The rules of the game

At the end of last year the European Commission passed a new set of guidelines for the continent’s wine industry. Ben Grant considers the consequences for the Old World

Gaining Europe-wide consensus on rules to govern the wine industry requires a quite gargantuan effort of diplomacy. Producers across the continent work in such different environments, have such varied opinions – and, frequently, are steeped in such long-held traditions – that wine has become one of the most contentious aspects of the entire project of European integration. Given the incendiary nature of the subject, the European Commission deserves significant praise for managing to thrash out an agreement in the week before Christmas.
The challenge to draw up a new set of guidelines that was acceptable to all 25 states was handed to EU agriculture commissioner Mariann Fischer Boel, and she spent the last year furiously rushing around the principal winemaking nations in a bid to reach a compromise. The final agreement was reached on 19 December, in the final throes of Portugal’s six-month term heading up the rotating EU presidency. Had it not been reached during this period, it seems unlikely to have been given too much attention now that Slovenia has taken on the baton. But who are the big winners and losers of the reformed wine rules, and what are the implications for the future success of the Old World?
Given the massive differences of opinion across the European wine industry, it’s not surprising that the reform measures passed in December register on the moderate end of the scale – Fischer Boel engineered a consensus that was, necessarily, more a case of evolution than revolution. The three key areas that were the greatest source of disagreement were national envelopes, planting rights and chaptalisation – the last of these creating the deepest schism between northern and southern European producers.

The original plan was to issue a blanket ban on chaptalisation with sugar, only permitting the use of rectified must concentrate. But as ZGM Group managing director John Hubinger explains, this would have had an unacceptable impact on business for German producers, resulting in a sharp increase in costs. Ultimately Fisher Boel has managed to find a compromise: the practice can continue, albeit with newly agreed limits, and subsidies will still be available over a four-year period. It may not have been exactly what the Germans wanted but crucially, says Hubinger, “we have finally reached a compromise that Germany can live with”.
Alongside the need for compromise, the most important element that has made the new rules palatable is the issue of time – changes will occur gradually, enabling producers to react accordingly. “The nature of the game is that you’ll always have winners and losers,” says WSTA head of technical and international affairs, John Corbet-Milward. “But the key is the fact that among the losers – for example, those who were deliberately planting grapes knowing that they would have to be distilled – they have a period of time to find an alternative livelihood.” Admittedly, this will be a bitter pill to swallow for a significant number of growers, particularly in traditional southern regions, but market forces are an unavoidable inevitability, and at least the time scale, together with the rural development aid package, will make the necessary transition as palatable as possible.
Europe’s need for change is, of course, a response to the radical evolution of the marketplace that has been driven by the runaway success of the New World powerhouses. Corbet-Milward explains that the need to respond “in order to prevent the further erosion of the European industry” was “blindingly obvious”; Europe could no longer avoid heeding the valuable lessons that have underpinned the success of the New World. Most notable is the relaxation of labelling laws – a logical move that will help to demystify European wine and enable it to compete more equally with the likes of Australia, South Africa and Chile. Hubinger sounds a note of caution when he warns that consumers “won’t be able to find the expressions they are looking for”, but this will hopefully be a minor concern when placed in the context of a significantly increased pool of potential consumers.

Since the start of the subsidy system, overproduction has been a major problem for Europe. The Common Market Organisation rules pertaining to grubbing up and national planting rights aim to address this imbalance. However, the decision to exclude the UK from planting restrictions indicates an enlightened approach that is sensitive to the specific circumstances of each state.
There are some in the trade who believe that the new rulings do not go far enough to put Europe on a level pegging with the New World. But such a viewpoint is rather naïve given the hugely emotive nature of the debate and the deep division of opinions. In reality, the fact that a compromise has been achieved at all represents a major success. As Corbet-Milward comments: “It’s possible to get bogged down in politics. We wanted pretty radical reform and that’s exactly what we got – the new rules go a lot further than we expected.”

© db February 2008