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EU must get creative with wine reform

By Chris Mercer in Languedoc Roussillon , 30-May-2006

More imagination is needed if the European Union's wine reform is to truly create a wine sector that will fend for itself against marketing masters from the New World, says the head of a French winemakers' delegation to BeverageDaily.com.

Europe's surplus wine lake is now estimated at 1.5bn litres, enough for every European Union citizen to take roughly four free bottles each.

The need to cut production is obvious. Yet, some in the European Commission risk focusing too much on this at the expense of original ideas, according to Jean-François Chapelle, a French winemaker who has represented his countrymen in discussions over wine reform with the European Commission.

Suffering on the EU wine sector has spread over the last couple of years due to overproduction, falling consumption in the bloc as a whole and rising competition from the New World.

The European Commission will unveil its initial ideas for wine sector reform on 21 June, after finally getting tired of dishing out millions of euros most years to turn wine that won't sell into undrinkable, industrial alcohol.

It is expected that this will include provisions for ripping up more of the EU's vineyards, which account for around 45 per cent of the world's vineyard area.

But Chapelle, who owns 20 acres in France's famous Burgundy region, warned that simply ripping up vines was too defensive.

"Is there anyone who has any original ideas for wine in Europe? The most important thing is that our wines do not fit with what consumers want to drink."

Chapelle said there should be more emphasis on helping wineries adapt to meet consumer demand in the world's two fastest growing wine markets, the US and UK.

This, he said, includes converting vineyards and also marketing Europe's wine heritage.

The European Commission has made some moves in this direction, last autumn securing an initial agreement with the US to give Europe exclusive use of certain traditional wine names on the US market, such as Champagne and Burgundy.

In reality though, the Commission's approach to wine reform is likely to be less hands-on, offering no more than a framework for winemakers to attack the market themselves.

It is understood that, over the longer term at least, agriculture commissioner Mariann Fischer Boel favours the sort of deregulation strategy that has underpinned the Commission's other market reforms, such as sugar and energy.

The message seems clear: winemakers should learn to cope on the open market, or give up.

The need to change has, in principle at least, been increasingly accepted by winemakers' representatives in France; a country where the middle market wineries have been hit particularly badly by overproduction and falling sales.

Denis Verdier, head of France's wine co-operatives' union, told BeverageDaily.com French producers had failed to "seduce" new consumers.

"The wine co-operatives must re-organise themselves and form better partnerships with buyers to create dymanic, modern businesses that will embrace new technology. Better marketing is also essential. If they don't, they will die."

France has lost the number one spot to Australia in its biggest export market, the UK. Top French wines still head Britain's premium sector, but Australia has won in the most popular price bracket, bottles priced £3-5, according to a report last autumn by the Inter Rhône wine buying group.

There is much talk in the vineyards of "re-launching" French wine on the market. Even the government has published a battle plan, in an effort to pre-empt EU reform.

A new national wine agency will attempt to make France's complex quality control system more accessible. The country has more than 450 so-called appellation contrôlée wine areas, with another 150 vins de pays regions, leaving even French consumers perplexed.

In truth, however, there is still some resistance to change. And, many of France's smaller wineries are in no position to stump up the funds necessary to adapt their vineyards, even with aid from the European Union.

Local wine unions said these businesses were losing between €500 and €1000 per hectare of vines in southerly Languedoc Roussillon, France's biggest wine region and perhaps the worst hit by the industry 'crisis'.

"We cannot survive like that for long. If it does not improve the situation will be catastrophic," admitted Denis Verdier. He and other union leaders estimated that 30-50 per cent of this region's wineries would disappear over the next few years.

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