Sour grapes and subsidies bedevil French wine

The grapes of wrath are fermenting in some of the best-known vineyards of France.

Leading wine producers will petition the Prime Minister, Jean-Pierre Raffarin, in Paris today to demand urgent action to resolve a collapse in sales and wholesale prices that menaces the entire philosophy on which French wine is made, labelled and marketed.

After decades of action to reduce over-production of cheap table wines, France now faces the unthinkable - an appellation contrôlée wine lake. Exports of middle-market wines with protected names from regions such as Bordeaux and Burgundy fell by 9 per cent last year, the fourth fall in five years. France remains the world's biggest exporter but is losing ground - especially in Britain and other northern European Union countries - to New World wines, which are clearly labelled, easily recognisable and standardised in taste and quality.

French domestic wine consumption slowed yet again last year, as younger people turned to beer, or soft-drinks or alco-pops and older people responded to a new campaign against drink-driving. Sales of wine in French restaurants fell by one fifth. Wine-producers blame their woes, in part, on a French law restricting the advertising of alcoholic drinks.

In Burgundy yesterday, they draped black, plastic sheets over the name signs of some of the most celebrated towns and villages in the world - Beaune, Pommard, Meursault - to protest against a recent court ruling that the advertising restrictions apply to even the highest quality French wines.

A delegation of wine producers from all over France will visit M. Raffarin today to demand immediate action to promote exports and domestic consumption and to boost producer prices.

After months of warnings, denials and internal squabbles between competing interests, the long-threatened crisis in the middle-market, French wine industry has exploded into the open. (Superior quality wines and all champagnes are still booming.) The wholesale price of generic claret - red wine which has the legal right to call itself Bordeaux - has collapsed by almost half in the past three years, from about €1,500 (£1,000) for a tonneau, or 900-litre barrel, to €850.

This works out at about 60p a litre wholesale for the kind of wine which has, typically, reached the shops at about 10 times that price.

France has known for years that its once-effortless domination of the world wine trade is doomed. New World wines have been siphoning off foreign consumers who want to spend up to £10 on a bottle of wine and be sure of what they are buying.

French wines, with their jumble of 466 different protected titles, or appellations - sometimes wonderful, sometimes less than wonderful, and frequently confusing - have been losing ground.

Rather than pull together, the industry is engaged in an increasingly heated war between regional interests, purists and modernists. Should France reconstruct - even partly abandon - the entire system of appellations on which the philosophy, and marketing strategy, of French wine has been based? Should France shelve its mystical belief that the identity of a wine is rooted in a specific locality, or terroir? Should it adopt - for the middle of the market - the New World approach, based on the standardised production of brightly labelled bottles, identified by popular grape varieties, such as Chardonnay or Cabernet-Sauvignon?

Some French wine traders and buyers blame the loss of market share on the failure of the wine industry to police its own system of appellations d'origines contrôlées (AOC) more rigorously.

"There are 15 to 20 per cent of AOC wines which are pigswill ... but no one will take the responsibility to tighten the rules," said Jean-Luc Roché, a buyer for one of the largest French supermarket chains.

Other wine traders and growers believe that the problem is more systematic. The system of hundreds of appellations is no longer sustainable, they say, in a world where brand names and logos rule.

A committee set up by the previous, Socialist-led French government recommended three years ago that a large chunk of the moderate-to-good quality French vineyards should abandon their own labels and pool their grapes in consistent-quality, simply labelled wines, like their Australian competitors. The idea was rejected by purists as a heretical surrender to globalisation and the erosion of local specialities. It was fiercely opposed by producers in the Languedoc region in the deep south, who were already successfully producing "Australian" wines in France and did not want other, better-known wine-growing areas to compete with them.

As the crisis deepened, wine-producers in Bordeaux, Burgundy and the Loire have started to examine the possibility of creating Australian wines, marketed partly under regional names, partly by grape varieties. The INAO, the organisation that polices French wine appellations, has, in recent weeks, been testing another idea on wine traders in France and abroad. The best of the wines that qualify for protected titles would be promoted into a premier league, or Super-AOC. The rest would be placed in a second division with fewer controls on how they are made.

But how splitting the system in two would simplify the choice for consumers, and improve the reliability and reputation of French wines, remains unclear.