EU wine reform needed to go further - Rabobank

EU wine reform needed to go further - Rabobank

Wide-ranging reforms to the European Union wine sector have fallen short of ambitious targets, according to a report by Rabobank.

Winemakers and grape growers have grubbed up 162,000 hectares of vines across the European Union in the past three years, in return for compensation from the European Commission. This falls short of the 175,000-hectare target, however, set by the Commission in its wine reform deal, agreed with member states in late 2007. Initially, the Commission had wanted to pull up 400,000 hectares, but this proved politically unpalatable to the largest producer nations.

Analysts at Rabobank are concerned that the three-year grubbing up scheme, which ended in December, has not gone far enough. "The scale of the reform is certainly impressive," said the analysts in Rabobank's quarterly wine report, published this week. "However, it appears that the supply reduction has only just kept pace with declining consumption of EU wine across the EU."

The Commission devised a wine reform plan in order to help Europe's wine sector become more competitive, amid overproduction within Europe and the growing presence of non-European producer nations in key markets. This year, which marks the end of the reform period, the Commission plans to review its progress.  

"In short, the impact of the reform plan has been mixed," said the Rabobank analysts. They said that reform has proved less effective than initially expected, but added: "Whether Brussels is willing to bankroll another round of reforms on this scale seems more and more unlikely, so there is little doubt that many European wine producers will scramble to future-proof their businesses and markets with the almost EUR2.5bn (US3.3bn) in funds that remain under the current plan."

Limited extensions and changes to the agreed plan have already been made. In 2010, the Commission promised to permit subsidies for grubbing up vines until 2015. The final deadline was initially 2013. 

In addition, the Commission has this month agreed to re-examine its plan to liberalise vine planting rights across the EU. Restrictions on plantings are due to be lifted at the end of 2016, but the bloc's biggest producer nations, France, Spain and Italy, are against the plan.