The Future of French Wine: Overcoming ‘Terroirisme’ and Stagnation

EuropeThis article was written by Michael Cohen, Girish Nanda and James Wilson, members of the Lauder Class of 2014.

If there is a product whose provenance consumers care about, it is wine. There are two methods of classifying wine,cépage and terroir. The cépage (varietals) method identifies the wine by the type of grape used in its production. In contrast, the terroir (land-based) method highlights the geographical origin of the wine, its region-specific taste and the winemaker’s skill.

Traditionally, in France, wine is classified by its terroir. This classification emerged over the centuries as villages developed specific approaches to winemaking, resulting in regionally unique wines. Consequently, sophisticated French consumers developed a rich understanding of these regions, which enabled them to identify the nuances between wines and the geographic impact on their flavors. As viticulture developed in the New World — in countries and cultures that did not traditionally consume wine — cépage emerged as the principal means of differentiating and marketing wines. Initially this approach sought to overcome the lack of traditional terroirs in the New World. However, in the last 50 years, it has emerged as the dominant marketing trend in the wine industry. In fact, the industry consensus is that the average consumer in 2012 is more likely to select his wine based on its cépage and the brand that the winemaker has developed than on the wine’s terroir.

In defiance of marketing trends in the wine industry, many French winemakers continue to identify and market their wine based on terroir. This desire to perpetuate tradition maintains a degree of complexity in understanding French wine, limiting its accessibility to new consumers and hindering sales. Rather than looking to adapt, many French winemakers and critics revert to terroirisme and overemphasize the importance of terroir in defining wine. This approach does not seek to make good wine, but rather emphasizes the traditional aspects of geographically centered wine production, ignoring modern trends.

In a growing market, a terroiriste approach to winemaking would not hinder the French wine industry. However, the French wine market is in crisis. Between 1980 and 2010, the percentage of non-consumers of wine doubled in France, increasing from 19% to 38% of the adult population. French consumers drink less and have become more demanding. Like consumers the world over, they are searching for a high-quality wine at a reasonable price. Ascépage-based competition from the New World and from other European countries pours into France, winemakers need to rethink their marketing strategies in order to succeed in an ever-more challenging marketplace. Some French winemakers are adapting and producing increasingly more cépage-based wine, but the majority remains rooted in tradition.

To understand the opportunities available to these winemakers, it is important to examine first, why a winemaker would choose a marketing strategy based on cépage rather than terroir, and second,where maintaining a terroir-driven approach adds value. Is there one approach that French winemakers should adopt uniformly, or should they develop individual strategies that play to the strengths of their wine while meeting the needs of the modern consumer?

Originally published by Knowledge@Wharton January 2, 2013 as part of The Lauder Global Business Insight Report 2013: Building Blocks for the Global Economy.

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