A year ago, UMP party deputies Philippe-Armand Martin and Gerard Voisin suggested teaching wine appreciation in French schools to help the nation's ailing vineyards, in the light of increasing evidence that young French people are turned off by the traditional drinks of their parents.

Per capita wine consumption had, after all, famously dropped dramatically from what it was in 1970, standing at some 55 litres per capita in 2005 compared with 160 litres previously. This meant the French domestic drinks market had been shrinking at the same time as the export market was suffering from increased competition from the New World, an effect felt most acutely from the early 1990s onwards. It had also been suffering from particularly restrictive legislation (Loi Evin, or the Evin Law) aimed primarily at reducing alcohol consumption by carefully controlling advertising practises.

But after a number of difficult years, things seem to be looking up, at least in pockets of the industry. In 2004, the total volume of wine produced in France was 5,850 million litres and the country remained the largest exporter of wine by volume with an 18.5 per cent share of the world wine market. In the same year, France was also the number one exporter by value with a 35.1 per cent share of the world wine market and total exports valued at US$6.8 billion. Last year, the largest drinks company in France, Pernod Ricard, had total sales of €6,443 million (US$8.7 billion), while the largest wine company, Castel Frères, reported sales of €920 million in 2006.

The Fédération des Exportateurs de Vins et Spiritueux de France (FEVS) is a trade association representing the interests of 550 wine and spirit-producing and exporting companies from France. The latest FEVS figures show the value of French wine and spirits exports totalled €4.16 billion (US$5.6 billion) in the first half of the year, an increase of 7.5 per cent on the corresponding period in 2006, with sparkling wine up 13 per cent. As French wine exports had fallen 11 per cent between 2002 and 2005, this was very welcome news. In the year up to July 2007, total wine exports were valued at around US$6.35 billion, climbing back up towards the 2004 figure.

Even in the home market, while the French are drinking less they are at least drinking better. In terms of volume sales, the off-trade accounts for the bulk of alcoholic drink sales, taking around two-thirds of sales during 2004 (and 70 per cent of that in supermarkets). In value however, two-thirds goes to the on-trade. Across all sectors, the move towards premium products is now well-established, although pressure on prices in supermarkets, combined with fewer people going out to drink in restaurants, mean that market value hasn't risen significantly overall. In terms of categories other than wine, the major changes in recent years have come from ready-to-drinks, which demonstrated steady growth both in volume and value, moving from 57,793.5 litres in 2001 to 63,519.5 litres in 2007 (source: Euromonitor).

The French are not averse to drinking beer, especially in the north west and north east. Annual beer consumption in 2005 stood at 20 million hectolitres (just slightly over production figures), or 38.6 litres per capita, with this figure showing a slight decline since 2001. As with wine, drinkers are showing a tendency to choose quality over quantity, but while there is a small rise in the opening of independent microbreweries, Kronenbourg and Heineken still control about 75 per cent of the French beer market. Imports perform much better in beer than in wine, accounting for around 25 per cent overall.

Cider also has a fairly stable market , not seeing the same double-digit growth as in the UK - with sales in supermarkets and hypermarkets remaining stable or losing slightly in most categories, from dry to sweet - but overall consumption rising from 99,980 litres in 2001 to 104,921 litres in 2006 (source: Euromonitor).

One bright spot in the drinks market is Cognac. According to the BNIC (Bureau National Interprofessionel du Cognac), five bottles of Cognac are sold somewhere in the world every second. From May 1 2006 until April 30 2007, Cognac shipments grew by just under 10 per cent, continuing five consecutive years of growth. The increase in shipments applies to all categories (VS, VSOP, XO) and to all markets. Cognac now sells 157 million bottles, a year, putting it at the top of international consumption tables for quality eaux-de-vie. With almost 95 per cent exported, Cognac currently represents some €1.5 billion in France's balance of trade figures - an increase of 10.5 per cent in one year. Armagnac has also seen a rise in export value of 29.3 per cent over the past year.

Champagne, of course, stands alone as a French success story and should perhaps largely be seen as a luxury goods product. The region's biggest, if not only, problem is being unable to fulfil demand - a situation which is set to get worse in the coming years as the lack of potential new vineyard areas persists. Figures for May 2007 show sales up again 7 per cent in France and 8.1 per cent in export, according to CIVC , up 99 million bottles from the same period in 2006.

But France is best associated with still wine - and it is wine producers who have been suffering the most in terms of declining sales. But intense marketing efforts and genuine attempts to balance supply and demand through uprooting vines and distilling excess wine have led to improvements. Still wines overall, in the first six months of 2007, saw a rise of 1.3 per cent in volume exports and 4 per cent in value.

Philippe Castéja, president of the FEVS , is clear about the challenges. "Global wine consumption is growing every year, even while we're losing drinkers in France, and that gives me hope for the future," he says. "But I am also aware of the problems we face. For example, I'm fighting in the EU for action to help lower the import taxes that India places on wines that can go up to 500 per cent."

As in the rest of the world, rosé wines are up in volume in France, selling 200.8 million litres in 2006 (+7.5 per cent, source: Rayon Boissons) in hypermarkets and supermarkets. In terms of wine regions, Burgundy exports have risen more than 20 per cent in value over the past six months (and 6.8 per cent in volume), and Bordeaux has managed to stem four years of declining sales, showing a 2.2 per cent rise in volume although still dipping slightly in export value.

Imports of overseas wines to the domestic market remain a tiny 2 per cent of the overall picture (and that figure has remained constant for 10 years), and the ones that make it over the border are still given poor exposure on supermarket shelves.

Yvon Mau, however - one of France's largest brand-led négociants and a subsidiary of Spanish giant Freixenet - is planning a marketing drive to improve the image of imports. Its overseas range, known as Flying Vintners, distributes Constellation Brands wines alongside Freixenet wines, including names such as Paul Masson (US), Trapiche (Argentina), Barramundi (Australia) and Kumala (South Africa).

"There has been an increase in international wines in the on-trade," says Christian Herbeth, of Flying Vintners, "with their positioning on wine lists becoming more prominent, and this is starting to follow in supermarkets also. But sales are centred around brands - the leading wines of Australia, Spain and so on; it's difficult to round out a range and to place more unusual grape varieties or smaller producers. However, we have good quality references on our list. There are too many wines coming into France that are low priced and not good quality, so if the French decide to try an overseas wine, they often don't get a good experience. We try to break with that tradition, going above €5 in our range and ensuring quality bottles." The strategy appears to be working, with Flying Vintners seeing a 10 per cent rise in sales over the past year, now up to 1 million bottles per year, excluding cava.

Overall the drinks market in France looks set to continue to be one of the world's leading consumer markets. The French have the enormous advantage of being indelibly associated in the minds of consumers around the world with food and drink - the Washington Post recently ran an article looking at how the success of Hollywood film Ratatouille, set in Paris, had reminded the French of the strength of their own gastronomic image.

The continuing ability to pull out of a difficult slump, however, depends largely on individual producers looking not to the EU or the government to help with their supply and demand issues, but to adapt to a modern marketplace, and to modern consumers who have plenty of other options for their drinking dollars.