EU Adopts New Wine Labelling And Production Rules

On August 1 new rules came into force in the EU's wine sector as part of a package of reforms designed to make the industry more competitive.

Producers will now be allowed to label bottles with grape variety and vintage, and the range of legal winemaking practise has been broadened to include all methods permitted by the International Organisation of Vine and Wine.

However, more radical action will be needed to revitalise the sector, which in the 18 months since the package was first agreed has continued to lose out to more competitively priced offerings from New World producers.

The increased freedom to label wines by grape variety, a practice that is currently permitted only for some of the highest quality wines, will simplify branding and marketing for many smaller producers.

Rather than having to sell a wine based on a vineyard's location in a little-known area of France or Italy, for example, producers will be able to take advantage of consumers' hugely increased awareness of particular grape varieties.

New World wines have already done much of the work in making certain grapes, such as Pinot Noir or Sauvignon Blanc, popular, and this move will allow European producers to catch up with this trend.

With wine consumption falling in many EU countries, emerging markets such as India and China are seen as crucial for sustaining growth in the wine sector.

Easier to understand labelling will undoubtedly help make EU wines more consumer friendly. To compete with New World wines, however, EU producers will also have to adopt some of the industrial techniques that have allowed New World producers to create a product that is better value and of a more consistent quality.

This is unlikely to be achieved until the full package of reforms agreed in December 2007 is fully implemented.

Under the deal, farmers have already been subsidised to dig up 175,000 hectares of vines, which will allow unprofitable vineyards to leave the sector before a host of subsidies are phased out by 2012.

More importantly, by 2015 at the earliest and 2018 at the latest, successful producers will be given the freedom to increase the size of their vineyards as they wish.

At present the EU's oversupply problems mean that even successful producers are prevented from planting too many new vines. This opens the door for the emergence of more European 'super brands' to compete with New World brands such as the US's Blossom Hill and Australia's Jacob's Creek.

This move should also mean that vine planting is tied to commercial success rather than a skewed system of agricultural subsidies, meaning that the power of the market should eventually phase out wine varieties for which there is little demand.

This should also be helped by the total removal of subsidies for 'emergency distillation' of unwanted wine into industrial ethanol from August 2012.

With this move the EU has made it clear that it is no longer willing to prop up unprofitable producers as it has done for so long.