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European Union Proposes Destroying 1 Million Acres of Vineyards

To deal with Europe's wine glut, commission plans radical reforms to reduce production and increase sales

Mitch Frank
Posted: August 8, 2006

Faced with a chronic oversupply of wine, currently at 750 million bottles a year, the European Union's Agriculture Commission has proposed that growers tear out more than 1 million acres of vines over the next five years. The vine removal is just part of a dramatic plan crafted by commissioner Mariann Fischer Boel to reform Europe's wine industry.

"The time has come to stop simply reliving the symptoms of our problem year after year. The time has come to find a cure," Fischer Boel, a Dane, told the European Parliament when she unveiled the plan in Brussels on June 22. "We are producing too much wine for which there is no market."

But winegrowers in several of Europe's largest winegrowing countries are not happy with the plan. Within 24 hours, France's agriculture minister, Dominique Bussereau, released a statement calling it unacceptable. "Pulling up vines is one possible solution, and could work in certain regions to respond to local problems, but it should not be the core principle of the EU's wine policy," he said. "What we should be concentrating on is supporting the sale and marketing of wine instead."

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 market. 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.

France, Italy and Spain are the continent's biggest producers, and the loudest opponents of the plan, so far. French vignerons in particular are suffering severe economic pain. Many are leaving the business for good. Last year, Bussereau appointed his own panel that has recommended reforms for French wine production, but on a smaller scale than Fischer Boel's plan.

For years now, the EU's answer for the glut was to pay producers to distill excess wine into industrial alcohol, usually ethanol. In June, the commission approved a new round of distillation for 150 million gallons of wine from France and Italy, and millions more gallons from Spain and Greece. But the program has been a failure--supplies are still so large that small, low-end producers in large regions such as Bordeaux and Languedoc are forced to sell their wine below cost. Fischer Boel's plan calls for an end to crisis distillation, arguing that it has become a regular program not reserved for crises.

While most French vignerons are unhappy with the E.U.'s proposal, they admit that the crisis is severe and solutions have been delayed too long. "We are in autumn," said Nicolas Joly, who owns Coulée de Serrant in the Loire Valley. "To find a new spring, we need to experience a bad winter. We deserve it."

To help increase sales, Fischer Boel proposes simplifying the classifications on wine labels, creating two categories--wines with a specific geographic origin, and wines without. This is a simplification of the current designations of "quality wine" and "table wine." Each country is still free to impose stricter classification systems. Wines without a specific geographic origin could be blends from more than one country, which is currently allowed with table wines. Labels would be redesigned to comply with the standards of the International Organization of the Vine and Wine (OIV), meaning many more would list grape varieties, which would make it easier for wine drinkers to understand what they are buying.

In addition, much of the $1.6 billion the commission was spending annually on crisis distillation and to support the industry would be redistributed to national governments to help them develop more focused marketing campaigns for their wines.

But critics of the plan complain that marketing efforts get short shrift compared to vine uprooting. "The systematic pulling up of the vines proposed by Europe will not work," said Pierre-Henry Gagey, president of Burgundy's Maison Louis Jadot. "On the contrary--we will overcome this crisis by traveling, exporting, listening to our customers and producing the wines they want to drink." Several national governments have previously offered their own loans for vine removal, but not enough growers have taken advantage to reduce production significantly. And growers in the larger production countries seem far more interested in EU help to increase demand in new overseas markets than in help reducing supply. Many complain that Australia and Chile will simply produce more wine to take advantage of any decrease in European wine.

Fischer Boel's proposal faces a long debate. The first parliament session discussing the idea on July 18 showed how vocal the opposition will be. French and Spanish representatives both denounced the plan to uproot vineyards--the Spanish claimed it could lead to deserts in wine regions--and called for a continuation of distillation. The French delegation argued that Fischer Boel should devote her efforts to marketing plans.

Smaller wine-producing nations like Slovenia, which don't receive most of the subsidies, support the plan. Non-producing nations Sweden and Denmark called for a complete end to subsidies for the industry. Little was accomplished, and further debate was postponed until September. EU spokesman John Benstead-Smith said the bill would be discussed for six months before being formally presented to the European Parliament in January 2007.

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