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The reforms are aimed to drain the European wine lake
and help its industry regain the market share it has lost to the new world
producers like Australia, Argentina and Chile by revamping the wine industry.
Changes include tearing up excess vineyards producing
cheap wine and control the chronic problem of excess production, simplifying
the intricate labeling procedures, and aggressively marketing to consumers
around the world instead of relying on age-old reputations.
Europe will now promote more single-grape varietal wines
like Shiraz, Merlot or Sauvignon Blanc, the way the New World has been
doing over the last couple of decades. Instead of pasting intricate labels
designating small vineyards and using old wine making techniques, simplified
methods will be deployed.
EU will no longer prop up money-losing wine initiatives
as in the past. Distillation of excess supplies will be phased out over
four years, though by-products such as pips and skins will be collected
for environmental reasons. Restrictions on where vines can be planted
will be abolished at the end of 2015, with a three-year extension for
countries that so desire.
Up to 175,000 hA of the 3.4m hA of vines in the EU could
be pulled up under a voluntary scheme of compensation for producers. This
is about 5% of the existing vines. European Commission had proposed uprooting
of 400,000 hA.
Some controversial reforms were rejected. On Germany's
insistence, the proposal to ban on using sugar to aid fermentation and
increase the alcohol level was rejected. The compromise reached will allow
wine-makers in cold regions to continue to add sugar, but with a limit
on how much sugar can be added. Further, the restriction can be relaxed
if crops suffer a particularly serious shortage of sun in a vintage.
The shake-up also calls for costly subsidies for distilling
surplus wine to be gradually diverted to marketing blitzes in countries
outside EU.
France now feels Europe has blended the best of both
worlds. Its unparalleled Bordeaux and Burgundies will be largely unaffected
by the changes while new funds will be available to modernize the inefficient
wineries. France will get $400 million annually in European funds.
"The Commission's proposal was too liberal, it wanted
to dismantle planting rights in 2013, but I didn't accept it," said
French Agriculture Minister Michel Barnier, who described the final agreement
as positive." With this new joint framework, we are going to be able
to keep our differences and modernise at the same time," he told
journalists.
In this decision, there are ways for all our vineyards
to modernize and set forth to re-conquer the world, he felt. France has
suffered chronic overproduction, which led the distillation of even fine
wines, to avoid further market saturation.
The country synonymous with great wine has been plagued
by declining consumption at home for more than a decade and wine drinkers
abroad have since discovered quality wines in non traditional regions
in Australia, Chile and even the USA.
Wines from these New World countries outpaced French
exports for the first time in 2003.
France has objected for years to a number of important
changes, but finally agreed to the proposals after three days of talks
when an agreement was reached to extend the transition period and some
leeway was given to the member countries to continue getting the state
support.
Boel satisfied
EU Agriculture Commissioner Mariann Fischer Boel voiced
satisfaction that the ministers had hammered out a well-balanced compromise.
"We didn't get everything we wanted, but we have ended up with a
well-balanced agreement," Mariann added.
"Instead of spending much of our budget getting
rid of unwanted surpluses, we can now concentrate on taking on our competitors
and winning back market share," she said.
Boel also insisted on eliminating most of the $720 million
in funding used to dispose of unwanted wine, spending it instead on helping
to produce quality wines.
"We have been losing markets. This is why we have
to get rid of the old-fashioned market tools to free money for promotion,
especially when we look eastward," she said. "There is an emerging
market, for example in China and India," she said, nosing the lucrative
market of more than 2.3 billion inhabitants in these two countries alone.
She said that high-quality producers could fend for themselves
but new labeling laws would help the middle market. All producers will
be able to state the grape variety and vintage on the bottle rather than
simply the area of origin.
In another compromise, ambitious plans to let profitable
wine producers expand their holdings at will to compete with New World
multinationals were approved, but not before 2015 at the earliest.
Subhash Arora
December 20, 2007
Incidentally, EU agriculture ministers also put an
end to the so-called "vodka war". Following a ministerial vote
earlier, producers using grapes, and not just traditional grain or potatoes,
to make the spirit will be entitled to label it as vodka.
This will be a cause for celebration among companies such as Diageo,
which produces grape-based Ciroc, after the EU threatened to limit the
spirit's ingredients to traditional raw materials such as cereals or potatoes.
From now on, vodka producers will be allowed to use non-traditional
ingredients as long as they are mentioned on the label, while vodka made
from grains and potatoes will just be labelled "vodka".
Mariann Fischer Boel, Commissioner for Agriculture and Rural Development,
described the solution as a "pragmatic compromise". But the
decision has frustrated distillers of traditional vodka
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