Wine Industry Avoids Fiscal Blow

After a weekend of debate in the National Assembly over the 2026 Social Security Financing Bill, France’s wine and spirits sector is expressing relief. The industry, supported by the Union of Hotel Trades and Industries (Umih), had raised alarms last week about what it called a “tax escalation” that could cripple an already struggling sector. The concerns centered on a series of proposed amendments, which industry leaders described as “alarming” and “disconnected from economic reality.” For now, most of those fears have not materialized. Only the amendment targeting the taxation of premixed alcoholic beverages was approved by lawmakers.

Nearly twenty proposals had been submitted as part of the bill. These included removing the cap on annual increases in alcohol excise taxes, extending social security contributions to all alcoholic drinks, imposing a 3 percent tax on alcohol advertising expenditures, setting a minimum sale price at €0.60 per centiliter of pure alcohol, and introducing a specific tax on so-called “premix” drinks. Many of these measures were backed by public health associations such as France Addictions, with the stated aim of strengthening health protections for young consumers. However, industry representatives argued that these proposals amounted to a pile-up of fiscal constraints without a comprehensive vision.

On Thursday, several key trade groups—including the Federation of Wine and Spirits Exporters (FEVS), the French Spirits Federation (FFS), the French Federation of Aperitif Wines (FFVA), and the Union of Wine Houses and Brands (UMVIN)—gathered at the Maison des Vins & Spiritueux to warn the public. Jean-Pierre Cointreau, president of the Maison des Vins & Spiritueux, criticized plans to index taxes to inflation, calling it an “automatic and mechanical increase totally disconnected from economic reality.” He pointed out that businesses are still recovering from years marked by soaring costs for energy, raw materials, rent, and wages. Even small price increases on bottles or glasses could mean the difference between survival and closure for many establishments.

Industry leaders also highlighted that a 40-proof bottle of spirits sold for €18 in supermarkets is already subject to 72 percent taxation—over €13 going directly to the state. Guillaume Girard-Reydet of FFVA noted that France is among Europe’s most heavily taxed countries for alcohol, yet such policies have not reduced harmful consumption. He cited examples from Scotland, Portugal, and Belgium where similar measures failed to lower consumption but weakened bars, hotels, restaurants, and encouraged cross-border shopping.

The debate comes at a time when economic conditions are especially challenging for the sector. Alcohol consumption in France has dropped by 60 percent over sixty years and continues to fall by 4 to 5 percent annually. Export markets—vital for the industry—have contracted sharply. By late August, exports were down 5 percent in value and 3 percent in volume year-on-year. Gabriel Picard of FEVS reported that business in China has halved within a year, mainly affecting cognac and armagnac sales. Revenue fell by €700 million from last year’s €2.3 billion total. Shipments to the United States have also dropped by 50 percent. These declines weigh heavily on an industry where more than half of revenue comes from international sales and which accounts for France’s third-largest trade surplus at €15 billion.

Industry representatives argue that strong domestic performance is essential for export success. They say they need support rather than constant fiscal pressure or restrictions on communication. Poorly designed tax decisions can have immediate consequences for competitiveness abroad.

Another source of concern is unrelated fiscal policy that could impact the sector: France’s digital services tax—known as the Gafam tax—is set to double from 3 percent to 6 percent with a lower threshold for application. While intended to target American tech giants, Gabriel Picard warned that it could provoke retaliation from Washington, with French wines and spirits likely among the first targets if trade tensions escalate again.

During a meeting with Agriculture Minister Annie Genevart, industry representatives outlined their concerns and asked her to persuade the Senate to reconsider the Gafam tax increase. They argue that no other country has taken such direct action against U.S.-based digital firms and risked similar confrontation.

The sector also faces mounting pressure from inflation and large retailers. Since Covid-19 began, glass costs have risen by more than 50 percent while prices for raw materials continue to climb. Retailers are pushing down prices even as production costs rise. According to Girard-Reydet, these combined effects are devastating: domestic consumption is falling, production costs are soaring, and about 25 hospitality businesses close every day in France.

Jean-Pierre Cointreau emphasized that wine and spirits support more than 600,000 jobs across nurseries, cooperages, glassmakers, logistics firms, wine shops, and restaurants. Weakening this sector would endanger an entire segment of local economies.

Professional organizations also criticized what they see as a cumulative approach in parliament—regular new budgetary attacks always justified as public health measures but with little evidence they reduce excessive drinking while directly impacting jobs and competitiveness. After years marked by unprecedented increases in energy costs, raw materials prices, wages, and rents, adding new taxes would push thousands of small businesses underwater.

Industry leaders also warned about unintended consequences from some proposals. Setting minimum prices for alcohol—as tried in Scotland or Belgium—has not proven effective at reducing excessive drinking. The FFS argued that a proposed 3 percent advertising tax would cost more to implement than it would generate in revenue while targeting an already tightly regulated sector under France’s Evin law.

However, industry groups did support taxing premixed alcoholic beverages—the only alcohol-related amendment passed last weekend. This measure targets energy drink-based alcoholic products like Vody—a mix of vodka with taurine-, sugar-, and caffeine-rich energy drinks—containing between 18 and 22 percent alcohol per 25cl can sold at around €3.50 (compared with competitors priced between €5–7). According to France Assos Santé, labeling these products as “energy drinks” rather than “spirits” when they exceed 15 percent alcohol content—and their high sugar content masking alcohol taste—makes them particularly attractive for binge drinking among young people.

As debate continues over fiscal policy affecting wine and spirits in France, industry leaders remain vigilant about future legislative developments that could further impact one of the country’s most iconic sectors.