I'm not defending bailouts of winemakers, but based on my knowledge of the industry, the government would simply be unable to sell the wine at market prices. They would probably need to be sold at a loss.

France has been over-producing low-quality wine for a long time, mostly in the south as referenced in the article. These bottles normally sell for 2-5 euros at retail within Europe. There is a massive amount of competition at this price point.

Also not mentioned in the article is that French wine is falling out of favor in lower price categories. Spanish and Portugese wines are growing in popularity as are so-called "natural" wines.