EU plan to drain wine lake branded 'a betrayal of tradition to capitalism'

Brussels has proposed the destruction of hundreds of thousands of acres of European vineyards in an attempt to drain the EU "wine lake" and reconquer markets lost to the New World.

In proposals which will be hotly disputed in wine-producing countries from France to Bulgaria, Brussels wants to pay producers of unsaleable wines to "grub up" their old vines. And from 2013, national restrictions on the planting of different varieties of vines would be lifted to encourage "competitive" growers to shift to types of wine more in demand from consumers.

The practice of "sugaring" immature wines or -chaptalisation - which increases yield and strength in more northerly vineyards would be banned.

Part of the EU budget for supporting the wine industry would be shifted to a campaign to promote European wines on the international market. The distillation of surplus wine into industrial alcohol or disinfectants - which costs €500 million (£340m) a year - would end from 2009.

The European Union's annual "wine lake" of unsold wines is more than 13 million hectolitres - equivalent to about 1.7 billion standard-size bottles.

Mariann Fischer Boel, the European commissioner for agriculture and rural development, said the proposal would "boost competition, drain the infamous wine lakes and make things more simple".

The €1.3bn budget for the wine industry would be unchanged but would be re-directed away from propping up "failing" producers. "Until now we have been spending in an inefficient and indefensible way," Ms Fischer Boel said.

The Commission's proposals were criticised - even before they were announced - as a lurch towards the so-called "industrial" mass production of "Coca-Cola" wines. Some wine producers' organisations in France and elsewhere said that they represented a betrayal of age-old, European wine-making traditions to market forces and "ultra-capitalism".

In fact, much of what the Commission is proposing is already happening, even in countries with fiercely defended local wine-making traditions such as France. The thrust of the Brussels plans is to help the lower reaches of the European wine market - not the thriving, top-quality wines - to compete with the simply labeled New World wines made from the most popular grape varieties, such as Chardonnay or Merlot.

Much of the French, Spanish and Italian wine industry is already willing, in some cases eager, to take this approach. But there are fierce divisions between, and even within, wine-growing regions. The ban on the sugaring of wine would, for example, be very popular with southern French growers and disastrous for producers of cheaper red wine in Bordeaux.

How much, and when, the EU plan would affect wine drinkers is unclear. The proposals will be fiercely opposed by some governments in the EU council of ministers. Much will finally depend on decisions still to be taken at national and regional level on the future of wine-making in Europe.

Although world wine consumption is rising rapidly, European producers have been partially pushed out of their traditional markets, such as Britain, by cheap, reliable, undemanding brands from Australia, Chile and other so-called New World vineyards.

Younger drinkers in particular find these wines more reliable, and easier to identify, than the jumble of château labels andappellations from France and, to a less extent, Italy and Spain.

There has also been a slump in wine consumption in France and Italy, as younger people switch to beer or alcopops. The result has been a huge annual surplus of red table wines and even a glut of some low-level appellations such as Beaujolais and generic red Bordeaux.

Ms Fischer Boel has spent the past year touring Europe's wine regions and says, as a Danish "farmer's wife", that she understands the producers' feeling of attachment to the land. "I realise that the wine sector is very emotional and that many will have objections to these ideas," she said yesterday. "But if we sit on our hands and do nothing the sector will face real difficulties."

Under the "grubbing-up" proposal, producers will be paid to leave the industry or reduce their acreage of vines. To encourage early take-up, the payment will be 30 per cent higher in the first year of the five-year scheme than the next year. The Commission says the average premium will be €7,174 per hectare in the first year, falling to €2,938 over five years.

Ms Fischer Boel rejected suggestions that some producers would be forced to give up their vines.

The scheme would be entirely voluntary, like several similar schemes in the past, she said.

Part of the money saved from ending the distillation of unwanted wine - about €120m - would be used to promote EU wine sales outside Europe. This proposal was attacked by wine growers yesterday as a "drop in the ocean" of existing national, promotional budgets. In any case, they said, more of the money should be spent within the EU, in countries such as Britain which had developed a thirst for New World wines.

Denis Verdier, the president of the association of French wine co-operatives, said his members were not opposed to change but wanted a "more ambitious" programme to promote European wines, not to destroy them. Jérôme Despey, the president of the French wine-marketing council, Viniflhor, said the Brussels plan was "incoherent".

Growers were being paid to stop production up to 2013. Then the existing restrictions on the planting of new vines - and different varieties - would be removed, encouraging a renewed explosion in wine production.

Europe's vintage passion

* Europeans drink 60 per cent of the world's wine.

* France, Italy and Spain are the EU's and the world's top producers by volume. They are followed by Germany, Portugal, Hungary, Greece, Austria, Slovenia, the Czech Republic, Slovakia and Cyprus.

* Increasingly, Europeans drink wine from beyond the EU: in 2005, exports of 13 million hectolitres only just outstripped imports of 12 million hectolitres.

* In the past 10 years wine production capacity in the EU has fallen by 15 per cent, but risen by 21 per cent in America, 33 per cent in South Africa, 52 per cent in Chile, 178 per cent in Australia and 360 per cent in New Zealand.

* Wine production last year represented 5 per cent of the value of EU agricultural output and employed 1.5 million people.

* While European wine sales have been steadily decreasing in general, sales of quality wines are rising. The surplus - the "wine lake" - amounts to more than a year's production.

* The EU has more than 2.4 million holdings producing wine, covering 3.6 million hectares, or 2 per cent of EU agricultural area.

* Imports to the EU have risen by 10 per cent each year since 1996, pushing out low-to mid-range home-grown wines.