The French wine and spirits industry ended the weekend with a sense of relief after a tense debate in the National Assembly on the draft law for financing Social Security in 2026.
The sector, already struggling with declining consumption, inflationary pressures, and weakening exports, had feared a wave of new fiscal measures that could further strain its competitiveness.
Ultimately, only the proposal to increase taxes on “premixed” alcoholic beverages—those combining alcohol with caffeinated or energy drinks—was approved. Other controversial measures, including additional excise duties, advertising taxes, and minimum retail prices, were put on hold.
A Sector on Edge Over Tax Proposals
In the days leading up to the debate, industry representatives voiced alarm over potential tax hikes. Associations such as the Federation of Wine and Spirits Exporters (FEVS), the French Federation of Spirits (FFS), the French Federation of Aperitif Wines (FFVA), and the Union of Wine Houses and Brands (UMVIN) warned that new fiscal burdens could cripple a sector already “at the edge of viability.”
Among the proposals under consideration were:
- An unlimited annual increase in alcohol excise taxes.
- The extension of social security contributions to all alcoholic beverages.
- A 3% tax on advertising expenditures related to alcohol.
- The creation of a minimum retail price of €0.60 per centiliter of pure alcohol.
- A specific tax on premixed drinks (the only measure adopted).
While public health advocates, including France Addictions, supported these measures as tools to curb excessive drinking—particularly among young people—industry voices argued that they would deliver little public health benefit while imposing disproportionate economic damage.
“A bottle of 40% ABV spirit sold for 18 euros in a supermarket is already taxed at 72%, meaning over 13 euros go directly to the state,”
explained Jean-Pierre Cointreau, President of the Maison des Vins & Spiritueux.
Guillaume Girard-Reydet of the FFVA added that France already ranks among Europe’s highest-taxed alcohol markets, yet consumption trends show no significant improvement. He cited examples from Scotland, Portugal, and Belgium, where similar measures failed to reduce harmful consumption but instead weakened hospitality businesses and spurred cross-border purchases.
Economic Strain Across the Wine and Spirits Chain
The French wine and spirits industry faces one of its most difficult periods in decades. Domestic consumption has fallen by 60% over the past 60 years and continues to decline by 4–5% annually. Exports—long the cornerstone of French viticulture and distillation—are also showing weakness.
Through August 2025, exports recorded a 5% drop in value and a 3% drop in volume compared with the previous year. The fall has been especially severe in key markets:
- China: sales have halved in one year, hitting Cognac and Armagnac producers hard.
- United States: exports are down 50%, exacerbated by currency fluctuations and trade uncertainties.
Gabriel Picard of the FEVS warned that the sector’s dependence on exports—France’s third-largest trade surplus contributor—makes it particularly vulnerable to both fiscal policy shifts and international tensions.
Broader Fiscal Concerns: The Digital Tax Risk
Beyond alcohol-specific measures, industry groups are also concerned about the government’s plan to double the digital services tax (“GAFAM tax”) from 3% to 6%. The sector fears potential U.S. retaliation, as seen in past trade disputes when Washington responded to French digital tax initiatives with tariffs targeting French wines and spirits.
During a meeting with Agriculture Minister Annie Genevard, industry leaders urged the government to reconsider the digital tax, warning that it could reignite trade conflicts and further harm exports.
“Instead of risking retaliation from our largest trading partner, we should focus on strengthening European technology and protecting our agricultural exports,” one participant noted.
Mounting Costs and Business Closures
Even without new taxes, producers are battling inflationary costs and weaker margins.
- The price of glass has increased by over 50% since the pandemic.
- Raw materials and energy prices remain high.
- Distributors continue to pressure producers for lower prices despite rising expenses.
According to FFVA data, approximately 25 hospitality establishments close every day in France. The wine and spirits value chain sustains over 600,000 direct and indirect jobs, and any further fiscal tightening could jeopardize thousands of livelihoods.
Premixes: The Only Targeted Measure
The only measure approved concerns premixed drinks—alcoholic beverages blended with energy drinks such as caffeine or taurine. With alcohol content ranging between 18% and 22%, these products are often inexpensive and popular among younger consumers.
Health authorities and producers alike acknowledge the potential public health risks posed by these drinks. The French Federation of Spirits nonetheless emphasized that while it understands the reasoning behind the premix tax, other measures such as advertising taxes or minimum pricing would have negligible health effects but significant economic downsides.
A Temporary Reprieve, Not a Resolution
For now, the sector has escaped the worst-case scenario. But the debate highlights a deeper tension between public health policy and economic sustainability. The government’s decision to pause most tax initiatives provides short-term relief, yet the structural challenges facing France’s wine and spirits industry—falling demand, shrinking exports, and mounting costs—remain unresolved.
The next months will likely determine whether the sector can regain stability or if fiscal and market pressures will continue to erode one of France’s most emblematic industries.
Source: Vinetur