On Wednesday July 4, after more than a year's discussion, the European Commission officially set out proposals for reform of the Common Market Organisation for wine. The aim is to increase the competitiveness of EU producers, and win back markets which are increasingly under competitive pressure from "new world" wine producers such as Australia, South Africa, and the Americas. In 2006, European wine production represented 5 percent of the value of EU agricultural output and around two thirds of global wine production but consumption has been declining leaving Europe with a "lake" of surplus wine. The EU spends around half a billion euro every year on getting rid of this left-over wine, often pouring it into expensive distillation schemes to turn it into industrial alcohol.

"We currently waste too much money, over one third of our budget, getting rid of surplus wine instead of improving our competitiveness and promoting our wines," said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development. Under the reforms, the Commission will launch a promotion campaign, concentrating in particular on third country markets, as well as putting an end to inefficient market management measures such as crisis distillation, support for by-product distillation, private storage aid, and export refunds.

Planting restrictions for vineyards are to be put in place for five years, during which time the EU will offer producers the financial support to leave the sector voluntarily under the grubbing-up scheme. Growers will receive €7,174 per hectare during the first year of the scheme which hopes to reduce the area of land under vine by 200,000 hectares in total. The restrictions will come to an end following this transitional period and from 2014 competitive wine producers will have the opportunity to expand.

The use of sugar to sweeten or enrich wine will also be banned from day one. Instead, producers are encouraged to use unfermented grape juice, thus helping reduce the excess.

The next five years looks to be a tricky time for the European wine sector. Reform proposals in the past have met with opposition from the governments of Europe's biggest wine-producing countries. Downsizing means unemployment for many in the agricultural industry as well as in Europe's numerous distilleries. However, the current situation is unsustainable with wine imports increasing by 10 per cent every year and the continent practically drowning in its own unsold wine. "I am convinced my proposal will reinvigorate the European wine sector and allow us to take our rightful place as the world's biggest and best," said Commissioner Fischer Boel.

Francesca Cookney
06 July 2007

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