French vineyards have been hit by taxes, the pandemic and now a killer frost.
France is famous for its wine. Along with Spain and Italy, it is one of the world’s top producers of wine (i.e. it makes the most) and also one of its top exporters (i.e. it sells the most to other countries). The wine sector therefore plays a really important role in France’s economy. It is responsible for about 600,000 jobs, and it also provides the government with millions of euros of tax money, which can then be spent on anything from public education to social housing to nuclear weapons.
But, like many of us, French wine has been having a bad year. First then-President Donald Trump decided to put 25 percent tariffs (taxes) on French wine, because he thought the EU wasn’t playing fair when it came to global trade. That meant French wine became substantially more expensive for American consumers, which in turn meant they bought less of it. This was a particular blow because Americans normally snap up a quarter of all of France’s wine exports, more than any other country.
Then the coronavirus pandemic hit. Across the world - and particularly across Europe - governments responded by shutting down restaurants and bars for large parts of the year. That meant a big drop in their wine sales. While people could of course still drink at home, people seemed to be less keen on indulging in the fancy wines France is particularly well known for: sales of champagne dropped by 18 percent.
As the saying goes, bad things come in threes. French winemakers are now dealing with the worst frost they’ve had in decades. Four-fifths of vineyards have been affected by it. Cold weather kills or damages the grapes, meaning no wine (or at least no good wine) can be made from those crops.
That’s going to result in much less wine being produced, exported and sold. Lovers of French wine will probably have to shell out more for it, as scarcity tends to push up prices. People who work directly or indirectly for the French wine industry may be facing job losses. And the French government will be taking in less tax revenue, at a time when it could really do with a few extra bob to fund programs designed to mitigate the negative economic effects of lockdowns and other Covid policies.
Read our explainer on: microeconomics
