EU uncorks plan to curb wine flood

$2.5 billion to be paid to take European vineyards out of production

The European Union proposed a radical overhaul of the continent's cherished wine sector Thursday, a move meant to ensure the survival of vintners hit hard in recent years by growing competition from Chile, the U.S., South Africa and others.

The reforms are "urgently needed" to win back consumers and to preserve centuries-old traditions and Europe's reputation, in the world's largest and oldest wine producing region and elsewhere, said EU Agriculture Commissioner Mariann Fischer Boel, who drafted the measures.
She said billions of euros in new aid would be made available to salvage the wine sector.

"Despite our history and the quality of so many EU wines, the sector faces severe problems," Fischer Boel told reporters. "Consumption is down, and experts from the New World are making huge inroads into the market."

She said EU governments had to realize that decades-old practices of generous subsidies had made wine producers complacent and out of touch with current trends and were flooding the market with too much wine no one wants to buy.

"We spend far too much money disposing of surpluses instead of building our quality and competitiveness," Fischer Boel said, adding while the reform would not cut such aid, it would "use this money more intelligently."

"Exports from our main competitors have simply exploded," she said, adding that European wineries had failed to attract young drinkers.

The plan aims to restore the appeal of European wines and calls for the production of low-quality wines to be cut by paying winemakers around 2 billion euros ($2.5 billion) over the next five years to take 400,000 hectares (988,400 acres) of vineyards out of production.
Subsidies would be used to encourage unproductive farmers to get out of the business.

The EU plan also ends restrictive and often confusing labeling rules for wines and wine making practices to make it simpler for consumers to see what they are buying.
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The plan allows winemakers to put on their label a wine's grapes, similar to "New World" wine products. The plan also does away with national quality wine making practices, replacing different systems with two classes of wine: wine with Geographical Indication and wine without GI.

Fischer Boel decided earlier this month to distill hundreds of millions of bottles of Italian and French wine into industrial alcohol or bio fuel to prevent excess supply from bringing down prices. The move will cost the EU budget 131 million euros ($168 million).

She warned that the distillation plan offers only short-term relief to producers, who she said must accept that current practices are outdated and need to be changed to compete with New World wine producers.

The EU said if the sector remains unchanged, Europe would become a net importer of wine. It said imports have grown by 10 percent per year, while exports are slowing down.

The plan still needs approval from EU governments and the European Parliament before the reforms can be implemented. EU officials hope to have the reforms in place for the 2008 wine growing season.