This blog post explores why France discarded millions of liters of wine and the underlying changes in the wine industry.

France: Why Did They Dump the Wine?

Long ago, a shocking article caught my attention: last year, France, a world-renowned wine-producing region, reportedly discarded approximately 66 million gallons of wine. That’s enough to fill a whopping 100 Olympic-sized swimming pools. What on earth happened?
Of course, not all of that enormous quantity was discarded. Under government policy and support, some was distilled and reprocessed into brandy, perfume, or disinfectant alcohol. Beyond discarding already aged wine, vineyards were also plowed up ahead of the August harvest season. The global wine market, which peaked during the COVID-19 pandemic, has been declining, leading to reduced demand. However, French vineyards are facing an unprecedented bumper crop, which will significantly increase supply. France, with its strong pride in its domestic wine, has opted for supply management rather than lowering prices through increased production.
Indeed, French wine consumption has dropped significantly. In the early 2000s, France’s per capita annual wine consumption exceeded 57 liters, but it has recently dropped to 38 liters, a decrease of over 30%. The global market situation is not much different. While the decline isn’t steep, global annual wine consumption is steadily decreasing.
What’s interesting is that despite falling consumption, the market size shows a consistent upward trend. This suggests polarization within the wine industry. As wine has become more mainstream, affordable wines have proliferated, yet demand for premium wines is also growing steadily. Consequently, a vast market has formed, spanning everything from convenience store wines costing around 10,000 won to ultra-premium vintage wines only obtainable through direct purchase as a registered member of the winery.

The Romanticism-Filled Wine Business

In truth, the wine business is, so to speak, a ‘romantic business.’ It’s not an industry one easily enters solely for profit generation. Fundamentally, wine doesn’t offer clear returns on investment. There are simply too many variables. Everything from that year’s weather to the skill of the workforce and the winery’s brand value influences the product’s condition and price. Moreover, obtaining industry-related information is difficult.
This is also why few wine companies are publicly listed. Going public requires annual sales in the hundreds of billions to trillions of won, which is hard to achieve solely with high-end wines priced in the tens of millions of won, where demand is limited. Therefore, companies need a broad product range, from low-priced to premium wines. However, in the wine industry, which is typically fragmented into small wineries, few companies can manage this.
Simultaneously, a characteristic of wine companies is that once they establish a certain foothold, they operate very stably, regardless of whether they are listed or their stock price. If supported by quality soil, suitable vines, and long-standing know-how, they can consistently generate steady profits. This stability might actually reduce the perceived need for listing or expansion.
Amidst this, new players are entering the wine industry. These are luxury brands like LVMH, represented by Louis Vuitton, or Kering Group, represented by Gucci. For these brands, which already possess luxury goods distribution networks and solid capital, wine is an excellent item. The existing customer base of luxury brands and the wine consumer base have significant overlap. Therefore, they can try new items while reducing marketing costs. It’s quite intriguing to see luxury brands approaching wine not primarily for massive profits, but to leverage its image of high-end culture.

Korean conglomerates acquiring wineries

As mentioned earlier, the Korean wine market experienced significant growth starting with COVID-19 but has now entered a downturn. However, given its massive growth in such a short time, viewing this downturn purely negatively seems difficult. With the pandemic ending and various alcoholic beverages like whiskey, highballs, and traditional liquors gaining new popularity, the growth momentum of the wine market has somewhat stalled.
Recently, however, several major Korean distribution conglomerates have been acquiring wineries overseas. Leveraging their already established distribution channels, they are extending their reach into wine, a sophisticated and romantic item. Korea’s wine market hasn’t been established for very long, making it challenging to directly purchase land overseas, cultivate grapes, produce wine, and handle sales. That’s why they’re interested in acquiring existing wineries that already have these elements in place.
A prime example is Shinsegae. In 2022, Shinsegae Property, part of the Shinsegae Group, acquired the American winery Shaffer Vineyards. It’s a famous winery well-known to anyone who buys wine in the US. Hanwha also acquired the US-based winery Seven Stones in 2022. Neither has shown particularly strong performance so far, suggesting that new strategies specific to large corporations are needed. Regardless, from a consumer perspective, the fact that Korea’s leading distributors are fiercely competing in winery acquisitions and wine distribution can be seen as a positive sign.

The Future of the Wine Industry Seen Through Supermarkets and Convenience Stores

Beyond the traditional channels that have handled wine in the Korean market—department stores, hotels, Western-style restaurants, and specialty wine shops—two new wine distribution channels are rapidly gaining ground. These are large supermarkets and convenience stores.
First, regarding large supermarkets, many are now dedicating quite a large space within their stores to wine displays. This shift is somewhat unexpected, even considering how much the public’s entry barrier to wine has lowered. The strength of large supermarkets lies primarily in selling food, beverages, and daily necessities at low prices. Wine, however, is a product where premium items are likely to stand out. Given that large supermarkets have been experiencing a steady decline in performance recently, doubts remain about whether investing in upscale products and spaces is effective.
Conversely, wine sales at convenience stores are progressing quite positively. In Korea, you’ll find at least one or two convenience stores wherever you go. Their target audience and sales approach are entirely different from supermarkets. Unlike supermarkets with large displays, convenience stores focus on stocking safe, affordable wines that appeal to a broad taste range and carry a low risk of failure.
The Korean convenience store industry, already saturated to the point of overflowing, has entered a phase of competition to increase average transaction value. What better way to boost that value than with wine? In this sense, it’s reasonable to expect wine to become a new cash cow, effectively revitalizing the stagnant convenience store sector.