PN230707D

Embargo: 00:01 Monday 23 July 2007

Contact: Owen Williams 020 7219 8659

EUROPEAN WINE MARKET IS IN CRISIS, PROFOUND REFORM IS NEEDED TO RESTORE ITS HEALTH - LORDS EU COMMITTEE

The House of Lords European Union Committee has called for profound reform of the regime by which European wine production is subsidised and its marketing is regulated.‚ In the Committee's view, the present regime is unsustainable.‚ Despite subsidies from EU taxpayers totalling nearly ‚£1 billion a year, the industry is producing substantial quantities of wine for which there is no market.‚ It is also steadily losing market share to 'New World' wine producers who are more in touch with what consumers want and who are not hampered by EU regulations.‚ Imports from the New World have risen sharply in recent years and the European Union is in danger of becoming a net importer of wine.

The committee, which has completed a 6-month inquiry into the EU wine industry, was commenting on proposals for reform which have been put forward this month by the European Commission.‚ These include: an end to all subsidised distillation; an ambitious grubbing-up programme to reduce vineyard capacity, including resettlement grants for farmers who give up wine growing; relaxation of the present rules on the labelling of European wines; an extension the current ban on new plantings; the abolition of subsidies for the use of grape must to enrich wine; a ban on the use of sucrose for enrichment; and a campaign to promote sales on EU wine outside the Community.

The committee is content with the broad thrust of the Commission's proposals, and is especially supportive of the proposal to end all distillation subsidies.‚ Without this change, says the committee, reform stands little chance of success.‚ But it is also critical of some of the other proposals.‚ There is no need, says the committee, for a ban on new plantings once subsidised distillation is abolished: such a ban would simply serve to keep enterprising winegrowers out of the industry.‚ The ban on the use of sucrose, which is cheaper than its alternative (grape must), will unnecessarily increase production costs as well as putting the EU at a competitive disadvantage with New World producers.‚ And the committee has also sounded a warning note over the proposed campaign to promote European wines.‚ Advertising alone, it says, will not do the trick.‚ There is a need to connect the EU wine producer with the market and to establish proactive marketing networks.

Lord Sewel, who chaired the inquiry said:

The Commission's proposals are long overdue.‚ The present pattern of subsidies is not just a burden on the EU taxpayer: it is also damaging the industry by deflecting attention from the real problem, which is lack of competitiveness.‚

Some of the best wine in the world is produced in Europe, but many of its producers are out of touch with what their customers want and they are losing out to New World suppliers, who are more attuned to the changing market in wine.

We believe that the European wine industry can thrive and recapture markets if it is allowed to stand on its own feet and if it is set free from some of the outdated regulations which are hampering it.

Notes to Editors

1. The report European Wine: A Better Deal for All, is published by The Stationery Office, House of Lords European Union Committee (Sub-Committee on Environment and Agriculture) 30th Report of 2006/07, HL Paper 141.

2. The report will be available online shortly after publication at: http://www.parliament.uk/parliamentary_committees/lords_s_comm_d.cfm

For copies of the report or to request an interview with Lord Sewel, please contact Owen Williams (Committee Press Officer) on 020 7219 8659.

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