French distilleries will close unless EU subsidies to the sector continue, a report has said. The industry is also turning to the biofuel industry to replace revenues lost as a result of EU Agriculture Minister Mariann Fisher Boel's reform of the EU wine sector.

A report by the 24-member federation of cooperative distillers FNDCV (Fédération nationale des distilleries cooperatives vinicoles) says the distillers face closure unless subsidies continue to be provided for distillation and treatment of wine by-products. The report also called for new subsidies to be provided for the transformation of those by-products into biofuel.

The FNDCV currently treats about 55% of the 3m tonnes of by-products (marc and lees) produced by French winemakers annually. It also distils 85% of the country's unsold table wine. But their business, the report says, relies solely on subsidies provided for these processes.

Last year the EU provided about EUR165m (US$221.5m) in subsidies for crisis distillation.