EU Pushes to Reform European Wine Industry
EU Farm Commissioner Mariann Fischer Boel is leading an effort to change the wine subsidy system which has led to over production in many European regions. In response to increased competition from the New World over the past few decades, the EU has been purchasing and distilling wine from member countries that will not sell.
This policy has not done much for innovation, and has created a situation where many European wineries are making products that no one wants. Over $700 million was spent last year distilling unsold wine into industrial alcohol. Boel correctly believes this is an inefficient use of resources, and recently said, “I want the money to be spent better – on things which will build the sector up, not as a crutch.”
Abolishing theses subsidies makes good economic sense, but it is ruffling feathers throughout the EU. Additionally, Boel wants to uproot about 200,000 hectares of underperforming vineyards. Farmers would be compensated, but the plan is still very controversial.
In an effort to shore up support for these painful, but necessary reforms, Boel is traveling to several European wine regions and speaking to policy makers. A few days ago, she gave a speech to the Italian Senate on the subject.
Wines from California, Australia, South America and South Africa are especially hurting Europeans producers in less expensive market segments. Boel is particularly worried about this development, because this where much of the wine industry’s innovation occurs.