Wine producers will be offered incentives to dig up their vines in a bid to reduce EU production.

Draft European Commission proposals, seen by just-drinks and due to be released next week, call for fundamental reform of EU wine regulations. The proposals are likely to meet with bitter opposition in wine producing countries.

Farm commissioner Mariann Fischer Boel will also suggest banning the planting of new vines to 2013 in a bid to reduce the area under vines by more than 400,000 ha over the next five years.

Money saved by scrapping crisis distillation will be used to better promote European wines, the paper suggests, adding that relaxing some of the rules on wine-making and product labelling could also help EU producers compete more effectively with New World rivals.

Producers will also be encouraged to take advantage of EU rural development funds to take early retirement or develop other business plans.