Officials Say Less is More in the Future of European Union Wine Industry

Apparently there can be too much of a good thing, and this much is true for European wine producers. In a July 5 Morning Edition story, National Public Radio reported that the European Union (EU) is undertaking a new plan to boost the struggling European wine industry by decreasing capacity and increasing quality.
Agricultural officials in the European Union are concerned that overproduction and fiscal irresponsibility is contributing to a stagnating European wine industry. According to the NPR report, EU Agriculture Commissioner Mariann Fischer Boel said the while the new regulations may create initial financial hardships for some wine producers, "the cost of doing nothing is far worse." The proposal was adopted July 4, 2007 and all reforms go into effect August 2008, according to NPR.

All reforms have potential to stir a backlash; however, because winemaking is part of the European culture, the efforts are especially controversial among wine producers. People "tend not to get so passionate about fruits and vegetables" as one wine seller said to NPR.

Wine Sector Reform

Europe remains the world's largest producer and consumer of wine. However, the combination of competition from New World producers and internal regulations has created a wine surplus and quality issue for European vintners, according to NPR. The EU Commission is embarking on a new plan to restore the quality and position of European wines in the international arena.

According to official EU documents, the wine sector reform strives to "increase the competitiveness of EU producers, win back markets, balance supply and demand, simplify the rules, preserve the best traditions of EU wine production, reinforce the social fabric of rural areas and respect the environment." The reform will phase in over the course of five years.

A primary area of reform is in the area of market supports. As reported by NPR, the EU currently provides subsidies and assistance to wine producers to get rid of substandard wine for which there is no market in the estimated amount of half a billion Euros. This subsidy elimination aims to decrease the number of poor quality wines on the market by reducing the number of vintners in the first place. By the end of the reform, vintner acres will be reduced by up to 50,000 acres according to NPR. As the report stated, "quality wines will always do well but wine makers have to wake up to the new reality of the wine market."

Additionally, the reforms will address and streamline labeling rules. According to NPR, French winemakers claim to be affected by strict rules and complicated classification systems since wines are named after where the grape is grown (Geographic Indications, or GIs) and not by grape varietal. The reform will allow EU wines to indicate variety and vintage on the label to answer consumer demand for single variety wines.

Raise a Glass to the Future

According to EU records, wine production represented 5 percent of the agricultural output in 2006 and vineyards account for approximately 2 percent of its agricultural area. France, Spain and Italy comprise 80 percent of EU wine area and provide 1.4 million wine related jobs. Needless to say, wine is an ingrained and critical part of European life.

The 10 percent increase of imports from New World wine countries like Australia, Chile, South Africa, and the United States in recent years has greatly affected the European market share. Combined with declining European and worldwide wine consumption, the EU wine sector reforms strive to restore wine prices and farm income by raising the overall quality.

For wine lovers everywhere, better wine is definitely a reason to toast but the effectiveness of the reform remains to be seen.

Sources:

NPR, EU wine industry must shrink to compete

EU Agriculture and Rural Development