Europe’s vineyards reform under threat from New World wines | The Australian

Europe's vineyards reform under threat from New World wines | The Australian

An interesting article on the nature of the wine in industry in Europe. The EU has mandated which vignerons may grow which grape variety and where, an extraordinary intrusion of bureaucracy into the free market, as a condition of higher subsidies. It was intended to ration supply and prevent price collapse. The result has worked as well as any extraordinary intrusion of bureaucracy into the free market does; not very well. Wine prices in Europe remain extraordinarily low and more nimble producers from the New World are still capturing market share.

The easiest way to prevent the overproduction that causes gluts is to abolish subsidies and let the market determine demand, not some Soviet central planning approach. If the EU can unwind its massive subsidies to the wine industry and let the market work its way out, the survivors will be much stronger companies capable of seeing off competition from imports and driving exports harder. Higher wine prices would also create more opportunities for Georgia to compete in export markets.

FACED by increasingly ferocious competition from New World wines, Europe’s top producer nations kicked off talks to decide whether or not to liberalise the planting of vineyards.

In discussions scheduled to last until the end of the year, a high-level group will decide whether or not to go ahead with plans to abolish by 2018 wine planting rights, determining which grapes are planted where.


Originally agreed by EU nations in 2008 as part of a package of sweeping reforms, top producers such as France and Spain are now calling for a U-turn on the grounds that European wines could lose their identity should growers be allowed to freely choose where and what grape variety to plant.


The 2008 European Union scheme also called for the removal of poor vines, an end to the distillation of surpluses, and higher subsidies to modernise the wine industry as it faced growing pressure from New World bottles.


While the EU remains world leader, with 65 per cent of production and 70 per cent of exports, “it is also the top importer”, EU Farms Commissioner Dacian Ciolos said.


And it remains under sharp pressure.


In Britain, sales of European wines are neck-to-neck with New World rivals and China is slowly but surely also taking to wine drinking.


Chile meanwhile is planning to plant 100,000 extra hectares by 2020 to increase its exports by 10 per cent per year as vineyards in France shrink 11 per cent in a decade and 14 per cent in Spain and in Italy.


In this context, the European Federation of Origin Wines (EFOW) fears that the abolition of the planting rights system could undermine the quality and reputation of Europe’s fine tipples.


So EFOW quality wine-makers from France, Italy and Spain have convinced their governments as well as those in a dozen other EU nations to rethink the 2008 reform.


An end to the current restrictions on where and what to plant could trigger over-production and a fall in prices as well as lead to a greater industrialisation of the sector which would undermine the small prestigious estates that drive sales.


“The question is not whether or not we maintain the existing system, but, if we do keep the context, how can we be more efficient than in the past?” said Mr Ciolos.


“We are ready to discuss this in a pragmatic way,” he said. “If we have enough member states who want to re-open the question, the Commission is ready to discuss.”


But “on planting rights we need the analysis and expert advice first.”


Opening the first of four meetings to re-think the wine reform package, Mr Ciolos said he would oppose a return to the highly interventionist policies of the late 1970s, when there was a ban on planting and the obligation to distill any surplus.


The sector achieved a better balance between supply and demand around 2000 after receiving help to restructure vineyards in order to produce higher quality wines. But even then, considerable funds had to be spent to dispose of surpluses.


Mr Ciolos said he believed European vintners needed more flexibility to satisfy wine-lovers who “are more curious, more volatile” nowadays as trends become “more fleeting, faster, specially on new emerging markets,” such as China.

via Europe’s vineyards reform under threat from New World wines | The Australian.


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