As the wine industry closes the books on 2024, the publication of the balance sheet of failures—safeguard court applications, recoveries, and liquidations—reveals a troubling trajectory.
Thierry Million, an expert in economic analysis, highlights the alarming data: 211 defaults were recorded in the French vineyard sector, marking a 55% increase compared to 2023 when 136 failures occurred. This sharp rise is significantly higher than the +17% insolvency increase across the broader French economy, underscoring the acute tension within the wine industry.
Regional Distribution of Failures
The geographic breakdown paints a stark picture of distress, particularly in certain regions:
- Nouvelle-Aquitaine: This region has seen a dramatic surge in failures, with 116 companies going under in 2024, an 84% increase from 2023. The Gironde department, home to Bordeaux, is particularly affected, accounting for 103 of these failures.
- Occitanie: Languedoc-Roussillon reported 39 defaults, a staggering 144% increase compared to 2023.
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Other Regions: While the overall numbers are smaller, the growth rates are concerning. For example:
- Burgundy doubled its failures, rising from 2 to 4.
- Poitou-Charentes saw a 150% increase, jumping from 4 to 10.
- Rhône-Alpes recorded a modest 8% increase, with 13 defaults compared to 12 in 2023.
The fourth quarter of 2024 underscores this worrying trend, with 62 defaults recorded nationwide, a 59% rise from the same period in 2023. Nouvelle-Aquitaine and Occitanie led this surge, with 35 and 19 failures, respectively.
The Role of Safeguards and Recoveries
Interestingly, the nature of these failures suggests that the industry is attempting to stave off the worst outcomes. Unlike the broader French economy, where two-thirds of defaults result in direct liquidation, the vineyard sector exhibits a higher rate of recovery and safeguard procedures. Of the 211 defaults in 2024:
- 47 companies underwent liquidation, a relatively modest 9% increase from 2023.
- 134 companies entered recovery after ceasing payments, a 65% jump from the previous year.
- 30 companies opted for safeguards, a dramatic 150% increase from 2023.
Safeguards represent an important mechanism within the industry. By proactively addressing financial distress, companies aim to freeze their debts, restructure, or find buyers, thereby preserving jobs and operations. While safeguards account for only 2% of economic procedures across France, they represent 14% of actions within the vineyard sector. This higher rate reflects the industry's awareness and utilization of this tool, despite its stigma.
Anticipation and the Road Ahead
The rising acceptance of safeguard applications suggests that the industry is beginning to view court protection as a viable management tool rather than a last resort. However, preparation is critical. Without a well-prepared application, companies risk failing to secure the debt freezes necessary to implement recovery plans.
Unfortunately, the outlook for 2025 appears grim. There are no signs of improvement in any wine-producing region. Insolvencies remain at historically high levels, and the distress in Occitanie—which recorded 19 failures in the fourth quarter alone, a 217% increase from the previous year—is particularly troubling. The sector faces significant structural challenges, including oversupply, declining exports, inflationary pressures, and shifting consumer behaviors.
Source: Vitisphere