Too Much of a Good Thing

By Mitch Frank

No one reveres wine more than the French, but it turns out that even they can have too much of a good thing. The Confederation of French Wine Cooperatives recently asked the European Union for permission to convert 66 million gallons of wine--333 million bottles--into industrial-grade alcohol, including ethanol for French cars. Why? A large grape harvest in 2004 has fed a glut in the French wine market, which is already reeling from tumbling demand. Domestic wine consumption--which makes up 70% of the industry's sales--has dropped sharply in recent years, owing to changing health attitudes, a crackdown on drunk driving and restrictions on advertising. In the meantime, wines from Australia, California and Chile have grabbed more of the export market, offering lower prices along with consumer-friendly tastes and labels. French winemakers and grape growers got some help last month when the country's agriculture department approved $91 million in financial aid. But as Allan Sichel, president of a federation of Bordeaux negociants, admits, "It's not going to make a big difference." Quick fixes won't solve the industry's problems. The fastest-growing consumers of good Bordeaux and Burgundy may be cars made by Renault. --By Mitch Frank