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French Wines' Bouquet Muted by High Cost and Competition

February 03, 1988|STANLEY MEISLER | Times Staff Writer

PARIS — American wine importers and distributors warned French producers Tuesday that they were pricing many of their wines out of the American market, losing ground to California and other competitors that may never be regained.

The warnings came at a conference on wine competition in North America and were accompanied by the release of some disappointing statistics about the sale of French wines in the United States. They showed that, for the most part, Americans were buying less French wine than before. There were only a few exceptions, such as Champagne.

An obvious air of apprehension hovered over the conference. Many producers still remembered the crash of the early 1970s, when American consumers suddenly balked at paying higher prices for Bordeaux wines, causing a cave-in of the Bordeaux industry and driving some investors into bankruptcy.

Harold Binstein, president of Gold Standard wine and liquor stores in Chicago, detailed specific examples of the problem. White Burgundy sales, he said, "are declining by leaps and bounds." In 1985, his stores sold Pouilly Fuisse, a white Burgundy, for an average price of $11 to $12 a bottle, with some bottles going for as little as $7.99. In 1987, his stores had to sell the same wine for an average price of $18 to $20 a bottle.

Los Angeles Times Thursday February 4, 1988 Home Edition Business Part 4 Page 2 Column 6 Financial Desk 1 inches; 20 words Type of Material: Correction
A chart accompanying a story on U.S. imports of French wine incorrectly reported the imports in thousands, instead of millions, of gallons.

"Pouilly Fuisse," he concluded, "is a category that may never generate excitement in retail anymore."

"Your biggest threat is California," Binstein went on. He cited California Chardonnay as an example. When the price of French white wines began to rise, he said, "a slew of cheap, $4 Chardonnays . . . filled the void in the market."

The conference was organized by Sopexa, a government-subsidized association that promotes the sale of French agricultural products abroad. Philippe Pascal, the organization's representative in New York, quickly delineated the importance of the American market.

He reported that French wine accounted for 47% of the value of all the imported wine sold in the United States in 1986. The United States and Canada combined also were the largest customers in the world for French exports of wine that year, buying 23% of the French wine sold outside France.

Prices Too High

But Pascal also reported that the value of French wine sold in the United States declined by 13% during the first 11 months of 1987. The value of white Burgundies declined by 36%; the value of red Bordeaux declined by 26%.

All speakers at the conference agreed on the main reason for the problem: the decline in the value of the dollar. A declining dollar makes anything sold in French francs more expensive. To make matters worse, French wine producers also have been been increasing their prices in francs in recent years. That amounts to a double increase for an American consumer.

"When you increase your prices by a franc (about 18 cents) a bottle," said Abdallah H. Simon, chairman of Seagram Chateau & Estate Wines Co. of New York, "you increase the price to the consumer by a half-dollar."

Most Champagne producers have tried to keep their prices down, despite the fall in the value of the dollar, and, the American importers and distributors said, the result has been an increase in the value of Champagne sold in the United States.

There have been other problems for French wine: a concern for good health that discourages drinking in the United States, anti-drunk driving campaigns and a new generation of American drinkers who do not prize French wines.

"For members of the old generation," Simon said, "French wines served as our point of reference for all wines. . . . Wine, like perfume and fashion, represented French tradition for us. . . . Alas, that is not the point of view of the young generation. For them, French wine is not the only option."

Australians Gain Ground

He said the young generation of Americans, while still liking French wine, also admires California wines, other American wines, and various imported wines from Italy, Germany, Spain, Eastern Europe, Chile and Australia.

Gerard Yvernault, senior vice president of Kobrand Corp., a major American importer, said that, in the past, it has usually taken French wines two years to recover from a decline.

"It is probable," he said, "that now the recovery of declining sales by these wines will be much more difficult and take much longer."

Several speakers noted the inroads that Australian wines had made recently in the American market. But a vote against them came from Frank J. Prial, the wine critic of the New York Times.

"Each night I pray that French wines will maintain their strong presence in America," he said. "Because if they do not, I will have to go to Sydney and Melbourne instead of Paris. And for me, that would be a real tragedy."

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