Solvency and Performance of French Wineries in Times of Declining Sales: Co-operatives and Corporations

Abstract

The paper assesses the ability of French wineries to prevail over the crisis of French wine in the years 2000. Corporations are distinguished from co-operatives: Over the 2000-2006 period in spite of sales fluctuations, French wineries did not increase their financial debt level substantially. Such result supports the traditional static trade-off theory (TOT). Co-operatives were able to absorb part of the impact of the wine crisis at the expense of their members, in increasing account payables to member. Corporations have not increased trade account payables to vine growers. In the mid-2000s, the French wine crisis has not been strong enough to shake the financial structure of co-operatives and corporations. But co-operatives look more affected. However, sales of French wines dropped a lot more in 2009 and financial data are not yet available to observe the consequences.