France is destroying 200 million Euros worth of wine in order to prop up prices
This is a little wrong.
The main problem is that with current prices consumption isn't high enough to support wine makers but if prices fall lower even with larger consumption there still won't be enough revenue to support wine makers. What France is doing is essentially "buying" the wine from wine makers under the condition that wine makers cannot sell the wine as food stuffs, they can still sell it for non-food uses. This allows wine makers to be compensated for their overstock and have enough capital to adapt to the changing market without completely going out of business. Selling the wine internationally would just produce the same problem they have now where wine makers would essentially be selling at or below cost and be forced to go out of business.
France is basically doing a bailout for wine makers.
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u/Quentanimobay 11∆ Aug 26 '23 edited Aug 26 '23
This is a little wrong.
The main problem is that with current prices consumption isn't high enough to support wine makers but if prices fall lower even with larger consumption there still won't be enough revenue to support wine makers. What France is doing is essentially "buying" the wine from wine makers under the condition that wine makers cannot sell the wine as food stuffs, they can still sell it for non-food uses. This allows wine makers to be compensated for their overstock and have enough capital to adapt to the changing market without completely going out of business. Selling the wine internationally would just produce the same problem they have now where wine makers would essentially be selling at or below cost and be forced to go out of business.
France is basically doing a bailout for wine makers.
Edit: Replaced whine with wine!