The Old World May Embrace a New Wine World

EuropeWhat a fascinating exercise the European wine producers and European Union is embarking upon.

Europe appears to be in the early phases of a complete overhaul of their wine industry, from growing to producing to marketing.

Yesterday the European Union’s European Commissioner for Agriculture and Rural Development , Mariann Fischer Boel, made a statement  that served as an introduction to the coming debate and staked out a rather progressive position on what needs to be done to make European wine more competitive as well as shore up the industry in general.

Mischer Boel started with a rundown of the challenge facing the European wine industry:

-Consumption in the EU is falling
-Europeans are fast adopting New World alternatives to Old World offerings
-Excessive production is pushing prices for wine and grapes downward
-Distilling down excess wine has become a part of the market rather than an extraordinary event

One gets the impression from the commissioner’s statement that a total liberalization or revamping based on market forces would be the preferred way to address this issues. However, it is also made clear that this kind of drastic approach won’t fly with producing countries.

Rather, the proposals now on the table include:

-Financing the pulling out of 400,000 hectares of vineyards (the equivalent of all the California wine grape vineyards

-Allowing these lands to be planted to any other agricultural product the owners desire

-The reapportionment of funds once devoted to distilling excess wine into alcohol and devoting it to restructuring the industry by funding early retirements and creating more profitable agricultural endeavors in regions where production of wine and grape outstrips demand.

-Wine labeling and wine production laws are to be made far more flexible and liberal in order to allow European growers to compete with the more free wheeling ways of the New World where just about any production methods are allowed.

-Increase the amount the EU spends on marketing of their wines, presumably both oversees and inside the Union.

It’s pretty drastic stuff. I can’t begin to estimate what the reactions will be, nor how successful they will be at bringing Europe into a more competitive stance with New World wines. Debate is about to ensue with proposed legislation coming likely early next year.

What’s really fascinating however is the fact that Europe apparently sees a turning point in their approach to winemaking and wine marketing the likes of which we’ve not seen in a very long time. It’s a very strategic approach that is being suggested. What I think will be most interesting is how the Europeans change their winemaking and wine labeling laws to compete with New World producers while attempting to maintain a reliance on the idea that the PLACE makes the WINE.

3 Responses

  1. Rob Cole - June 21, 2006

    The thing about this that would bother me were I a European wine grape grower is the idea about pulling up the vines. The way I read the statement, it sounded to me like they wouldn’t even ask the largest, most profit-making, and biggest names in wine grape producing to pull up any of their vines. Only the smaller growers that may not have as much history in their name. Given, she said that it will be an optional choice for those smaller growers, but with that pressure to switch crops or retire, it would seem almost too much. Perhaps my thinking is the American in me coming out, where any of us have the opportunity to start up any kind of business and have the chance to compete with the big boys. But if I were a smaller producer in Europe, I would not be too accepting of the suggestion that I pull up all of my grapevines just so Rothschild can continue to sell wine for ridiculous amounts of money.
    Perhaps, I’m misunderstanding the proposals, or maybe it’s just so early in the process that Boel is basically just brainstorming, but in my point of view, there are several problems with this.

  2. Ryan Opaz - June 21, 2006

    Airen = Largest planted grape on the planet by hectare…this is why they want to pull up grapes. There are plenty of places and types of grapes that need not be planted in the quantities they are.
    In fact Franco helped spread Airen, due to his policy of paying for distilled wines made by farmers. For many the cheapest and easiest way to make brandy was to find the easiet vine to plant.
    I know there are other areas in Europe that have this problem. A lot of the “little guys” aren’t using the land for quality wine anymore, many are using it only to sell off jug wine or for distillation.
    Go little guy who is trying to make quality wine, and let’s hope he’s not pushed out!

  3. Stuart - June 24, 2006

    It appears that once again the European government has missed the basic premise of a free market economy. Don’t interfere in the market with subsidies and over regulation. Loosen the rules, ensure a level paying field, and then let the market provide.

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