The European Union (EU) Council of Ministers has struck agreement over reforming the EU's common market for wine after partially conceding to demands from the French government to maintain compulsory distillation.

This will remain an option for subsidies, although it will be limited and financed through the new 'national envelopes' of subsidies that will be established by the reform, the agreement, secured today (19 December), stated.

From 2009, only 20% of these funds can be allocated by national governments to compulsory distillation, then 15% the next year, declining annually to zero. From that point, permission from the European Commission will be required for any compulsory distillation, which will be capped at 15% of the national envelopes.

These funds will command EUR782m from 2009, rising to EUR1.22bn by 2015, allocated amongst countries according to their wine production. In 2009, Italy will spend the highest - EUR218.2m, and the UK the lowest, at EUR200,000.

On grubbing up, subsidies will be payable to countries producing more than 50,000 hectolitres of wine (excluding the UK), and will fund the grubbing up of 175,000 hectares over three years.

Ministers approved the printing of varieties, vintages and vineyards on table wine labels, and agreed that the national envelopes could be spent on measures including research, green harvesting and private harvest insurance.