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Home / Business

EU reforms crisis-ridden wine industry

20 Dec, 2007 04:00 PM4 mins to read

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EU vineyards seek to modernise and reconquer the world. Photo / Michael Cunningham

EU vineyards seek to modernise and reconquer the world. Photo / Michael Cunningham

KEY POINTS:

It's the Christmas season and wine merchant Willy Goorden's business has been brisk. But his customers don't keep up with tradition the way they once did.

"I got this phone call from a customer asking for New Zealand's Cloudy Bay sauvignon blanc. Ten years ago, they would have
been asking for a French bordeaux," Mr Goorden said.

The heat from New World upstarts has forced Old Europe to revamp its wine industry.

A ground-breaking European Union agreement imposes new rules that are certain to cause some traditionalists to choke on their vintage burgundies.

Changes include tearing up vast swathes of vineyards, getting rid of overly intricate labelling, and aggressively reaching out to international consumers instead of relying on age-old reputations.

Increasingly burdened by overproduction, ever bigger imports from abroad and more temperate consumers at home, Europe's wine industry has been mired in crisis.

For every top-notch producer there was also a vintner producing insipid plonk and unable to make ends meet - unless the Government bailed him out.

"We were heading for the abyss," said Portuguese Farm Minister Jaime Silva.

That was clear in Mr Goorden's wine shop on the outskirts of Brussels.

"The old folks still ask for a classic French bottle. Anyone younger may pick a Chile, Australia or South Africa wine," said Mr Goorden.

Now, Europe will promote more single-grape wines such as syrah or sauvignon blanc, much as the New World has done for a generation.

And instead of fancy labels designating tiny plots in faraway places and arcane production methods, simplicity is now the order of the day.

To top it off, when the consumer is not in the mood to buy, the EU will no longer bail out vintners.

"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," said EU Farm Commissioner Mariann Fischer Boel.

"There is an emerging market, for example, China and India."

Plans to ban the addition of sugar to increase alcohol content - something done in northern climes for centuries to compensate for lack of sunshine - were also scrapped, despite opposition from opposed by France, Germany, Austria and several central European nations..

Now France feels Europe has united the best of both worlds.

Its unparalleled bordeaux and burgundies will be largely unaffected by the reforms, and money will be freed to bring ageing, inefficient wineries up to date.

France alone will be able to spend €280 million ($533 million) a year.

"In this decision, there are ways for all our vineyards to modernise and set forth to reconquer the world," French Farm Minister Michel Barnier said.

Under the reform, farmers will be compensated for digging up some 5 per cent of vineyards to curb overproduction.

The original plan drawn up by Mrs Fischer Boel called for more than double that amount.

Mrs Fischer Boel also insisted on eliminating most of the €500 million in measures to do away with wine no one wants to drink and instead spend money on helping to produce wines people would want to sniff and savour.

Plans to let profitable wine producers expand their holdings at will to compete better with New World multinationals were approved, although they were delayed until 2015 at the earliest.

Mrs Fischer Boel said without changes, excess wine would account for 15 per cent of total EU output by 2011.

"We have seen throughout the last 10 years that there has been an increase in production in Europe. But there has been an increase in imports from the new wine world and there has been a decrease in consumption."

- AP

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