The victory of Spanish wine laws in the European Court of Justice may change the face of the European wine industry for good. Keith Nuthall reports on why bulk shippers are bracing themselves for the worst.

The conclusion of one of the longest-running legal battles in the history of the European wine industry has raised fears throughout the sector that Europe's quality wine producers will call time on the bulk shipping of their vintages.

The European Court of Justice (ECJ) has dismissed the Belgian case opposing Spanish laws that allow regulatory councils - including those for Rioja and Ribera del Duero - to insist on the bottling of quality wines in their region of origin. Lawyers will now pour over the ruling to establish the precedent it will set.

It is a decision that has sent shudders through the executives of bulk shipping companies. These shippers now fear that the wine houses of Bordeaux will agree to impose a similar bulk ban on the sale of Claret, and other regions, such as the Rhine and Burgundy, will follow suit.

Belgium said that the Spanish law is an illegal restraint of free trade in the European Union. The ECJ - although agreeing that the law did infringe trade rules - said the risk that shippers might spoil a consignment of quality wine meant that producers had the right under European Union law to insist that all quality wines from their region should be bottled locally.

The UK's Wine and Spirit Association fears the impact the ruling will have on its industry. WSA director Quentin Rappoport said: "It's not good news. We think this is the thin end of the wedge. The moment this has gone through, there will be demands for pressure by local bottling plants. We can see this spreading further.

"This is a victory for the producers, but it hurts the consumer." Indeed, his organisation estimates that the difference in cost between bulk and bottled wine is £0.87 a litre. If this was applied to all bulk imports, (including non-quality wine), this would amount to £130 million per year.

Rappoport warned that a wholesale move of EU quality wine producers towards bottling prior to shipping could harm the UK bottling industry, which currently manufactures 30 million wine bottles a year.

His association is keen to reverse the judgement, offering the European Commission a model code of conduct, through which shippers can assure producers that their product will be sold in mint condition after it has been bottled away from the region of origin.

"We're not sitting and taking this. We're very upset about the whole thing. We want the possibility for shipping in bulk," he said. Unfortunately for him, the Commission does not appear to be listening.

It has proposed an EU directive that would give an official EU blessing to any Member State introducing a law that insists that certain quality wines are bottled in their home region.

A commission report said that the proposal would maintain quality, saying: "Transporting a wine always involves a loss of volatile components and therefore some of its natural aroma. The typicality of certain wines and their distinctive characteristics are only acquired after bottling and a certain period of ageing in the bottle."

Its attitude is reflected by some Spanish wine importers. Andrew Connor, director of A&A Wines, said: "As far as we're concerned this court decision is ideal. Rioja is a premium region. Where you have a wine coming out in so many guises - in bulk and through grand reserve - but with the same name, it's a nonsense. There's a world of difference. Anything that goes down the road towards moving Rioja towards a premium region has got to be good."

Unsurprisingly bulk shippers disagree. Hugh Archibald, operations director of Matthew Clark, which sells Grants of St James and Stowells of Chelsea, said: "This case could have a quite substantial impact in the worst case scenario." The company bottles and boxes all its wine in Bristol, having imported it in bulk from abroad. He insists that bulk carrying leads to no decline in quality or in
distinguishing regional characteristics. "You have to be careful," he said, "particularly in loading and transporting wine to avoid oxidisation and extreme temperature changes. But it's perfectly possible by using correct tanks and equipment to transport it in very good quality condition."

Whatever the protests from shippers, the ECJ has made its final ruling. It said: "By ensuring that wine growers in the region of La Rioja controlled bottling...the Spanish rules pursued the aim of better safeguarding the quality of the product and, consequently, the reputation of the designation, for which they now assumed full and collective responsibility.

"Against that background, the Spanish rules were, in the Court's view, to be regarded as compatible with EU law." In reaching this conclusion, the court stressed the importance that the EU has laid on the maintenance of designations of origin, which "often enjoyed a high reputation amongst consumers and constituted for producers an essential means of attracting custom."