The Federation of French Wines and Spirit Exporters (FEVS) has revealed that the industry’s exports reached a historic high of €12.9 billion in 2017, making wine and spirits the second largest French export after aerospace technology. This increase is particularly noteworthy as it coincides with a general upswing in France’s economy, and the country’s exports are playing a big part.
Like many EU countries, the effects of the financial crisis appear to be waning in France. The economy expanded by 1.8% in 2017 and unemployment is at its lowest in 5 years. While several factors have contributed to the expansion of France’s economy, a substantial increase in exports last year (up 3.1%) has been cited as a key source of economic growth.
It looks like a good glass of French wine is something that more than just the French are demanding. Global demand for the country’s wine and spirits has been a leader among its export products. The industry experienced broad-based growth in 2017, with exports of champagne, wine and spirits increasing by 8.5%. Exports proved especially buoyant in China and the US, with sales reaching €1.2 billion and €3 billion in each respective market.
Aside from playing a large role in the country’s culture, the wine and spirits industry is also fundamental to the French economy. Wine alone is France’s most valuable agricultural product, accounting for around 15% of agricultural revenue despite using just 3% of farmland. More than 300,000 jobs across France are linked to the production and sale of wines and spirits, which enables the country as a whole to benefit from the industry’s success.
Although the wine and spirits industry has helped improve France’s export performance, there is no guarantee that it will continue to experience such high growth rates. China’s increasing demand for French wine is vulnerable to competition from Australia, while Brexit could reduce sales to the UK, France’s second largest export market. It is therefore necessary for other export sectors to expand in order to sustain France’s economic recovery.
To the government’s credit, France has introduced policies specifically aimed at supporting the growth of various export sectors. Recently enacted economic reforms relating to the French labor market and the reduction of bureaucratic red tape were made in an effort to lower the costs for businesses and make them more competitive on the global market. In 2013 the government introduced La France Tech in order to promote the French start-up industry. Following on its success, the French economy minister, Bruno Le Maire, announced in October the launch of La French Fab in an effort to expand France’s manufacturing sector in the international market.
“France is back!” declared French President Emmanuel Macron at Davos this past January, while speaking to a group of global business leaders. The economic indicators certainly suggest the country’s GDP turned a corner in 2017 and there are many reasons to remain hopeful that this trend will continue. However, in order to keep growth numbers climbing, further change will be necessary, as a particularly strong performance of France’s wine and spirits industry is not enough to sustain the expansion rate of the country’s exports. Time will tell if the reforms enacted and the policies introduced by President Macron and his government will support the emergence of a broader export sector in France.