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Tuesday, October 13, 1998 Published at 15:36 GMT 16:36 UK

Business: The Economy

A fillip for French wine?

Higher quality wines should be readily available at much lower cost

The BBC's Jonathan Charles reports from Montpelier in Southwest France on how the European Commission is helping the wine industry to modernise.

Watch Jonathan Charles report on how French winegrowers want to fight back
For more than 2000 years, the coastal vineyards of South Western France have exported wine - but now producers around Montpelier are facing tough competition from the rest of the world.

The Abbaye de Valmagne vineyard is suffering - Philippe D'allaines sells 10% of his wine to British supermarkets, but customers are increasingly choosy about what they buy. Bit by bit, Australian and American rivals are eroding the Abbaye's traditional business.

[ image:  ]
He says: "I think the Australians have been improving very much the wine and also they are very very good in terms of marketing and advertising - I suppose they are better than the French for that."

More help on the way

French winegrowers are trying to fight back, and now there may be extra help from the European Commission.

More subsidies are being proposed to improve the continent's wine. Money would be spent on planting new vines to replace those currently producing poor quality grapes.

More than 60% of the world's wine comes from Europe, but as consumer tastes have changed, producers here have been slow to adapt, in future quality will be the key to success not quantity.

[ image: Vines currently producing poor quality grapes would be replaced]
Vines currently producing poor quality grapes would be replaced
Testing the latest vintage, members of the local growers association admit they have plenty of work to do.

Wines from outside Europe often have a fresher flavour, appealing to a wider variety of drinkers.

The French industry knows it must modernise if it's to thrive. Mireille Rambier of the Wine Producers Associations says: "We want to have new markets and this is a good idea because the wine is something that we need, it is in the French culture, we have to let it be known around the world.

Unfair competition?

But not everyone is entirely happy with the European Commission's initiative. The Domaine de la Baume vineyard is owned by Australia's second largest wine producer.

Bill Hardy, invested here in France in the early 1990's, but most of his family estates remain in Australia.

He worries that extra subsidies would put Australian and other non-European vineyards at a disadvantage, making it difficult to compete.

[ image: Consumer tastes have changed]
Consumer tastes have changed
He says: "If I was back home I'd be screaming as loud as the next man, because it does seem like unfair competition to us to have the industry subsidised, when in fact the world is trying to break down subsidies and differential trade barriers."

European consumers certainly won't be complaining though, as eventually, higher quality wines should be readily available at much lower cost.

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