1. Former situation

Wine has always been a national pride, a comfortable source of profit and a part of the French culture. All those things allowed France to reign as the uncontested world leader of the wine market. French wine was of greater quality and no comparison could be made with other producers. French producers developed specific know-how and the different techniques were transmitted from generation to generation. Those facts can partially explain why there is so little room for innovation in France, conservative views are restraining industry development while “New World” producers quickly adapted their production line to wine market. 

2. French Wine Supply Chain

2.1 Description of the main stages

1. Grape production: Agricultural stage. Includes pruning, harvest, transport within the field, maintenance of equipment etc.
    

2. Wine production: Stemming, crushing, fermentation and storage. First, grape is transformed into “young wine” or “must” and then, after several processes, including racking, clarification etc, it finally becomes wine.
    

3. Storage: Ageing after storage is an important process. See the movie below for more information about the production process.
    

4. Packaging: Bottle filling, corking, capsuling, labelling, box filling and placement on pallets.
    

5. Distribution: Basically transport and is less or more significant depending on if we have a “local” or “global” supply chain (see below).
    

6. Phase at the consumer: Further storage takes place here. Impact on environment if refrigerator used.
    

7. End of life: Waste management and bottle treatment closes the loop of the supply chain.

2.2 Different types of base producers

1. Private domains: They cultivate the grape, make the wine and sell it. They are divided in two types and distinguished by the size (business-like run or family-like run domains). The first with managers, employees and lots of surface area and the second smaller in surface, cultivated by the farmer hiring consultants.
    

2. Wine co-operatives: members deliver grapes to the cooperative which is involved in production of wine from the grapes and the subsequent marketing activities.

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“In France 65% of all independent wine growers (grape farmers / wine producers) belong to a wine cooperative. That does not quite mean that 65% of all wine is made by cooperatives since many growers do a bit of both: bottle their own wine while also being part of a cooperative”

2.3 Different types of supply chains

2.3.1 Global wine chains

We can roughly identify two global wine chains:

1. Bulk wine being sold by co-operatives to foreign but also to French traders (wholesalers, distributors, bottlers; for example LGCF group). These importers sell to wholesalers, not specialised in wine, like retailers and supermarket. The retailer sells the wine under his brand with a label or a PGI for example.
    

2. Bottled wine using the routes of other operators within the global chain. Bottled wine is thus sold on the global market by wine estates and cooperatives. Production strategy enhances the quality image and  the operators provide specialised stores and restaurants.
    

2.3.2 Local wine chain

Local chains apparently are believed to have a weak position in the market. It included direct sale at cellars (still very common) and sale to local intermediaries (restaurants, specialised stores etc). Wine tourism is generally included in this chain although the wine is not always drunk in the region. Local wine chains generally have:
 

• Not a lot of intermediaries;

• Physical proximity between the place of production and consumption;

• Well known local identity of the wine (labels or word of mouth)  
   

As a conclusion, there can be firstly supply chains dominated by their producers (private domains, reputed wine estates, co-operatives with a niche). Secondly, supply chains dominated by supermarkets, wholesalers or large wine shops (downstream power limited to specific market segments). Thirdly, supply chains dominated by wholesalers or traders who purchase bulk and develop their own trademark. Lastly but not least, a fourth type is the supply chain dominated by producers and traders at a regional scale with “marketing boards” (e.g. Champagne).
This last supply chain is one that is not observed a lot.

3. “Appellations”

French wines are most of the time classified by their “appellation” based on their “terroir” and on several other features. Here are the most commonly used:

Table Wine (“Vin de Table”) is the lowest classification for wine. To be allowed to use this designation, there are not many restrictions. Table Wine can use different varieties of grapes and can come from any European countries. The only “real” restriction is that they cannot take the name of a region of locality: they are only allowed to take the name of the country.

Local Wine (“Indication Géographique Protégée”) is 25% of French production. The restrictions are higher than the table wine ones. It has to mix specific varieties of grapes. According to the area of the variety, they belong to a sub-group (National, Regional or Local).

The AOC (appelation d'origine controlée) is the most wanted name. It is the equivalent of the European AOP (“Appellation d’Origine Protégée”). If a wine loses the AOP designation, he will also lose the AOC one.

To use  the designation “AOC”, there are many conditions such as the area of production, the variety of grapes, the minimum alcohol rate or the process of cultivation and vinification. Here we will concentrate on another of these restrictions: the return per hectare. To become an AOC, the yield must be below a certain number and here is the table of the cut-off yield in different region to give an example of the complexity of the requirements.