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European Union Agrees to Wine Industry Reform

Watered-down plan aimed at lowering overall production but giving quality—and marketing—a boost

Mitch Frank
Posted: December 20, 2007

What do you call 400,000 acres of uprooted vines? A good start, according to the European Union. Agriculture ministers from the E.U.'s member states came to an agreement on Wednesday to reform the continent's wine industry after more than a year of painful negotiations. In the end, E.U. Agriculture Commissioner Marian Fischer Boel had to water down her aggressive 2006 reform proposal, which called for an immediate end to distillation subsidies and a much grander vine-pull scheme. But Fischer Boel thinks the agreement will help get the European wine industry back on track and more able to compete with New World wine-producing countries.

"She is very happy with the agreement," said Michael Mann, spokesman for the E.U.'s Agriculture and Rural Development department. "We didn't get everything we wanted, but we believe this definitely moves things in the right direction and gives member states the tools to make their wine producers more competitive."

Fischer Boel introduced the plan in 2006 to help end Europe's chronic overproduction of wine and encourage more innovative marketing. E.U. nations produce 60 percent of the world's wine, according to the Agriculture Commission, but consumption is declining across the continent, and New World producers such as Australia and Chile have grabbed a growing share of the global market with quality, low-priced wines. Last year the E.U. spent almost $2 billion distilling excess wine into industrial alcohol. If current trends continue, the commission predicts that, by 2010, 15 percent of European wine will be surplus, and the continent will import more wine than it exports.

While most of Fischer Boel's plans will be enacted, the timeline has been stretched out to help producers adjust. More than 70 percent of European vineyards are less than 12 acres, according to COPA-Cogeca, an alliance of European farmers' unions, and many of those small growers may go out of business if they cannot improve quality or marketing.

The EU will sponsor a three-year program to help small growers retire and pull out 400,000 acres of unneeded vines, but that's down from a proposed 1 million acres. Instead of ending distillation subsidies, the E.U. will phase them out by 2013. Countries will be able to use the money that would have gone to distillation for marketing instead. Chaptalization, the adding of sugar to unfermented grape must, which the commissioner had proposed banning, will still be permitted since it's a standard winemaking practice in Northern Europe. A current ban on new plantings will be phased out also (for some nations by 2015 and for others by 2018), the idea being that once the production surplus has disappeared, successful regions that have proven themselves able to sell more wine will have the option to plant more vines.

"In the short term, production will decrease, but when the planting restrictions go, there is no reason why production of quality wine should not expand," said Mann. "The European wine sector will be more competitive, of generally higher quality and be more able to respond to consumers' tastes."

The question remains, however, if the slow pace of reforms in the final agreement means the rest of the world will leave Europe's lower cost wines in the dust while the changes are being implemented.

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