Examination of Witnesses (Questions 780
- 799)
MONDAY 21 MAY 2007
MR JEAN-LOUIS ALAUX, MR JEAN-MARIE FABRE AND MR JEAN-LUC
FABRY
Q780 Chairman:
Do you think that, even if you give aid on marketing (and marketing
is about much more than promotion), there will nevertheless be
some, maybe a significant number of, producers who will not be
able to operate economically and will have to leave the industry?
Mr Alaux: There will be some who will fall by
the wayside naturally. What would be very interesting would be
the international aspect of such aid. I work with a wine broker
in London called Charles Wells and, if I was allocated a certain
amount of aid, I could apportion some of this to Charles Wells
to help him hire someone to sell more of his wine, take it to
the market and therefore create a virtuous circle where I am better
paid for my wine, et cetera.
Q781 Chairman:
What would happen if Charles Wells came back to you and said,
"With the product you are giving me, I can sell X amount,
but if you change the product I can sell 3X the amount"?
Mr Alaux: We could imagine any situation. We
have to remember that people here are generally highly professional.
They are not producing just any old product in a bottle, they
are producing high-quality products that they are very proud of.
On a long-term basis the vineyard has been established for a given
type of product over a period of time and it is impossible to
change things just like that. The highest level of impact on a
vineyard is the changing of the weather from one year to another.
Q782 Baroness Jones of Whitchurch:
We heard this morning that the price of wine, even quality wine,
is going down. So is there not an imperative for an awful lot
of people to get out of the wine business for anybody to be able
to make a profit?
Mr Alaux: If there were no doors and windows
in this establishment we could think that way but we are entirely
aware of the situation throughout the world at the present time.
We know that in China there is an increase in consumption of over
7% per month, notably in the Shanghai region, the United States
is plus 8½% per year, et cetera.
Q783 Baroness Jones of Whitchurch:
France is going down.
Mr Alaux: France is going down, absolutely,
it is normal. That is the case in Italy and Spain too. Why? Historically
in these regions, France, Spain and Italy, the liquid available
in the past was wine, it was on site, it was what was there. But
now we have shops where you can buy Coca-Cola, whisky and all
sorts of things, so the choice is more and the way people consume
liquids has changed in these areas. It is totally normal.
Mr Fabre: International consumption is increasing.
Q784 Viscount Brookeborough:
That wine which was used here under those circumstances is not
the sort of wine that you are able to sell on the other markets.
Mr Alaux: It is a little more complicated than
that. Why? The Languedoc/Roussillon vineyard has undergone the
highest level of restructuring of any vineyard in the world. Roughly
70% of the entire vineyard of Languedoc/Roussillon has been restructured
and transferred from a philosophy of high levels of production
towards an objective of quality production. Over the past 30 years
levels have dropped from 25 million hectolitres to 16 million
hectolitres, thanks to European Union aid. We have gone from a
very high level of local production and consumption towards a
higher quality production which is not just consumed locally but
on a wider basis, but not wide enough because we have not got
the marketing tools to address all of the markets. Many of the
wine-making estates in Languedoc/Roussillon are family companies
and they do not have the structures of major international groups.
I have got a lot of contacts with people in the United States,
for example, in California or in Australia, and here we see the
major groups are made up of investors, bankers, pension funds.
The way these groups operate is certainly more modern, more active,
but, when the price of wine drops, they remove their investments,
put the money elsewhere and the vineyard collapses. In Languedoc/Roussillon,
when there are difficulties, we are talking families. We try to
stay in place, we do not change our car, we do not change the
fridge that year or renovate the house, we continue employment,
maintaining the environment, maintaining public services—and
we pay taxes too.
Q785 Viscount Brookeborough:
At the end of the day they are like family farmers everywhere.
Mr Alaux: Yes, but the fact that is very important
to understand is that, if we look at international consumption,
we need to be able to provide every family industry, every family
wine-producing company, with the same marketing resources and
means as are used and deployed by major groups around the world,
because today the price that wine is sold at in Languedoc/Roussillon
we cannot take enough added value from the wine at the price it
is sold and, therefore, we cannot take this step forward because
the wine is sold at too low a price.
Q786 Chairman:
What we know about European wine consumption is that it is declining,
the only countries in which it is increasing are the northern
European countries which are not wine-producing countries themselves.
I think this is a fundamental fact because in the wine-producing
countries, particularly in France, wine is part of the culture—it
comes from the ground, the climate, the wine-producer mixes his
soul with the elements to produce wine. The consumer in the north
of Europe does not have that background at all. The high status
consumer will always go for the top-of-the-range French wine.
What has happened in Britain is that the medium range market has
seen a major penetration by New World wines because the consumer
goes into the supermarket—and 70% of our wines are sold
through supermarkets—finds a bottle of wine that he likes,
goes back week after week, month after month, year after year
and wants that wine to be exactly the same.
Mr Alaux: Yes, exactly. What is the question?
Q787 Chairman:
The question, is that in the New World the wine producers engage
in a dialogue with the supermarkets and it is the basis of the
supermarkets saying, "The customer wants this, can you produce
it?" and they do. The wine producers in the New World do
not have the history to say, "This is a first class historic-based
product of high grade and you ought to appreciate it".
Mr Alaux: I really felt your question coming
anyway! The main difference between French wine and wine from
elsewhere is the internal regulation. An example of what you can
do in other countries and cannot do in France is that we are not
permitted to add aromas. If there is a difference in a flavour,
taste or aroma from one year to the next in other countries, they
can inject this aroma. If there is a little bit of sun missing
in California, they can inject an aroma to replace the missing
sun and we cannot do this in France. Here in this Palais,
in this house, because we are avant-garde, we are looking to the
future, we have been asking for a long time to have the same opportunities
in these terms as our competitors on the bottom of the range and
middle of the range wines only. For the rest, the wines above
this category are considered as wines produced by specialists
in their own right.
Q788 Viscount Brookeborough:
Who is controlling these regulations? Are they being controlled
by those strong groups who produce very superior wine?
Mr Alaux: There are several layers of control.
We could have a whole meeting just on the question of regulation
and the many layers of control. Wine is probably the product that
is most strictly controlled in France.
Q789 Viscount Brookeborough:
Who has the most vested interest in maintaining the status quo?
Mr Alaux: It is not in my interest.
Viscount Ullswater: Who benefits?
Q790 Viscount Brookeborough:
That is the point. You are the biggest wine-producing region in
the world.
Mr Alaux: Yes.
Q791 Viscount Brookeborough:
And you suffer more than anybody else.
Mr Alaux: But it is us who want to change the
most too.
Q792 Viscount Brookeborough:
But somebody is stopping you?
Mr Alaux: It is probably we who are preventing
us to changing as well. I am being frank.
Q793 Chairman:
I can see that.
Mr Alaux: One single example: until recently
a co-operative winery director was paid on the number of hectolitres
vinified in the winery with no incentive, therefore, to promote
low quality production but, on the contrary, high volume. When
we criticised this situation the main labour unions in France
came and complained to us and caused trouble for us. I will give
you one example. We tried to get through this complicated situation
and unlock the situation but it is very, very difficult. We would
have appreciated far clearer directives from Brussels, notably
with regard to the examples I have just spoken about.
Q794 Viscount Ullswater:
Does that not indicate how the New World has penetrated this market
because of these constraints and that the sooner these constraints
are removed, the more competitive they can become?
Mr Alaux: In the long-term, yes, but if we remove
these constraints immediately we destroy a whole economy, we need
time.
Q795 Chairman:
You are in a very difficult position and I think you have been
remarkably frank and honest with us. What I want to ask is—do
you think that your views are similar to the views of people in
the co-operative sector? Is there a big difference?
Mr Alaux: We have certain levels of support
within the co-operative sector but this does not represent the
majority.
Q796 Chairman:
So much more conservative, with a small `c'?
Mr Alaux: It is more difficult for us to evolve.
For example, all of the producers that bring wine to the co-operative
are never in contact with the market.
Q797 Baroness Jones of Whitchurch:
I was going to ask a similar question, which is that there must
be an All-France independent wine growers association. Is his
colleague lobbying within that organisation for the sorts of changes
that he has talked about?
Mr Alaux: Independent wine growers?
Q798 Baroness Jones of Whitchurch:
Yes.
Mr Alaux: Yes. It is the French Association
of Independent Wine growers.
Q799 Baroness Jones of Whitchurch:
They share the views that have been expressed today?
Mr Alaux: I am the Vice-President.
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