[Knobbly] It's a system the French use for wines which ensures that only wine made in a particular place (or in a particular way) can bear a particular name. The most famous example is Champagne.
[Tuj] I would automatically say Toozh, although there's a vague sense in my head that it could be a to-eye (but not quite like that, sort of using the Russian "bI" sound, where the "j" implies palatisation.