Winegrower protections become flashpoint for debate on future of EU wine Wine-producing member states have derailed a EU plan to liberalize the wine sector, but negotiations may not prove as fruitful as they hope. By Kathryn Stewart, with files from Nailah Morgan BRUSSELS
The Beck-Hartweg vineyard in France’s Alsace region has been passed down from generation to generation for hundreds of years. The soil that anchors the vines is what gives the wine its unique character, says its owner. But the soil also comes with one other perk: planting rights, or government permission to grow wine grapes on the property. Without these rights, planting or managing a vineyard would be illegal. Compared to the Beck-Hartweg family history, planting rights are comparatively new. They were introduced EU-wide in the 1970s to curb wine overproduction in Europe, giving member states the power to halt any new vineyards being planted. Protecting winegrowers, protecting Europe A bloc of EU wine-producing countries is trying to defang a European Commission plan to abolish all planting rights in 2016. Without a mechanism to deny the expansion of vineyards, they say, supply will outstrip demand, creating “wine lakes” of cheaply made, unsold wine. Negotiations between wine-producing member states and the European Commission have been going on all year, through a body called the High Level Group on Wine. After its most recent meeting in September, stakeholders are preparing for the final round of negotiations and an official set of recommendations in November. The recommendations will set out a framework for the EU to change the legislation if the Agriculture Commissioner, Dacian Cioloş, approves. As the ministers of agriculture in the High Level Group prepare for the November negotiations, the outcome remains unclear. Although the 9 member states – including powerhouses France, Italy, Germany, and Spain - protesting the liberalization purport to speak with a single voice, different member states are still asking for different solutions, according to member state officials. While some countries are pushing for a full extension of the system, others are asking for a less abrupt transition into a free-planting sector.
EU not ready to reverse decision The Commission is listening to member states’ concerns, says Agriculture spokesman Roger Waite, but the abolition of planting rights needs to go forward if Europe is to keep its place at the top of the global wine production market. Europe has traditionally led the global wine industry, with 65% of world production and 70% of exports. But as “New World” wines from Australia, Chile, South Africa and other countries are gaining market share, the EU worries that European wine will lose its dominance to younger, less regulated wine industries. “We are in a situation where in the world market, the consumption is increasing in countries like China, Russia, Brazil, but not so much in Europe. Because of our planting rights situation, we are in effect blocking our wine producers from taking part in this market expansion,” he says. At its heart, the negotiation hinges on how the parties want to compete against the New World upstarts. On one side of the negotiation table, the EU wants to streamline and liberalize, creating more similar market conditions to wine production in Argentina or New Zealand. On the other hand, the wine-producing member states maintain that expanding production of wine in Europe will only flood the market with mediocre vintages, diluting the cachet and reputation of European wine, and hurting their strongest defense against the competition. Misgivings on mass-production persist Florian Hartweg runs the Beck-Hartweg vineyard in Alsace. It was passed down to him from his parents, who in turn received it from his grandparents, and so on. The abolition of planting rights will lead to factory-style vineyards in low-cost areas in Central and Eastern Europe, he says. While the costs of production are cheaper than in France, the soil is inferior. “I don’t think [the abolition of planting rights] will be a good thing in any place. Not for the current producers, and not even for future new producers, because the only thing that they will win is that they will be able to sell their wines cheaper. But I’m not sure that they will make more money.” While Hartweg isn’t worried about direct competition from factory-style wine (“I think that the new plantings won’t resemble the wine I produce,” he says, diplomatically), he does worry that a race to the bottom of the price tag is the wrong direction for the market.
“Why produce more? The planet doesn’t need more bad wines. They need fewer but better wines,” he says. The business case But the reputation of traditional winegrowers may not be enough to shield the sector from the forces of globalization. The evidence suggests that relying on reputation alone to sell wine hasn’t been working for decades, says Damien Wilson, Director of the MSc program in Wine Business at the Burgundy School of Business. “Wine quality has improved out of this world,” over the last 50 years, says Wilson. But wine consumption in Europe has dropped by 70% over the same time frame. Having a reputation of quality doesn’t motivate new customers, he says. Better marketing in the wine sectors in the U.S. and Australia is what helped them carve out a place in the global market – more than reputation, and more than liberal planting policies. But while relaxed planting regulations have contributed to oversupply in these countries (Australia doubled its vineyard area in the 1990s), Wilson doesn’t buy in to the “scare mongering” of the member states, partly because oversupply already exists. Global wine production has outpaced consumption by 4 million liters of wine a year since 2007. “Any rational human being would look at a market, and say, we have a surplus of product, why on earth would there be any reason to get in to this business?” Modernizing the playing field The plan to abolish planting rights was part of a wider strategy to dismantle the interventionist laws of the 1970s, says Lene Naesager, who was head of cabinet to past Agriculture Commissioner Mariann Fischer Boel when the reform was planned. The idea is to introduce more flexibility and innovation to the sector, allowing new players into a traditional business. After the EU dismantled subsidies in the wine sector after the last round of reforms, only competitive vineyards will survive, she says. “Right now we are in principle in a situation where you could prevent very good, young, dynamic wine producers from getting into business,” she says. This stifles the sort of innovation that strengthens the sector in other countries. As countries like China begin to join the competition, even consulting French wine experts to help with setting up quality vineyards, the EU can’t afford to pretend the world is the same as it was in the 1970s, says Naesager. “It’s just a question of time; we will be overwhelmed by wine from elsewhere. We just
have to see if we want to be in the competition or if we want to be out, as usual in Europe.â€?
Published on Nov 4, 2012
Report from Brussels: As New World wines flow freely into the global market, the European Union debates with member states on protectors for...