Falling demand are pushing wineries into the red according to the International Organization for Vine and Wine.

The French wine industry is grappling with the opposite problem – an overabundance of wine.

According to OIV data, France is on track to overtake Italy as the world’s biggest producer this year, up from second place in 2022. Weather conditions were more favorable this year, which allowed the country to maintain the same level of production as last year.

Nevertheless, prices have fallen as a result of burgeoning supplies of wine in France and abroad, outpacing waning demand.

French and European Union authorities announced this summer a joint buyback scheme worth €200 million ($217 million) to allow winemakers to sell their excess stock to distilleries for recycling into other alcoholic products.

Falling prices have coincided with rising input costs.

In the past two years, soaring inflation and historically high energy prices have driven up the costs of fertilizer, bottles, and transportation fuel. With higher interest rates, winemakers’ already narrow profit margins have all but disappeared as borrowing to invest has become more expensive.

Winemakers in France who are having trouble selling their own product have vented their anger at imports from Spain. There were hundreds of them on a major cross-border highway last month, storming trucks transporting Spanish wine into France. Gallons of imported wine were dumped into the street by protestors who smashed crates.

In an explanation of the demonstration, organizer Frédéric Rouanet said Spain makes many low-priced wines, and the message to merchants was clear: “To get cheap wine from Spain, you’ll have to buy our wine first.”

Rouanet, who runs an association of winemakers in Aude in France, says that the region’s wineries can’t survive otherwise.