EU calls for destruction of vines to empty wine lake

Winemakers should be paid to destroy millions of vines to help drain the Continent's growing wine lake, the European Commission said yesterday.

Proposals to save the industry from a slow death called for a new focus on high-quality wines and more consumer-friendly labelling. The hope is that, with clear labels identifying the type of grape, big importers such as UK supermarkets will stock more French, Italian and Spanish wine. Although the high-quality market is still dominated by Europe, cheaper table wines are losing out to New World rivals. The result is a massive annual European wine lake.

The crisis has been compounded by lower demand across the Continent, caused mainly by stricter drink-driving laws. EU consumption is falling by 75 million litres a year while imports from South Africa, the United States, Australia and Chile have grown as much as 770 per cent over the past 15 years.

The European agricultural commissioner, Mariann Fischer Boel, warned that the competition from the New World was becoming fiercer each year. "What was once a trickle is becoming a flood, to the point where our imports could soon overtake our exports," she said.

Under plans which, if approved by governments could be in place within two years, €2.4bn (£1.65bn) will be spent over the next five years to compensate winemakers who destroy their vines. The scheme is voluntary but, if taken up, it could remove 400,000 hectares of vines. Officials say it would be a good investment if the policy produces a more competitive industry which focuses more on quality than quantity. The Commission also wants to abolish a scheme which allocates rights to plant new vines.

Earlier this month the EU funded distillation of 560 million litres of surplus French and Italian wine into fuel or disinfectant to prop up prices. Such spending, which the Commission wants to end, cost €506m in 2005, about 40 per cent of the total wine budget.

Ms Fischer Boel said the distillation schemes made no economic sense. "Distillation is supposed to be a crisis measure, instead it has become a way to regulate the market," she said. "It is a ridiculous way to spend taxpayers' money."

Labelling restrictions would be swept away to put European winemakers on the same footing as their New World competitors. Under the plan all producers would be able to market single variety wines - such as chardonnay or cabernet sauvignon - and give them a vintage. At present many European wines cannot be labelled in this way because they have not been granted the status of being a product from a recognised region.

French and Italian producers' federations reacted angrily to the proposals, saying wider action was needed than the sponsored destruction of vines. The Comité Européen des Entreprises Vins, which represents wine industry trade associations, said the plans were "lacking in ambition at European level", and called for more promotion of responsible wine consumption.

Down the drain

The EU has more than 1.5m holdings covering 3.4m hectares. In 2005, spending on the wine sector totalled €1.27bn.

* €446m (35 per cent) went on a restructuring programme.

* €506m (40 per cent) was spent on distilling wine into alcohol or disinfectant.

* €198m (16 per cent) was devoted to aid paid out for musts - the juice of freshly crushed grapes that will be fermented into wine.

* €70m (6 per cent) went on subsidies for private storage.

* €31m (2 per cent) was spent on compensating those who destroyed their vines.

* €17m (1 per cent) went on export refunds for wine.