Paris
CNN
 — 

The French government and the European Union will spend 200 million euros ($215 million) to help the country’s wine producers, who are struggling to cope with falling prices and waning demand.

The French Ministry of Agriculture had initially allocated 160 million euros ($173 million) for the crisis program allowing certain growers to sell excess stock to distillers, who then turn it into other alcoholic products like hand sanitizer.

High demand for the voluntary buyback program, which was announced in June, prompted authorities to stretch its budget to $200 million, the Agriculture Ministry said in a statement Friday.

France was, as of 2020, the world’s second-biggest wine producer and its biggest wine exporter. But the industry has taken a hit since the Covid-19 pandemic due to inflation and changing consumption patterns. Increasingly poor harvests due to climate change also threaten the future of French vineyards.

A good harvest last year combined with the waning demand created a glut across Europe, the EU said. As of June, production this year was estimated at about 4% – higher than usual – but consumption is down about 7% in Italy, 10% in Spain, 15% in France, 22% in Germany and 34% in Portugal. EU wine exports from January to April this year are also 8.5% lower than last.

“This market context is translating into sales difficulties for EU wine growers and producers, reduction of market prices and consequently, a serious loss of income especially in certain regions mostly hit by these trends,” the EU said in a statement in June.

The EU said across the bloc, the most affected wines are reds and rosés produced in certain parts of France, Spain and Portugal.

The French government is also encouraging wine growers to look to alternative crops to cope with climate change and changing market forces. The agriculture ministry also announced a plan to pay up to 6,000 euros ($6,500) per hectare (2.5 acres) to help growers safely uproot vines.