European Union Wine Regulations - History

History

While a large bulk of the text of the regulations is concerned with winemaking practices and the like, much of the history of the EU wine regulations has been linked to the issue of market imbalances and overproduction of wine.

In the early days of the CAP, the wine sector of the then-European Economic Community (EEC) was in reasonable equilibrium for a rather short period of time. During this time, there were no regulations as to plantations and few interventions into the market, as this was not needed. However, the early post-World War II saw the introduction of many technological innovations within viticulture, which soon led to increased production, while the demand stayed constant. This resulted in a surplus of wine. The answer from EEC was to intervene in the market to make some guarantee as to sales, while still keeping the freedom to plant new vineyards, which aggravated rather than solved the problem of overproduction. While looking like a very illogical policy in hindsight, this was in keeping with the view that what the EEC was aiming to do was to balance variations in production from year to year.

After the realisation that the surplus was a structural one rather than a temporary variation, the wine regulations were changed to be more interventionist in 1978, with a ban on additional vineyard plantations, which means that a system of planting rights was introduced to regulate replantations. Also, requirements to distil the surplus wine into industrial alcohol were introduced, a procedure often referred to as "emergency distillation", although it has remained in force for decades. At about the same time, domestic wine consumption of simpler wine qualities started to drop within the larger wine producing countries of Europe, making it even harder to return to the previous state of market equilibrium. From the 1980s, this has meant a marked reduction in the total demand, in terms of quantity, despite the fact that the wine-importing countries of northern Europe have increased their consumption. Increasing wine exports from the New World, often in a style arrived at by market research rather than long tradition, also meant increased competition and changing tastes among wine consumers. As a result, the reduced total demand also included a shift in the demand towards higher quality level. Since it was realised that the vineyards in some locations would be unlikely to yield wines of the necessary quality, increased financial incentives for giving up vineyards, so-called grubbing-up schemes or vine pull schemes, were introduced in the late 1980s. This led to reduced overproduction, but a complete balance has so far never been achieved.

In the mid to late 1990s, much of CAP was overhauled and the legislation was simplified. A major revision was done in 1999, and it has been stated several times since then that the ambition is to phase out interventions such as emergency distillation, since they are "artificial outlets" for wine. However, this aim has proven difficult to achieve.

The latest round of reforms was announced in 2006 and led to agreed legal documents in 2008. Some of the key points were:

• The system of planting rights to be abolished by 2015, with the possibility to keep them on a national level until 2018
• Distillation measures to be phased out after four years (in 2012) with progressively less money allowed to be allocated to these measures for each year.
• A three year voluntary grubbing-up scheme for up to 175,000 hectares (430,000 acres) of vineyards.
• Introduction of "national financial envelopes" whereby it becomes a national responsibility to choose the right balance of incentives.

Many of the reforms were less sweeping than what had initially been proposed, and the implementation of several items delayed.