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France spending $215M to distill wine into ethanol as demand drops

Wine producers do not toil for months so that their wine can be put to industrial uses. But that nonetheless will happen in France this year thanks to falling demand for wine among French drinkers, weaker sales in China, and greater competition in export markets.  

With EU help, the French government plans to spend about $215 million to pay for “distillation aid,” as the Financial Times reported on Sunday, with most of the assistance going to the Bordeaux and Languedoc regions. The process involves distilling excess wine into ethanol, which can then be put to various industrial uses, including perfume, cleaning products, and the hydroalcoholic gel found in hand sanitizers. 

On Friday, agriculture minister Marc Fesneau said during a distillery visit that the government aimed to shore up wine prices and help winemakers “find new sources of revenue,” the FT reported. Farmers must “adapt to changes in consumption and adjust production to the demand of tomorrow,” he added.

In another program, farmers are compensated for destroying vineyards and converting the land to woods and leaving it fallow. In Bordeaux, about 1,000 farmers have participated, leading to the removal of about 8% of the region’s vines, the British paper reported. Other public funds help grape-growers switch to other products, including olives. 

As the BBC reported this weekend, wine consumption has fallen across Europe—including by 7% in Italy, 10% in Spain, 15% in France, 22% in Germany, and 34% in Portugal—for the year to June, according to European Commission data. Meanwhile, wine production across the bloc rose 4%. 

Also hitting the sector is a cost-of-living crisis—linked to soaring energy prices and the Russian invasion of Ukraine—that has spurred many European shoppers to become more frugal and spend less on non-essential items. Meanwhile craft beer and other drinks have presented increasing competition.

But demand for high-end wine has held up better than the more affordable variety, so some producers in France have opted to move upmarket rather than convert their land to something else. In February, Moët-Hennessy, the wine and spirits division of LVMH, added Provence rosé producer Château Minuty to its portfolio of luxury wine labels.

As the Guardian reports, this isn’t the first time Europe has suffered a “wine lake.” In the mid-2000s, the overproduction of wine, stimulated by subsidies, prompted the EU to reform its farm policies. 

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