Recent events: Numerous violent strikes were organized by the wine growers to draw attention to their difficulties; for instance, they demanded more assistance following the bad weather conditions that ruined the annual harvest.
A succession of demonstrations: It is a traditional economic crisis, reminiscent of the 1970s and 1980s; these protest movements show us the extent of the current wine crisis.
The crisis' perception: Wine consumption, like a lot of agricultural produce, is inelastic (i.e., the quantity total consumed does not increase when the prices are lowered). Consequently, any surplus of production creates reduction in price - stocks rise and prices decrease. The "law of variable proportions", well-known by the agricultural economists, comes into play. This expression can be summarized by: "beyond a certain quantity produced, any offer's increase results in an income fall, which is higher than the rise of the sold quantities".
Who are affected?: In this context, all the producers are not affected by the same problems. The wine growers who are not completely dependent on wine (those who work part-time, those who have already reached a certain financial maturity and finished paying their land capital and only need to finance the variable loads) can have a real aptitude for an "economic resistance". Moreover, contrary to the majority of Italian or Spanish producers, the French wine growers have always been specialized in their activities. During the bad years, they could not fall back upon compensation from other agricultural incomes. The combination of farming-breeding is not very prevalent in specialized wine areas. On the other hand, the wine growers solely dependent on wine operations, and who have incurred debts, are directly affected. The professionals, who are perfect models of the economic dynamism because they followed the recommendations of the agricultural advisers and the State, and started to invest in the marketing, are the most affected! The fall in income leads to the aggravation of their debt. Faced with the threat of liquidation, they are now demanding explanations from the government.
[...] The wine growers who are not completely dependent on wine (those who work part-time, those who have already reached a certain financial maturity and finished paying their land capital and only need to finance the variable loads) can have a real aptitude for an "economic resistance". Moreover, contrary to the majority of Italian or Spanish producers, the French wine growers have always been specialized in their activities. During the bad years, they could not fall back upon compensation from other agricultural incomes. [...]
[...] For simplifying economic flows, the independent vine grower mustproduce one- third wine , allocate a third to buy services or packing products and another third to sell its products and manage its business Stocks, customer credits and supplier credits The vine growers do not think much on these subjects, until the moment when they are plagued by their suppliers and their bankers because they do not have any more treasury available to meet to these obligations: the requirement in working capital can quickly become dangerous in the financial management of exploitation. [...]
[...] As the world leader of the wine it seems essential for the companies to be present at the same time in oligopoly and implement a discrete presence in the Top 10 and in the fringes in the shape of TPE and form a very powerful SME, that still remains exceptional The French problem 1. Technical recommendations The financial study realized on the three exploitations with the three types of production has enabled me to evoke the investment possibilities in the French wine stream. [...]
[...] www.lemonde.fr Appendices Appendix World stock market wine firms classification (2003) Countrie Total Wine World World s turnover Turnover Market Position (Million (Million Share US US Winery Wachenheim Appendix Incomes and prices selling discussion With the optimisation of the return and the French rules, the selling price becomes determining to estimate the turnover. The bottle selling price assumptions were selected in order to the grape price and the wine "en vrac" one are an above their costs of return. They are supplemented to find the final selling prices, after the standard margins of the costs of distribution addition. [...]
[...] La gouvernance de l'entreprise (La découverte, Pérez J., 2004) and Contribution a la connaissance de la viticulture regional Agreste, Octobre 2002) and articles in Capital magazines 115 and 118), give a better vision about this market in order to obtain some recommendations Financing and management of the multinational wine firms Since the middle of the 80s, the world wine industry has entered a new historical stage of its development, marked by the progressive assertion of new producer countries (NPC: Argentina, Chile, Australia, New Zealand, South Africa and the United States) in a market in a globalisation process. [...]
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