Commission Of The European Communities
Originaly Published: Brussels, 22.06.2006
Communication From The Commission To The Council And The European Parliament
Towards a sustainable European wine sector
(Thursday, 25 October 2007)
This Communication represents a Commission initiative as part of the continuing common agricultural policy (CAP) reforms
of 20031, 20042 and 20053, which cover all the main sectors except wine and fruit and vegetables. The deterioration of
the balance between supply and demand in the wine sector and the increasing challenges inherent in a European and
international wine market require reform of the sector. Community policies on sustainable development, agreed at the
Göteborg European Council4, on greater competitiveness in the Relaunched Lisbon Strategy5, and on Simplification and
Better Regulation for the CAP6 also point in that direction.
The European Union (EU) is the world's leading producer, consumer, exporter and importer of wine. In terms of quality,
its reputation is recognised worldwide. This has been earned by centuries of quality wine making which has provided
consumers worldwide with excellent quality products. In addition, it provides high value landscapes and allows a
profitable use of land which might otherwise be abandoned - both of which are environmental assets, provided production
is carried out in an environmentally respectful way.
The wine sector in the EU represents a vital economic activity, especially as regards employment and export revenue.
With more than 1.5 million holdings using 3.4 million ha (2% of the EU-25 agricultural area) wine production in 2004
represented 5.4% of agricultural output. Wine production represents around 10% of the value of agricultural production
in France, Italy, Austria, Portugal, Luxembourg and Slovenia, and a little less in Spain.
Council Regulation (EC) No 1493/1999 on the common organisation in wine (wine CMO) established a complex EU regime
notably as regards production potential, market mechanisms, wine making practices (WMPs), wine classification, labelling
Supplementary layers of rules at national and regional levels add to the lack of clarity. This goes with subsidiarity,
but simplification and transparency are also legitimate aims.
Many support schemes have remained unchanged for some years, as has the level of aid they offer. All the measures
financed from the Community's budget need to be reviewed, notably because of the increasing tendency towards crisis
distillation not only for table wine but for "quality wine" produced in specified regions (QWpsr). Crisis distillation,
which used to be an exception, is increasingly becoming a regular practice, undertaken in three out of the last five
years. It was requested by several Member States in the 2005/06 wine year, despite an 11% reduction in production, for
significant quantities of table wine and "quality wine". It is necessary therefore to ensure that future policy is cost
effective and that the money is well spent. Moreover, from a public health point of view, concerns have been raised
that subsidies to potable alcohol distillation artificially lower the price of wine spirits which are high in alcohol
An Impact Assessment (IA) covering possible options for a new Community policy for the wine sector has been carried out
to ensure synergy with other Community policies. It represents the work of all the relevant Commission departments and
is presented together with this Communication.
The Commission launched a public debate on future policy by holding a Wine Seminar with stakeholders on 16 February
2006. The documents of the Seminar are available on the European Commission website7. The Advisory Group on Wine has
also discussed the potential reform scenarios. In addition, many bilateral meetings have been organised with a wide
range of stakeholders.
1 General CAP reform.
2 Cotton, hops, olive oil, tobacco.
4 Presidency Conclusions, 15-16 June 2001.
5 COM(2005) 24 final.
6 COM(2005) 509 final.
1. CURRENT SITUATION AND MID-TERM FORECAST FOR THE WINE MARKET
Since 1975/76, the European problem of overproduction has been addressed by a policy of limiting production potential,
and encouraging the permanent abandonment of production areas, contributing to a decrease from 4.5 million ha in 1976 to
3.2 million ha in 2005.
However, since 1996, optional implementation of the grubbing-up scheme by Member States has led to a decrease in uptake
which, together with the allocation of new planting rights, has practically cancelled out earlier benefits. Wine
production8 in the last five wine years varied between 166 and 196 million hl for the EU-25. The share of QWpsr in the
total EU wine production has been increasing and currently almost equals that of table wines.
EU wine consumption has fallen significantly and steadily in recent decades. This trend has particularly affected table
wine, whereas the consumption of QWpsr is growing, so that now the two have almost equal shares.
Since 1996 the volume of wine imports into the EU-25 has been growing at a rate of 10% a year, reaching almost 11.8
million hl in 2005. So-called "new world" wines have gained considerable market share from EU wines. The volume of wine
exported from the Community has been increasing since 1996 but at a much slower rate than imports, to reach about 13.2
million hl in 2005. Overall, the EU remains a net wine exporter.
The mid-term outlook for the EU wine sector until 2010/2011, under the assumption that the wine CMO is unchanged and on
the basis of the expected trends in production, consumption and trade dynamics, is that excess wine production will
increase up to 27 million hl (15% of production), or to 15 million hl (8.4% of production), if the quantities distilled
with aid to the potable alcohol sector are not considered surplus. The surplus is a particularly serious problem for
table wine but the situation of QWpsr has also deteriorated. The EU-27 wine balance is outlined in the IA.
7 At http://europa.eu.int/comm/agriculture/capreform/wine/index_en.htm.
8 Total wine production = vinified production + production of grape musts and juices.
2. THE WINE CMO TODAY
The wine CMO is organised around a comprehensive but complex set of policy tools. Three measures aim at managing
production potential, by limiting planting rights and by supporting structural improvement through (a) permanent
grubbing-up and (b) restructuring/reconversion programmes focusing on adapting quality and quantity to consumer demand.
The planting rights restrictions, including a ban on new plantings, are valid until 31 July 2010.
The internal market measures include traditional measures such as crisis distillation of surplus wine and distillation
of surplus wine from dual purpose grapes. The aim is to limit price decreases. Then there is compulsory distillation of
lees and marc, by-products of wine making, to avoid over-pressing of grapes and improve wine quality. Finally, there is
the distillation of table wine into potable alcohol for use in the spirit drinks industry, its purpose being to maintain
certain parts of the potable alcohol sector as a traditional outlet for wine.
To avoid market disturbance and its consequences, aid is paid for the temporary private storage of wine and grape must.
In addition, aid is available to encourage the alternative use of grape must, notably for enrichment and grape juice.
The CMO also includes traditional trade mechanisms such as duties, refunds and licences. Agreements with non-EU
countries have also been concluded.
The wine CMO, contrary to most others, provides a full set of rules governing definitions, QWpsr and table wine with a
Geographical Indication (GI), WMPs, and labelling, ensuring a fair and transparent standard of quality for consumers.
3. PROBLEMS IDENTIFIED WITH TODAY'S CMO AND CHANGING CIRCUMSTANCES
3.1. Market situation
• EU wine consumption, is declining by about 750 000 hl or 0.65% annually.
• Consumption patterns in general and those of wine in particular, are changing, as are lifestyles.
• The structural surplus is estimated at about 15 million hl of wine, which is equivalent to about 8.4% of EU-27 wine
• Intervention via distillation is required to remove about 15% of wine production every year.
• Wine stocks which exceed one year's production are increasing, with little prospect of disposing of them. This exerts
downward pressure on prices and producers' incomes.
• Imports are increasing at a faster rate than exports, the gap is narrowing and imports may soon exceed exports. The
world trade in wine is already highly liberalised, with EU wine import duty at low levels.
• The surge in "new world" wine production and sales highlights the need for EU wine producers to become more
3.2. Regulating production potential
• The success of the ban on planting rights in curbing production potential is limited by the granting of new additional
planting rights and by the increase in yields in some Member States.
• Planting rights increase the cost of production and act as a brake on rationalisation of the structure of holdings,
• Non-EU countries do not apply such planting restrictions.
• The restructuring and conversion scheme has enabled producers to upgrade to "quality wine" but could also lead to an
increase in production. It may sometimes cover normal renewal, which would defeat its purpose.
• The use of the grubbing-up scheme has virtually stopped since 1996.
• After many years, some Member States have still not dealt with certain so-called irregular vineyards (planted before 1
September 1998) or the grubbing-up of certain so-called illicit vineyards (planted from 1 September 1998). The areas for
which regularisation has been refused and which are still under examination amount to about 68 100 ha, or about 2% of
the total EU-25 area under vines.
3.3. Market support measures
• Market support measures in the form of distillation are not very effective in terms of securing vine growers' income
and serve as a permanent outlet sustaining an unsaleable surplus.
• Crisis distillation, designed to tackle conjunctural surpluses, is used as a structural measure and now also covers
• The private storage aid scheme has become a structural measure. Wine storage costs should be borne by the industry.
3.4. Wine-making practices, geographical indications and labelling
• The rigidity of procedures for adopting and adapting WMPs hinders competitiveness.
• EU regulations are too complex, notably on definitions, WMPs, and classification, i.e. QWpsr, table wine with a GI and
• On QWpsr, there is no 'quality' concept at international level and no reference in Community legislation to the
concept of 'geographical indication' as defined by the WTO's Trade Related Aspects of Intellectual Property Rights
(TRIPs) Agreement. Besides, in recent decades, there has been an increase in the number of QWpsr and table wines with
GIs, which leads to customer confusion, weakens the Community GI policy in the EU and abroad, and contributes to the
decline of the market situation.
• On labelling:
– consumers are confused by wine labels resulting from a complex legal system consisting of a mixture of legal
instruments which deal differently with several wine categories and with some particulars depending on the product;
– certain inflexible labelling rules hamper the marketing of European wines. A major drawback is the prohibition of the
indication of the vintage and the vine variety on table wine without a GI;
– non-EU countries regularly criticise European labelling policy as far as the sales designation (for example, QWpsr,
table wine with a GI and table wine), the use of optional indications, the reservation of bottle shapes and the policy
on traditional terms are concerned. In that connection the review of the labelling rules should take into account their
impact on imports from third countries and the EC's international obligations.
• Independent analysis suggests that appropriate liberalisation of wine-making practices, in line with International
Wine and Vine Organisation (OIV) rules, and more consumer-oriented labelling would enable EU wine producers to expand
their outlets and improve their marketing, thereby improving their competitiveness and reducing the structural
3.5. Health and lifestyle
In recent years concerns have grown about the increasing trend of high risk consumption of alcohol among young people.
However, there appear to be beneficial impacts on health among older people. Information on the advantages and the
benefits of moderate and responsible consumption of wine as well as information related to alcohol-harm has to be
provided to all concerned. Community policy should reflect this.
4. OBJECTIVES FOR A NEW EU WINE POLICY
Against this background, the future regime should ensure sustainability for producers, make provision for the smooth
integration of Bulgaria and Romania and the full respect of our international obligations. The EU wine sector is
producing the best wine in the world and has a huge potential that should be further developed in a sustainable manner.
The policy also has to react to changing circumstances in order to:
– increase the competitiveness of the EU's wine producers; strengthen the reputation of EU quality wine as the best in
the world; recover old markets and win new ones in the EU and worldwide;
– create a wine regime that operates through clear, simple rules - effective rules that balance supply and demand;
– create a wine regime that preserves the best traditions of EU wine production, reinforces the social fabric of many
rural areas, and ensures that all production respects the environment.
The new EU wine policy should also take in due consideration increased concerns of society on health and consumer
5. OPTIONS EVALUATED IN THE IMPACT ASSESSMENT WHICH DO NOT PROVIDE AN ADEQUATE SOLUTION
Taking into account the situation of the sector and the policy objectives to be achieved, the Commission considered four
possible options for the reform of the wine CMO. Three of these options - to maintain the status quo, to reform the wine
CMO along the lines of the CAP reform model and to pursue a complete deregulation - do not provide adequate answers to
the problems, the needs and the particularities of the wine sector.
5.1. Status quo with possibly some limited adjustments In view of the serious difficulties of the current CMO in terms
– achieving a better market balance,
– applying the rules correctly in some Member States, notably the planting restrictions, and
– fitting in with the reformed CAP, a merely cosmetic amendment would not be sustainable economically or politically.
The current CMO has not eliminated surpluses nor provided an answer to other problems, notably the loss of
competitiveness as highlighted by the requests for crisis distillation and by the increasing share of non-EU wines on EU
markets. There is a broad consensus among various stakeholders that major changes are necessary.
5.2. Reform along CAP reform lines
The main innovation of the CAP reform is the decoupling of direct payments from the type of production and the
introduction of the Single Payment Scheme (SPS). Significant advantages are farming flexibility, market orientation and
WTO friendliness through green box classification. One possible thrust of the reform would be to shift all or part of
the budget of the wine CMO to direct payments for vineyards which could be included in the SPS. Additional advantages
would be a major simplification and the introduction of cross-compliance for all vine growers. However, in contrast to
other sectors, there would be no obvious equitable way of distributing SPS entitlements.
On the basis of the available budget, the potential amount of decoupled payment would be very small for a permanent crop
and would probably not compensate the loss of market support for many growers.
Abolition of market measures accompanied by decoupled income support fully transfers the responsibility for adjusting to
changed market situations to producers. If the system is consequently implemented alone, a balanced market should be
achieved, but only in the medium to long term, and probably only after a major crisis in the sector leading to a massive
5.3. Deregulation of the wine market
The option of complete deregulation would imply the abolition of all policy instruments for the management of the
production potential and of the market. Tools such as the ban on new plantings, and grubbing-up, the policy of
restructuring and reconversion and all market measures would be abolished, leading to complete liberalisation of the
sector. The budget would be either suppressed or transferred to the second pillar for RD policy in general.
The harsh adjustment required by the immediate implementation of this policy and the lack of accompanying structural
measures would produce in the short term severe negative economic and social impacts on the regions concerned.
6. PROFOUND REFORM OF THE WINE CMO
Recognising the problems and the potential of the sector and its particularities, and following the in-depth analysis in
the Impact Assessment, there is a need to keep a specific wine CMO which must, without doubt, be fundamentally reformed.
The challenge is to adapt the regulatory framework and the production structure to obtain a sustainable and competitive
European wine industry with long-term prospects while, at the same time, ensuring the use of the budgetary means in the
most cost-effective manner.
The Commission considers this option as the most appropriate response to the challenges. Two variants are identified.
The first one would provide quick answers to the present difficulties but requires rapid and demanding adjustment of the
The second would obtain the same result, but phased in over time, which would allow the rural economy and the social
fabric to adjust more smoothly.
6.1. Profound Reform of the CMO - Variant A - One-step
Abolishing the Planting Rights and Grubbing-up Scheme
The system of planting rights restrictions would be either allowed to expire on
1 August 2010, or be abolished immediately. However, rules regarding access to GIs would de facto limit the number of
The current grubbing-up scheme would also be abolished at the same time. Each hectare of vineyard grubbed-up at the
farmer's expense would become part of the area eligible for the SPS.
6.2. Profound Reform of the CMO - Variant B - Two-step
This approach is analogous to that adopted for the sugar sector - the first phase is restoring market balance and the
second phase is building improved competitiveness, including the abolition of planting rights. The principal feature of
variant B would be a structural adjustment, i.e. temporarily reactivating the grubbing-up scheme. The system of
restrictions on planting rights would be extended until 2013, when it would expire. The least competitive wine producers
would have a strong incentive to sell their planting rights. Rapidly, competitive producers can be expected to focus
more on the competitiveness of their enterprise, as the cost of planting rights will no longer hamper expansion. In the
medium to long term this would represent a reduction in their fixed production costs.
The grubbing-up premium will be set at an attractive level. To encourage take-up from year 1, a decreasing scale would
be set for the premium over the remaining period of planting rights. The aim is to grub up 400 000 ha in the EU over a
five-year period with a maximum total aid of about EUR 2 400 million.
Vine growers should be free to choose to grub up or not.
The agricultural area formerly used for vine production, once grubbed up, would qualify as an eligible area under the
SPS and be granted the average regional decoupled direct payment.
The Member State envelope could be topped up by a certain amount per grubbed up hectare.
Minimum environmental requirement would be attached to the grubbing up premia to avoid land degradation.
6.3. COMMON FEATURES OF VARIANTS A AND B
Both variants contain common measures such as:
6.3.1. Abolishing market management measures and introducing more forward-looking measures
Market management tools would be abolished from day one, namely:
• support for by-product distillation,
• potable alcohol and dual-purpose grape distillation,
• private storage support,
• must aid in relation with enrichment and for making grape juice.
The crisis distillation measure would be abolished, or replaced by an alternative safety net mechanism using the
6.3.2. National envelope
A budget envelope would be made available to each wine-producing Member State, calculated according to objective
criteria, with which it would be allowed to finance measures, according to its preference, from a given menu. There
would, however, be more resources available at the beginning under variant A because of the absence of grubbing-up
This envelope could be used by Member States, for example, for certain crisis management measures such as for insurance
against natural disasters, for providing basic coverage against income crises, for the administrative costs of setting
up a sector-specific mutual fund9, and for measures such as green harvest. Its use would be subject to certain common
rules (including minimum environmental rules), in order to avoid distortion of competition, and to approval by the
Commission of the specific national programme.
The vineyard restructuring/conversion scheme would be maintained under the national envelope.
6.3.3. Rural development (RD)
Many measures could be part of the RD plans adopted by the Member States. Early retirement and agri-environment support
could provide significant encouragement and benefit for vine growers. Farmers who decide to stop all commercial farming
activity definitively for the purpose of transferring the holding to other farmers may benefit from a maximum of €18
000/year and a maximum of €180 000 for a maximum of fifteen years. Agri-environment measures to cover additional costs
and income foregone in providing and maintaining vinescapes/cultural landscapes may amount to a maximum of €900/ha for a
period of between five and seven years. As the 2007-2013 RD planning process is in progress, and in order to encourage
these measures, a transfer of funds between budget headings (market and direct payments on the one hand and RD on the
other hand) would be necessary and would be earmarked for the wine producing regions in line with what was done in the
tobacco and cotton sectors. Such development programmes could play an important role in the economic welfare of wine
sector stakeholders in the future and in preserving the environment in the wine producing regions.
6.3.4. Quality policy/geographical indications
The quality policy would be made clearer, simpler, more transparent, and thus more effective, by:
a) Substantially revising the current quality regulatory framework, with a view to enhancing the conformity of EC
quality policy as regards international rules. In particular it should be clearly aligned with the provisions of the
TRIPs Agreement. Moreover, the wine quality policy incorporated in the CMO would be made consistent with the horizontal
quality policy (on Protected Geographic Indications (PGIs) and Protected Designation of Origin (PDOs)). The Commission
proposes to establish two classes of wines: wine without GI and wine with GI. Wines with GI would be further divided
into wines with a PGI and wines with a PDO. A procedure for registration and protection of GIs would need to be
b) The concept of EU quality wines is based on a geographical origin approach (quality wine produced in specified
region). The EU wants to confirm, adapt, promote and enhance this concept worldwide.
c) Expanding the role of the interprofessional organisations in order to be able to control and manage the quality of
the wine produced in their territories. Control instruments should be reinforced as well, in particular for the
production of 'vin de cépage'.
6.3.5. Wine making practices
The Commission would propose, regarding wine making practices (WMPs):
– to transfer from the Council to the Commission the responsibility for approving new or modifying existing WMPs,
including taking over the acquis;
– to recognise OIV WMPs and filter at Commission level their incorporation into a Commission regulation;
– to authorise use in the EU of WMPs already agreed internationally for making wine to export to those destinations;
– to delete the minimum natural alcohol requirement of wine which becomes redundant due to the proposed limitation on
enrichment and there is a legal minimum for alcoholic strength by volume of the wine marketed;
– to ensure an acceptable minimum level of environmental care in the wine making process.
The sugar reform accentuates the problem of using sugar instead of must in enriching the alcohol content of wine. There
are three possibilities: increase the aid for must, to compensate the reduction in the sugar price, leave the level of
aid unchanged, which may disturb the equilibrium, or remove the aid and ban the use of sugar. On balance, the Commission
considers the latter option to be the most advantageous since it would result in significant savings in the budget and
increase the outlets for must.
Furthermore, the Commission proposes to reduce the maximum level of enrichment (with grape must) to 2% except in wine
growing zone C (meaning certain parts of France, Spain, Portugal, Slovakia, Italy, Hungary, Slovenia, Greece, Cyprus,
and Malta) where the maximum should be 1%.
The Commission proposes to simplify the labelling provisions by setting up a single legal framework applying to all the
different categories of wine and particulars relating to them. It would be tailored to the expressed needs of consumers
and more consistent with the wine quality policy. In particular, this would involve:
– transfer of competence from the Council to the Commission;
– the use of a single legal tool for all wines by complementing the rules in the horizontal labelling Directive
2000/13/EC as appropriate to meet the particularities of the wine sector as regards compulsory and optional labelling
– improving the flexibility of the labelling policy, in taking into account the WTO policies, by: 1) removing the
distinction between the rules on labelling wines with and without GIs, most importantly facilitating the indication of
vine variety and vintage on wines without GI status, in order to allow EU wine producers to market "new world" type
wines (i.e. single vine variety), and thereby put EU wine producers on an equal footing with external competitors,
2) maintaining and improving the traditional terms system, 3) adapting the policy on trademarks, 4) amending the
language rules in the wine sector to allow more flexibility on the use of languages, 5) ensuring health and consumer
information and protection, 6) fully informing the consumer of the origin of the product through appropriate labelling
rules on traceability and
7) allowing to inform consumers on the environmental aspects of production practices.
6.3.8. Promotion and information
Several stakeholders, in particular during the 16 February Seminar, underlined the need for increased emphasis on wine
marketing. The Commission intends to pursue with vigour a responsible promotion and information policy. All available
opportunities in existing Community legislation should be used to carry out ambitious promotion projects outside the EU.
Information campaigns on responsible/moderate wine consumption could also be considered within the EU.
6.3.9. Environment The Commission intends to ensure that the reform of the wine regime improves the environmental
impacts of vine growing and wine making. In particular, it intends to include minimum environmental requirements for the
wine sector covering the main pressures from the sector (notably, soil erosion and contamination, the use of plant
protection products, and waste management).
An important feature of the profound reform will be to make the new wine CMO WTO-friendly. Thus, current trade
distorting ("Amber Box") intervention measures will be eliminated, and where internal support measures continue to
exist, preference will be given to "Green Box" measures. The present ban on vinification of imported must and blending
of Community wines with non-EU wines will be examined in the same spirit.
7. SO-CALLED IRREGULAR AND ILLICIT PLANTINGS
Irrespective of the removal of the planting ban, economic operators and Member States have to comply with existing
Community legislation regarding so-called irregular vineyards and illicit vineyards. Compliance with these rules is
crucial to the functioning of the existing CMO. If the rules are not observed, the Commission will (continue to) take
appropriate measures in the framework of the clearance of accounts procedures or, if necessary, initiate infringement
procedures under Article 226 of the Treaty.
8. BUDGETARY IMPACT
Precise estimates of the budgetary impact of the measures outlined above will be established when the formal legislative
proposals are presented. However, the financial impact will not exceed levels of expenditure during the last years.
9. FINAL REMARKS
The Commission is of the opinion that a fundamental reform of the wine CMO is necessary.
The eventual implementation of these modifications should lead to simplification and better regulation, with positive
consequences on limiting the management and statistical monitoring costs, on easing implementation and controls, hence
on limiting the risk of fraud and misuse of public funds. In addition it would increase management efficiency through a
higher level of subsidiarity given to Member States for the determination of the type of measures they need to respond
to their specific situation. Finally, a reform along these lines will significantly strengthen the Commission's
possibility to defend its policy in all international fora, which it intends to pursue actively.
With this Communication the Commission invites all stakeholders to participate in an open debate on the future wine CMO,
which will assist it in drafting proposals before the end of this year.
Originaly Published: Brussels, 22.06.2006
(Thursday, 25 October 2007)