Grape-based alcohol would have to be distilled before being dehydrated and turned into pure alcohol ready to be added to conventional fuel.

"We are now starting to look into it, but it is mainly the economics of such a green fuel that we are studying," Eric Bontemps, head of research at the cooperative wine institute ICV, told Reuters.

The alcohol yield from grapes was seven times lower than for sugar beet, Bontemps noted.

France produces 200,000 tonnes of ethanol a year, the third largest European output after Spain and Poland, largely from sugar beet or cereals.

"With an annual output surplus of 400 million litres, we could produce 40 million litres of alcohol to be potentially used in biofuels," Bontemps said.

"But with some research I think we should be able to increase the amount of alcohol which vines can produce, through distilling techniques for example," he added. "It could be worthwhile for struggling wine makers to do that as an additional income," Bontemps said.

Roland Courteau, Senator for the southwest region of Aude and a champion of the wine industry, last week urged France's Agriculture Minister Dominique Bussereau to help the wine industry diversify.

"Regarding the use of wine surplus in biofuels, I consider this is a good idea," Bussereau said, adding that wine marc and dregs were already used to produce ethanol. Courteau said the minister agreed to set up a working group from December to study yields and types of vines. Other countries were making similar research, he added.

STRUGGLING WINE MAKERS

"French wine growers have been in a deep crisis over the last five years when consumption in France stabilised and exports started to drop," a spokeswoman at Onivins said.

Consumption in France averages 3.5 billion litres, exports 1.5 billion litres and around 0.4 billion litres are distilled to produce brandy, she said, adding that France did not have outlets for more than 5.5 billion litres.

"And because the 2004 harvest was at 5.8 billion litres we now have a stock of 4 billion litres which is a level we had never reached in the last 10 years.

"This year we had to distill 150 million litres including Bordeaux and Cotes du Rhone wines to lighten the market," she added.

Bontemps said the sector had to react. "There is no reason why sales should increase so we have to find other solutions."

Courteau said the crisis was such that vintners were contemplating ripping out vines, but he did not want to see vineyards turned into wasteland.