Examination of Witnesses (Questions 763
- 779)
MONDAY 21 MAY 2007
MR JEAN-LOUIS ALAUX, MR JEAN-MARIE FABRE AND MR JEAN-LUC
FABRY
Q763 Chairman:
Good afternoon, thank you very much for inviting us.
Mr Alaux: (Through an interpreter) First of
all, it is a great pleasure to welcome you to the Palais du
Vin. I know you were welcomed this morning but I am welcoming
you again. I am the head of a federation which represents some
1,000 companies. Each individual member of the federation would
be delighted to welcome you themselves, they are very open to
the world. Our economic vision is very liberal in many ways. Our
aim is to accompany our members as far as possible in the international
market. I am entirely at your disposal should you have any questions
that you wish to ask.
Q764 Chairman:
Can I first of all thank you, Mr President, for your welcome and
for finding time to talk to us and the incredible amount of effort
that your two colleagues have put in to help us today.
Mr Alaux: It was done with great pleasure.
Q765 Chairman:
I see that it clearly helps to be called Jean in order to make
it into the federation! I have no problem with that.
Mr Alaux: It is not obligatory!
Q766 Chairman:
As long as it helps! This is the first formal session we have
had and I think it would be useful if we try to get into this
session a lot of the informal conversation we have had earlier
in the day.
Mr Alaux: It is over to you.
Q767 Chairman:
Thank you very much. I would like to focus on two things: firstly,
the present state of the wine industry in this region and, secondly,
how that would be affected by any proposals for the reform of
the wine regime. Could I start by asking you where the wine industry
is at the moment in Languedoc/Roussillon, what differences and
changes you have had in the recent past and where you are going
in the future?
Mr Alaux: There are two types of families in
the wine industry in Languedoc/Roussillon. There is a sort of
family company, an independent company, which I represent, and
then there is also the co-operative system which is much more
closely related to the industrial framework. These families have
co-existed for roughly one century, so for a long time. Before
the last century there were only family companies, there were
no co-operatives. Today these two categories have two different
axes of production. The co-operative system by necessity has had
to choose production based on high volumes and low pricing. They
are frequently positioned on what we know as the hard discount
market. As for many independent wine makers, they are positioned
on a very highly competitive market. The family that I represent
to a certain extent is also present on this market but the fact
that our members have individually decided to put their names
on their products, to add their own individual signatures to the
products, shows they have chosen a production based less on volume
and more on quality. The combination of co-operatives and private
family enterprises should mean that we can have access to the
entire market. The problem is that over the past 25 years the
policies that have been applied in France have not been very effective
with regards to the market approach in the wine industry. In addition,
wine making in Languedoc/Roussillon is not what we would call
a millionaire's game. We cannot earn the same amount of money
as one might expect in Champagne, in Burgundy or in Bordeaux.
In generations past, children have inherited their family estates
but this inheritance does not necessarily mean that the skills
have been learned along with the inheritance. If we combine the
fact that the policies have not been well adapted, plus the insufficient
capacity of many wine makers to adapt their production to the
market through their insufficient knowledge, we arrive at a conclusion
of certain difficulties. Here we believe that the problems are
not forever, we are in a position to find solutions which can
resolve the problems that we have observed.
Q768 Chairman:
Could I just take you forward on the discussion about the reform
of the wine regime, and in particular your views on the three
elements of crisis distillation (the cessation of crisis distillation)
grubbing-up and the removal of the ban on planting rights.
Mr Alaux: That is very important. Personally,
I very much appreciate the way things have been presented by the
European Commissioner. She has an art of simplifying to the maximum,
but when you are in the field and you are defending a profession
that you love deeply things become a little more complicated in
reality. Having said that, I am going to start with the question
of grubbing-up. There are two ways of looking at this question.
In this establishment three years ago we were favourable towards
the policy of applying the grubbing-up policy, unlike our colleagues
in similar federations. But, as we entered this period of mutation,
as I call it, and not crisis, when things were changing rapidly,
I preferred to say to my members that we were entering a period
of heightened competition and it is better for us to grub-up the
parcels of vines that are not highly productive, which do not
bring added value, and concentrate on the areas where we do well
and can sell wines with added value. Finally, the grubbing-up
within each company is the responsibility of each individual enterprise,
each individual entrepreneur. This enabled the company, therefore,
to have money coming in, to amputate the part of its vines that
were not ensuring sufficient revenues and to reinvest and come
back to the market with the remaining production. This was why
we considered grubbing-up an interesting measure. That is on an
individual basis. But, if we take it from a global point of view,
I am much more prudent because the European Commission's simple
viewpoint only takes into account the viticultural economy, whereas
the wine-making industry in Languedoc/Roussillon is certainly
an economic factor but also is integrated into the questions of
regional and environmental development. The question is much more
complex if we are looking at grubbing-up from a global point of
view. As far as grubbing-up goes, it is an interesting measure
where it concerns adding vitality to an individual company, bringing
it up to a competitive level, but a far more delicate question
when we are looking at it from a global point of view.
Q769 Viscount Ullswater:
Before we leave grubbing-up, could I ask whether you think that
grubbing-up should therefore be controlled by the producers or
by the Department of Agriculture, bearing in mind the social concerns
and the environmental concerns?
Mr Alaux: It has a strong social and environmental
dimension. We have asked this question ourselves. We consider
it a State-wide question because, if the decisions were taken
locally, these decisions would probably be taken with a little
less fairness and a little more local interest. Here nobody wants
to live off subsidies, the wish is that each company can live
off its own work. This is why we have defended the idea that this
CMO must be the last but it must be very efficient. We need to
stop this situation, we need to do it once and for all and take
a position on the market as it is in its own reality.
Q770 Lord Plumb:
Still on grubbing-up, do you think that the 400,000 hectares which
the Commissioner has proposed to take out of production is about
the right amount? Is this an acceptable level? Or is it too much?
Mr Alaux: We know the world figures of wine
consumption, we know very well that worldwide wine consumption
is increasing and we agree fully to grub-up the parts of the vines
that do not correspond to market requirements. I will fight literally
to the death to ensure that Languedoc/Roussillon remains a major
wine producing area. I understand from the Commissioner's words
that it would not be a bad thing if Languedoc/Roussillon disappeared
as a wine-producing area. If the proposal was, "Let us grub-up
Languedoc/Roussillon but we will inject something new, an alternative",
then maybe we would start listening, but at the moment that is
not the case. The problem in Languedoc/Roussillon, as we spoke
about earlier, is a problem of marketing skills in addressing
the international market. We bring a very small contribution to
the overall excess wine production. If we look at total international
wine production, I am in contact with wine producers in Australia
where they are starting to grub-up vines and with producers in
Argentina where they are starting to grub-up vines. I cannot let
it be said that Languedoc/Roussillon is the worst student in the
class and is being asked to make the greatest effort, it is happening
everywhere. The biggest problem at present is marketing. We have
been used to marketing our wines in a certain way but that no
longer corresponds to what the world expects. We need the means
to take our products to the market in the conditions the market
wishes. With regard to crisis distillation, we do not make wines
like you make cars, planes or another industrial product. The
weather, the rain, the sun, et cetera, means that sometimes we
have higher levels of production one year than the next, we are
not the bosses in that department. We need a tool which can remove
the excess production if there is any and enables us to maintain
the price for which the wine is sold. I cannot go and look my
vines in the face and say, "This year you are only going
to produce this much", it is impossible to do that.
Q771 Chairman:
I suppose the question is—who should pay for it? Should
it be the industry or the State?
Mr Alaux: I recognise the pertinence of your
question because this is another question that we have asked ourselves.
Q772 Chairman:
I cannot come up with any original questions!
Mr Alaux: My colleagues will support the fact
that I am far from the first person who will go running to the
State to ask for subsidies or aid of any sort, but the wine-making
industry goes well beyond the fact of just making wine. It represents
a great deal of employment and a great deal of work. There are
many companies which are not directly involved in making wine
but are suppliers to the wine industry. I cannot imagine being
asked to pay taxes to the State, to Europe, without these bodies
showing solidarity with the persons they are taking the taxes
from in return. I am not saying that everything should come from
Europe or the State but, if when we need it help is not forthcoming,
what is the point of having Europe or the State? We are not looking
for a fight, we are not looking to cause trouble, we want Europe
for peace, but Europe for peace is not enough, the bodies that
Europe represents also need to show solidarity to its members
who are paying the taxes.
Q773 Viscount Ullswater:
Would you suggest that the part of the budget which went into
the country envelope was available for distillation?
Mr Alaux: The smallest amount possible but not
systematically.
Q774 Chairman:
Can you just say something on the banning on planting?
Mr Alaux: It is something I consider logical.
Q775 Chairman:
To maintain the ban?
Mr Alaux: No, to free the planting rights.
Q776 Lord Plumb:
I just wonder if we can get a broad view of this. The Commissioner
has been given the mandate from the Council of Ministers, as with
anything in the CAP because of the total reform of CAP, to curb
some of the cost of supporting the various projects that they
are responsible for and, as far as wine is concerned, the total
cost of supporting the wine regime, as we understand it, is something
like €1.5 billion a year. If you had the opportunity to say
how you would reconstruct the wine industry within that limit,
which would be on a reducing scale, to improve the position for
the producers and keep them in business, what would be your proposal?
Mr Alaux: This too is an extraordinary question.
Chairman: Which you have asked yourselves!
Q777 Lord Plumb:
You believe in simplicity, don't we all!
Mr Alaux: We have already asked this question
of ourselves! I will give you my point of view on this question.
Unlike the CMO agreements, I would be very happy if there was
only one single aid for the Languedoc/Roussillon region. This
would be to give an aid per hectare under production. This aid
would be allocated to each wine producer and would be allocated
per hectare under production and per estate and all or part could
be paid to marketing companies anywhere in the world to help these
producers market their wine at the place of consumption. We are
talking about Languedoc/Roussillon, we cannot compare with Champagne,
they do not need this type of tool. If this type of aid could
be pushed forward in the upcoming CMO proposals, which could cover
a period of five to seven years, if it was applicable and active,
you would probably never again hear requests for subsidies to
the European Union from Languedoc/Roussillon.
Q778 Viscount Ullswater:
I am surprised to hear that, quite honestly, because it sounds
as if it is a continuation for market support for inefficient
producers. They will just remain in business for another five
to seven years and will not have restructured.
Mr Alaux: After this five to seven year period
there will be no more aid, so after that period they will die
anyway.
Q779 Viscount Ullswater:
Can we not reach that position now?
Mr Alaux: No, they have got no aid for marketing
at present.
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