Here's a dinner-party brainteaser: Name the world's largest wine exporter in the 1950s. France? Italy? Argentina? Australia? How about none of the above? You'd be on the wrong continent with any of those responses. It was Algeria.

For much of the past century, the North African country was a juggernaut, shipping more wine outside its borders than France, Italy and Spain combined.

Try to find an Algerian carignan or alicante today in your local liquor store, though, and you will almost certainly be out of luck. The country's output has dried up like a raisin. It's a boom-bust story chronicled in fascinating detail in a recent study by two Belgium-based economists, who say there's more to the tale than previously thought. Though a trivial player today, the Algerian industry left a potent legacy on global wine trade in the form of France's widely copied appellation laws, which were rooted in a movement that was designed to debase cheap African imports on the French market, the authors write.

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"People had written about the size and scope of the Algerian industry, but nobody thought about the institutional legacy and influence on French regulations," says Giulia Meloni, a researcher at the LICOS research centre at the University of Leuven near Brussels, who co-authored the study with centre director Jo Swinnen.

(A copy of the paper can be viewed at: wine-economics.org under "working papers.")

Algeria had been an inhospitable place for wine until its thirsty colonial settlers came along. Centuries of Muslim rule, combined with yeast-stifling heat that tended to stall fermentation, sealed its fate on the margins. That changed late in the 19th century, when French occupiers decided, against the local population's discomfort with alcohol, to make a serious go of it with the help of refrigeration technology.

What started as a cottage industry suddenly took on the imperative of a state emergency. Disaster had struck in France in the 1860s as the phylloxera root pest began ravaging vineyards. Domestic production plummeted, leaving a whole lot of coq in search of vin. To fill the void, imports, mainly from Italy and Spain, began pouring in, leaping tenfold in a 10-year period between the late 1860s and late 1870s. Then France turned to its more arid, but much more cost-effective, colonial conquest.

From 1871 to 1900, the authors write, 50,000 families, many former wine growers, fled to Algeria, occupying 700,000 hectares. They helped turn the vast country into a satellite farm for French tables, shipping back virtually all their (mostly cheap, high-strength) wine, which at one point represented almost a third of Algeria's gross domestic product and half its export revenues. Every bottle, jug and tank landed tariff-free because Algeria was treated as part of France.

In the meantime, French vineyards began to recover, aided by the discovery that high-quality European vines could be grafted onto roots of inferior – but phylloxera-resistant – North American varieties. A glut was nigh. Suddenly, posters in Paris advertising inexpensive Algerian product as "vin français" left a bad taste in French producers' mouths.

In 1905, responding to protests, notably from producers in Bordeaux, Burgundy and Champagne, the French government began to enact a series of laws designed to distinguish "natural" wine from that sold using "frauds and falsifications." Regional boundaries, until then a loosey-goosey affair, were drawn up, and restrictions were placed on permissible grape varieties and methods of viticulture for each region. (Never mind that a lot of Algerian juice had been surreptitiously used to pump up anemic bottles of Bordeaux and Burgundy.) The statutes were ultimately roped into a comprehensive 1935 law that formed the basis of the now-hallowed appellations d'origine contrôlées, or AOC, after which Canada's VQA system, among others, is modelled.

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AOC laws may have protected the vaunted status of Bordeaux and Burgundy (even if the wines didn't always taste better than Algerian plonk), but they did little to appease irate producers of cheap jug wine in the vast Languedoc region, who were competing head-on with Algeria for the bottom of the market. Rather than impose tariffs on Algerian imports – deemed politically unpalatable for a colony of Mother France – the government came up with another brainstorm: Tax overproductive vineyards across France (including Algeria) and force large-scale producers to uproot their vines or distill excess juice into high-spirit alcohol.

As Meloni notes, that move – which, not coincidentally, hurt Algeria's generally larger farms more than those in the Languedoc – bears an eerie resemblance to current EU policies aimed at curbing oversupply across Europe.

Despite the protective market measures and the temporary devastation of the Second World War, Meloni says, Algeria still ranked as the world's fourth-largest producer in 1961. Algeria's fate as a footnote in the wine books wasn't sealed until a year later, after France pull the political plug altogether, retreating from the colony in a sea of blood. The country soon nationalized the wine sector and proceeded to mismanage it in fine public-sector fashion as France – finally – began to severely restrict imports. Algerian production dropped from 15 million hectolitres in 1962, the year of independence, to about 600,000 hectolitres in 2009 – roughly the same volume Algeria produced in 1882.

The country may be yesterday's wine news, but Algeria's legacy of appellation laws and artificial supply-control mechanisms continues to stigmatize and marginalize supposedly "unnatural" vin ordinaire that doesn't enjoy the benefit of hoity-toity appellations such as "Bordeaux" or "Burgundy."

One can see the ripples around the world today. Successful exporters such as Australia, South Africa and Chile, which stormed onto the scene with bargain table wines in the 1990s, are now struggling to shed the vin ordinaire stigma by promoting higher-priced – and higher-profit – offerings designated with regional appellations that mirror the premier cru and grand cru hierarchy of France. To compete in the fine-wine game, you've got to brand your land.