The Review - FOOD & DRINK- The Wine Press with DON & JOHN Published: 29 November 2007
The historic town of Limoux. From Languedoc-Roussillon: the Wines and Winemakers by Paul Strang and photographer Jason Shenai, published by Mitchell Beazley
Economics in the melting pot
Languedoc, with its dry climate and rocky terrain, is the perfect place for winemaking – so why is it so disadvantaged?
SO far in our report on Languedoc, the area has been portrayed as a Mediterranean culture at odds with the corporate identity of northern Europe. The region’s economic structure reinforces and is part of this divergence. With its dry climate free from disease, its rocky terrain and extensive infrastructure of training and specialist services, Languedoc should be the perfect place to make wine. But history and the vagaries of the market have been unkind to it.
The region is too large and too diverse for effective administration. Within it, there has been a cycle of low investment, subsidies combined with low prices, and a lack of marketing. The more traditional vineyards are family businesses handicapped by insufficient capital, selling their wine in bulk to local co-operatives, to bottling plants elsewhere in France, or abroad.
State aid, intended to keep families on the land, has been at the expense of economic development. Small vineyards, often part-time farmers, benefit from a nominal tax regime so favourable that they may be reluctant to increase turnover. At worst, this can limit growth, encouraging tax evasion and a black economy. Since price often fails to reflect cost, much of Languedoc’s wine is sold at a loss, depressing general price levels. Along with Spain and parts of Eastern Europe, it produces the cheapest wine in the world. But in these other areas, living standards are generally rising.
Taking the example of La Clape, a limestone outcrop near Narbonne that has made wine since Roman times, there are around 30 vignerons, around half of whom bottle their own labels. The rest depend on traditional outlets. They may own local shops catering for holiday-makers, sell their wine by the roadside for about 0.8 euro a litre, equivalent to about 40p for a standard bottle. (The breakeven point varies from 1 to 1.6 euros per litre.) They might also supply local customers with five-gallon plastic containers. A 2,000-litre tank on the back of a lorry can range across a radius of 100 kilometres.
Sales to local co-operatives may yield higher prices, but nevertheless conform to the same pattern. Local banks also grant loans against next year’s harvest. These loans are necessarily on a two-year cycle, borrowing on future gains before receipts for the current year have come in.
Worse, the future of Languedoc is decided elsewhere. In 2006 just over one fifth of the region’s appellation d’origine contrôlée (AOC) wine was sold in bulk, chiefly to Côtes du Rhone, Bordeaux, Germany and Italy, for blending or bottling by other producers as a cheaper label. Unlike most other French regions, wine from here can be bottled elsewhere and still sold as Languedoc. For the producer, merely putting the wine in a bottle more than doubles its value.
Because Languedoc came late to the AOC system, controls are more rigid. In Bordeaux, for example, almost any wine can have the word “Bordeaux” on its label. While tight controls are imposed on wine producers, those who sell them have a free hand to exploit suppliers. This is particularly true of the large UK retail consortia. In French supermarkets, the mark-up on a bottle of wine is about 15 per cent, compared to three times that in Britain.
At the heart of the issue are insecure contractual arrangements. When supermarkets buy wine, the order itself has the effect of a contract. A buyer might purchase 50,000 bottles in monthly lots of 5,000. But electronic stocktaking can turn one month into two, four or even six. Risk is unloaded onto the producer, who is promptly dumped if he can’t maintain the supply under these conditions.
But Languedoc is not a victim, it’s the most dynamic wine region in France. Successive waves of reform since 1945 have taken it from bulk production and an easy, perhaps lazy, labour-intensive process to a more competitive modern industry with quality as its goal. It now has a lot of people producing wine in different ways.
This contributes directly to the intense discussion within the region. Together with its history of agitation it has made the region a melting pot of diverse opinions.
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