The European Commission has called on Germany to reform its spirits monopoly law regarding the production of grain brandy, ornbranntwein. It wants to prevent small agricultural producers being unfairly favoured with state production subsidies denied to producers from other EU member states, and, from 2006, to larger German commercial producers.

Indeed, the Commission has warned the German government that no subsidies should be paid for the production of grain brandy because in 1989 Brussels branded this spirit an industrial product, for which standard EU state aid rules apply. These are stricter than those in place for agricultural goods, (covering most other alcoholic beverages), where national governments have more leeway to subsidise producers.

The Commission says Germany should cease all grain brandy subsidies from January 2004. Under EU state aid rules, the Commission can order Germany to comply. The Commission#;s action was prompted by a complaint about unfair treatment from six German industrial producers of grain brandy, made only in Germany from grain, barley, oats, wheat or buckwheat.