5th Annual Conference American Association of Wine Economists

STIMULUS AND RESPONSE THE COMMON MARKET ORGANIZATION WINE REFORM How does it affect economically, socially, and environmentally?

Eglantina Di Mase

Introduction ...................................................................................................................................................................... 5 1. The Worldwide Wine Market ........................................................................................................................... 7 1.1. World Production........................................................................................................................................... 7 1.2. World Consumption....................................................................................................................................10 2. The EU Wine Market ..........................................................................................................................................12 2.1. Wine Impact on the EU Economic........................................................................................................12 2.2. Wine as a Source of Employment .........................................................................................................13 2.3. EU Wine Production...................................................................................................................................14 2.4. EU Wine Trade: Imports/Exports ..........................................................................................................17 3. The EU Wine Industry Regulations ...............................................................................................................21 3.1. The Common Market Organization ......................................................................................................21 3.2. The CMO regulations inefficiency........................................................................................................25 3.3. The EU Situation/ Problem Definition ................................................................................................26 4. The Common Market Organization For Wine ...........................................................................................28 4.1. The CMO problems ....................................................................................................................................28 4.2. The CMO Reform ......................................................................................................................................29 4.3. The CMO Options Evaluated for the Situation ................................................................................30 5. The Profound Wine reform: Option Chosen by the CMO ....................................................................34 5.1. Profound Reform of the CMO ± Variant A: One-step ..................................................................35 5.2. Profound Reform of the CMO - Variant B: "Two-steps" ............................................................35 5.3. Common Features of Both Variation A and B ................................................................................36 5.4. Budget ..............................................................................................................................................................51 6. Expected Effects of the Wine Reform .........................................................................................................56 6.1. Economic Impact .........................................................................................................................................56 6.2. Social-Economic Impact on the Rural Areas ....................................................................................59 6.3. Environmental Impact ................................................................................................................................61 6.4. International Effects ..................................................................................................................................63 7. Recommendation ..................................................................................................................................................66 Conclusion ......................................................................................................................................................................72 ANNEXO 1 ....................................................................................................................................................................74 ANNEXO 2 ....................................................................................................................................................................77 2

ANNEXO 3 ....................................................................................................................................................................80 ANNEXO 4 ....................................................................................................................................................................82 ANNEXO 5 ....................................................................................................................................................................84 ANNEXO 6 ....................................................................................................................................................................85 ANNEXO 7 ....................................................................................................................................................................86 Figure Index ...................................................................................................................................................................87 Bibliographical Reference ........................................................................................................................................89

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³Water separates the people of the world. wine unites them.´ Anonymous 4 .

The problem is not on regulating the wine. strengthen the reputation of EU wines. consumer. a pleasure that used to be reserved only to the well educated and owners of a refine taste. Its production is not only sensitive to the environment but it is mainly affected by economic and legal factor. It has to undertake production regulation. the actual problem is that when creating the regulations the mind is set is under the country¶s economic reality. to incorporate it in their common choices when considering what to consume. Still due to the globalization of wine the European wine industry is suffering a loss of market share. environmental regulations and even social regulations. its consumption just passion« and like this. but also as an alcoholic product. Wine needs to be regulated not only as an agricultural product. This is the globalization of wines. It is because of its delightful effects. Its production requires both art and science. gain new ones. a career. trading regulations. a business. wine has taken a greater ³share of the stomach´. Even though these regulations are essential for the over all good of the community. marketers often come up with new cutting-edge ideas to appeal to their target markets. This reform aims to create a sustainable wine sector by: increase the competitiveness of the industry. in other words. retailers now devote greater shelve space to wine. and producers have innovated with new strategies to increase sales and gain a larger market share. recover old markets.Introduction Wine is the perfect blend between nature resources and human creativity. create new rules to 5 . In the last decades. many others have been created with wines laws and regulations. The European Union (EU) is the world¶s leading producer. just with time wine becomes a culture. Even though many trading barriers have been eliminated with globalization and trades agreement. Which is perfectly illustrated in the European wine industry. This has set off a chain reaction that changed the landscape of the industry forever: wines exports and income activities have increase. As a reaction the European Commission has made a reform of the EU¶s Common Market Organization for wine. an storyteller. and not on the wine industry itself. has become increasing popular among a wider spectrum of social classes and geographical locations. monetary availability. exporter and importer of wine. world recognition and business profitability. most of them affect the market flow of wine. People have been leaving behind the discourse of seeing wine as a rare and luxury commodity. that sometimes we forget that overall wine is a commodity. causing a greater market unbalance. and social necessity.

Then the study attends to provide futures reform recommendation leading to the final thesis reflection. Subsequently the study describes and illustrates through tables and graphs the legal framework of the EU wine sector and its development through time. social and environmental sector. and books. In addition the ones that have put into practice have been in the market for just a short time. and environmental effects that this reform will bring to the European Wine industry. which gives sometimes information which is not subjective. socials. Also by asking a simple question to 50 people. wine documentaries. mainly on the explanation of the new reform measures. The research will explore several themes. In addition another limitation is that most of the data comes from the EU agricultural commission. studying the role of wine in different sectors of the Community. A limitation of this study is that not all reform measures have being put into practice.operate effectively. the original findings of this research come from academic knowledge and comprehension gain from common past events. newsletter articles. The first part of the dissertation examines and discusses the worldwide wine industries and its production and consumption. social. The objective of this report is to provide an understanding on the 2006 Common Market Organization profound wine reform. The dissertation seeks to accurately predict the effects of the new CMO wine regulation on different levels of the EU wine industries. It then specifies in the European wine industry. The dissertation body¶s focus on the Common Market Organization of wines. Primary data was obtained through interview with executives from diverse countries. and environmental impact are then evaluated. While secondary data was mainly obtain from the European Commission Agricultural webpage. Data analysis includes an examination of the past EU wine regulatory scheme and how the new reform affects the EU economic. who work in different wine industry areas. not reflecting the overall real effects of each measures. and the international wine sector. while discussing the different economical. about the Common Market Organization reform. 6 . both European and International. However. From which economic. its weaknesses and strengths. while respecting the environment.

In 2009 each continent had a country or more in the top 10 wines producers.6 million hectoliters produced in 2008. China is the country that drives the forces of the continental vineyard development. Last year the overall world wine productionincreased by 1.9% AMERICA 5.1% AFRICA 17. the world¶s most powerful wine producing countries. Oceania and Asia go hand-to-hand. Figure 2.1% of the overall world wine production. increasing their production continually.7 million hectoliters of wine produced (not including juices and musts). 4.1% ASIA EUROPA 67. with almost 18% of the total world¶s production.1 World Production Wine production is found in all continents of the world except Antarctica. (Indian Wine Academy) Figure 1. Figure 1: Global Wine Production Distributed by Continent. 7 . The World Wine Market 1.1. producing over 65% of all worldwide production.1% 5. The last position is for Africa producing only 4. illustrates the total of wine production through different continents.1 million hectoliters compared with the 267. The American continent is the second biggest producer. illustrates in quantity and quality.8% OCEANIA Source: Indian Wine Academy The European continent is the major wine producing in the world. In 2009 there was a total of 268.

Argentina and Chile represent the growing wine producers from the American continent. Italy. USA.Figure 2: Top 10 Wine Producing Countries 47. Spain. represent the African continent with 3. Source: FAO 8 .7% Source:Winebiz Almost 50% of total wine production is done by three European countries.4% of the world wine production. France and. Finally South Africa. In addition. The fact that China is in the top 10 world producers reflects its rapid growth.

As shown before France.goldmedalwine. Figure 3 illustrates the top 20 worldwide producers and its significant positioning change through out the years.Figure 3: The Principal Wine Producing Countries (in thousands of hl) and Its Development. Canada.and the United States. in particular from Argentina. There is an anticipated increase in production from China and Romania. Also ³New World´1 producers such as Australia.´In addition we see the emerging of new wine producing countries such as Russia and Austria. compensated by a strong growth in Spain wine production. New Zealand. creating a worldwide wine surplus (Wine Instituted). World wines: are those wines produced outside the traditional wine-growing areas of Europe. Vinexpo chief executive says ³China is among the top 10 producers in the world in volume now days and India is getting close.com/member_benefits/education_terms 1New 9 . There has been a drop in French and Italian wine production over the last ten years. South Africa and the United States. Italy. but are present in today¶s wine industry. Mexico. while there an increase in world wine production. developing every day more and more. Australia. there is a decrease in the world consumption of alcohol. Robert Beynat. www. Chile. Source: Organisation Internationale de la Vigne et du Vin (OIV) . which were not present in the late 80¶s. are continually increasing their production of wine. These countries have been increasing their overall vine plantation area in the second half of the 1990s and early in this decade. Chile.Unfortunately. and Spain are the top producers of the world.

1. For the pass three years the world has been in an economic crisis.785 million hectoliters in 2009 with a total of 236.5 million hectoliters vs. There is a slow down in the consumption of wine.2.2 million hectoliters of wine consumed in 2008 (Indian wine academy). Economical drinking options such as beer and local spirits are coming back in trend. since they are cheaper. combining with the rise in beers and spirits. World Consumption: The global wine consumption decreased by 8. especially in luxurious products. Figure 4: Evolution of the World Wine Consumption Source: winebiz 10 . people are spending less money. The decline in the wine¶s demand can be a result of the worldwide crisis. 245.

it predicted the Asian wine and spirits market would be worth $6. In Addition. In addition. Rothfield & Wittwer.61% in the next three years.54% Figure 6: Global over supply 1997-2004 Source: OIV.4 billion by 2011.Figure 5: Top 10 Wine consuming countries (wines below 15% of alcohol) Source: VinExpo Asia-Pacific 2010 The 2010 VinExpo studies predicted Asia's wine consumption to growth by 25% in the next five years. 2008. over the same period experiencing a rise of the United States consumption of about 9. Figure 5 illustrate how Asia's wine consumption is set to grow by 31. 200 11 . IWSR. 2010. it forecasts the European wine consumption to fall.

3% more than twice that of olive oil 2. Average production over the past five years was about 178hectolitres. which is equal to an extra production of 12%.4 million hectares. and Luxembourg. This covers about 3. EU wine is not as important to the world as it is for the EU its self. which equals to 2% of the EU-25 agricultural area. worth about ¼16 billions. It produces about 175mhl of wine per year. The importance of wine production in economic activity is even greater at regional and local level: for certain regions the value of wine production exceeds 20% or even 30% of total agricultural production. Portugal.5 million properties producing wine. The global wine market is currently unbalanced by a production surplus.1 Wine Impact on the EU Economic Wine is one of the main products of the EU agricultural sector. 57% of global consumption and 70% of the global exports. Which accounts for 65% of world production. through history it have give wine life and recognition.7%.4 billion) and employed about 1. Figure 7.5million people (15% of agricultural job). mainly in value. 45% of wine ±growing areas.4% of agricultural output (¼17. Over the past few year supply has exceed demand by about 30 million of hectoliters. In 2004. (European Wine Commission. It represents around 10% of the value of agricultural production in France. 2006) The EU is the fathers of wine. In 2004 the share of wine in agricultural value was 5. it is still an important number. (Common Agriculture Policy) 2. (Common Agriculture Policy) Wine production plays a primary role in the agricultural activity of most wine-producing countries. 2. The EU Wine Industry The European Union is the world¶s largest wine producer. exporter and importer in the world. 17 out of 27 countries produces wines giving European Union more than 1. 2010) However. (Common Market Organization.2% and sugar 1. when considering more restricted geographical areas. show the share percentage of wine in 12 . consumer. the wine industry in the EU accounted for 5. Austria. wine products make up an important share of the EU¶s agricultural output.Figure 6 confirm the high increase of the wine production comparing to the decrease of the wine consumption. Therefore. Italy. Nowadays. the percentages can be even higher. Even though some of this surplus is use in the liqueur industry.

wine only contributed with about 3% of value. which is equal to 22% of the total EU agricultural work force (Eurostat). Moreover. The wine share is higher than its wheat share and almost seven times higher than the sugar beet production. exporters.7%. and Slovenia the wine production is very important it is similar to its their total cereal shares. Figure 7: Source: Eurostat-Economic Accounts for Agriculture The table shows how production is also important to some of the new member state of the EU. the average income varies depending on the region and the kind of wine being produce. In countries such as Italy. and Slovenia. 2. In contrastthe share of wine is lower in the Czech Republic 0. This will increase amazingly by including others upstream and downstream part of the sector. it not only produce farmers and producers job. importers and more. such as Greece. Portugal. Only in the agricultural level. Luxembourg. but also agents. which is the third largest producing country of wine in the EU. Austria.2 Wine as a Source of Employment Wine is very important source of labor in the EU. in 2005 EU wine producing had more than 2 200 000 full time workers.producing countries. In the case of Spain. In addition wine producers have always enjoyed higher incomes than those in the agricultural level as a whole. The table also shows how wine is extremely important for the French agricultural industry. 13 .

Italy.Figure 8: Average incomes of the EU wine producers according to the type of wine (2003) The graph show us how in well develop Member States such as France and Luxembourg. Portugal. This can explain their low wine price. Other important producers include Germany. Bulgaria and Slovenia. On the other hand in countries such as Spain. Greece and Portugal the income is very little. In addition as shown in figure 7. and Spain are the three main producing countries of the EU accounting for 85% of the EU¶s wine production. Romania. 2. 14 . wine has and important role in countries such as Austria. Furthermore the graph show us the important different between quality wine and table wine. Greece and Hungary. The following map show how the wine production areas are spread through out the EU territory. enjoy of higher incomes when producing wines. France.3 EU Wine Production The European Union continues to be the world leader in terms of vine growing area and wine production volume.

15 .000 Hectoliters) Source: EU Commision and FAS EU Offices Due to the quality of the wines there is a big different between the volume of wine production and the volume by value of wine productions of the different EU wine producing member state.Figure 9: Map of the EU Wine Producing Areas source: Wine in the old world: new risks and opportunities. Figure 10: Wine Production in Selected EU countries (1. The following two graphs compare the Produce wine volume with the value wine money. The Following table shows the wine production of the leading EU countries in the past couple of years.

Italy comes next with around 50 million hl and a value of ¼4 billion.6% of the overall EU production. Furthermore.3% of value production it accounts for almost half of the value of the EU wine produce. France is the biggest producer in volumes and value.Figure 11: Volume of wine production by Member State (EU-27) ± ave. The third production place is for Spain with 45 hl. This reflects the low price of Spanish wine. which equal to 28. 2002±06 Figure 12:Value of wine production by Member State (EU-27) ± ave. with 47. In average it produces about 53 million hectoliters. 2002±06 Theses graph illustrate the production distribution of wine in volume and value.2 billions. but in value it only account for ¼1. This 16 .

therefore.S. During the 70¶s the problem of over production was address by the creation of different production laws. In addition. Franco) For many decades now.2 million hl were trade between Members State.8 million hl) and from Spain to France (2. The EU exports more than 17 million hl to international countries and between 2008 and 2009 a total of 43. Globally around 83 million hl of EU wine. the European wine market has suffered from a wine overproduction problem. dollar value. for most EU wine-producing countries. The use of these instruments contributed to a decrease in the EU wine area and in the total production of wine. with a rises of fallen of the wine surpluses this is done mainly because production varies significantly from year to year. depending on weather conditions. A large portion of this trade involves the shipments of bulk wines. used mainly for blending purposes. which have been member of the EU since 2007.4 EU Wine Trade: Imports/Exports Wine is one of the most EU trade products. from both Italy to Germany (about 3 million hl in January-November 2009) and France (0. wine contributes significantly to the trade balance 2. 30% of wine production. The mix between the uses of these instruments and a higher demand let to a better market stability until the mid 90¶s. wine exports from the European Union to third countries in 2009 declined by 8% in volume and 17% in U. They deal withlimiting production potential by prohibiting new plantations and motivating the abandonment of certain producing areas through the process of grubbing up. they produce about 2 million and 5 million hl respectively. EU wine exports are worth ¼15 billion.4 million hl in the same period) and Germany (1. wine is one of their most valuable export commodities. (EU Commison Data). (Angelini. For those countries. both for the agricultural sector and for the economy in general. (Calwinexport) Excluding the intra-EU trade.graph includes Bulgaria and Romania.5% of all the international agricultural trade. was export in 2006. 17 . which accounts for 3. The following table shows exports from the EU-27 during the three most recent years. Every year the EU wine market imbalance changes. The main reason for this decrease can be the economic crisis. In addition the higher value decrease can be explained by both the decline of the wine prices and the stronger preference from the consumers in the importing countries towards cheaper wines and the new world competition.1 million hl).

Value in $. The United States is the leading exporting country for EU wine. base on volume. In addition Russia is the second largest exported. Quantity in 1. 18 . 25% of the total volume and 32% of the total value.000 Hectoliters. On the other hand we see how the Asia market growth. Chinese export increase both in term of volume (+38%) and value (+ 36).Figure 13: EU-27 wine Export. Still figure 13 shows how in 2009 export to Russia decline by a -18%. since most shipment to Russia are of inexpensive Bulgarian and Spanish wine.

therefore. South Africa and the United States. in 2005 the EU exported ¼351/hl compare with the ¼207/hl of wine 19 . Value in $. Nonetheless. the unit price of exports has increased compared to ten years ago.Figure 14: Value of U. On the other hand. Most imported wine comes from Australia. These show how EU market is changing its demand from expensive wine to more economic wines. 1996-2007 The EU is not only the largest wine exporter in the world.000 Hectoliters.S. agricultural and Rural Development) Figure 15: EU Wine Imports. Quantity in 1. Last year total imports had slight increase in quantity but a decrease in value. Chile. Wine Imports. The market is consuming less wine but more expensive ones. (European Commission. Totals and Shipments from EU25. but it¶s also the largest wine importer. the value of exports has grown.

This is illustrate in Figure 16 and 17. the overall commercial balance for the EU wine sector remain with a positive constant trade surplus of about ¼2billion. Figure 16: EU Wine Exports and Imports in Volume Source: European Commission. Agricultural and Rural Development 20 .imported. Therefore. Agricultural and Rural Development Figure 17: EU Wine Exports and Imports in Value Source: European Commission.

y y Protection from low priced imports through a duty system. It is one of the most complex and detail legislation since it not only deals with standard topic such as price.This freedom on plantings waseventually coupled with a program that virtually 21 . The Common Market Organization The CMO aims are consistent with the objectives of theCommon Agricultural Policy.1. the regime includes a complex set of rules on winemaking practices and labeling. to stabilize markets. intervention. It started out very liberal with a stable market. made mostly by farmers and their cooperatives. This is why the EU wine is control by the Common Agricultural Policy (CAP). The main basically principles of the CAP are to. wine production had nocurbs on plantings and very few market regulations. Over the past three decades the CMO policies have evolved significantly. (Common Agriculture Policy) The counter size is that some of the CMO policies tend to stifle innovation and prevent effective market adjustment. The regime contains all ofthe basic components of classic CAP support measures.3. including: y Support of internal prices through planting restrictions. among others. The CMO follow the principles of a single market model. unified the market creating free trade. but there are few viable agricultural activities. protect European products against international products and financial solidarity with Europeans farmers. The EU Wine Industry Regulations In the EU wine is treating as an agricultural product. oenological practices. and Export refunds to facilitate external sales into markets with lower prevailing prices. It tries to keep preserve tradition and prevent destructive commercialization through the used of technical and administrative legislation. These payments ensure farmer¶s income providing social stability. In addition. circulations and release to the market. In addition within the CAP there is The Common Market Organization (CMO) for wine. and trades but also with more specific topics as production. and ensure fair competition within the Single Market. It eliminates all customs duties and other trade barriers to accomplish the free movement of wine between Member States. in particular. 3. storage and distillation arrangements. The CAP subsides regions where winegrowing is an important economical activity. ensure a fair standard of living foragricultural communities.

reaching better balance between the demand and supply of the EU wine market. G. In 1970. However. it is more difficult to improve market conditions and to support prices by just withdrawing surpluses quantities (which was how it was done before). but whichgenerated a serious structural surplus that was partially addressed through exportrefunds (subsidies). and table wines. Nevertheless. another consequence of the agreement is that when competing in a open market. This change and combined bad use of certain rules induce CMO to write a new reform in 1999. (Campbell. while the wine production increased. which was supplement by a constant high demand. With the pressure of the wine market being globalized the EU find the need to sing the Uruguay Round agreement in 1995. On the contrary the EU wines were exposed to the world market competing with new world low price wines. Moreover. So with it the wine¶s community market was not longer isolated from the world market. It also financed the restructuring of a large part of present vineyards. the responsibility to classify and control the quality wines psr was left over to Member States.guaranteed sales. Figure 18 and 19 below give an overview of the CMO instruments enforce following the 1999 reforms and their expected impacts. the first CMO for wine was established. the obligation to distil the surplus wine. So in1976 the CMO became very interventionist. making EU wine¶s prices dependable of its new competition prices. Important changes occurred during the 1990's on the European and world wine¶s market. and guaranteeing better incomes for framers. and Guibert. It distinguishes two categories of wines: quality wines produced in specific regions. with water pollution and soil impoverishment. In fact. Also this increase of production created a negative environmental effect. It prohibited new planting for table wines production. this same principle of freedom of plantings and virtual guaranteed sales started causing wine surplus. so-called quality wines psr. 22 . in 1980s the wine¶s demand decreased. N) During the 1970s there was a remarkable increase of wine production. The EU wine market stabilizes and new wine producing countries appear. creating a huge wine surplus. The CMO answered to the environmental problem by reinforcing financial incentives for giving up vineyards. In addition. giving customers more options. The goal of the new reform was to improve competition in the long term. and subsidizing the conversion of vineyards to other agricultural products. the market is fill with new quantities of wine from international producers.

Source: Common Agricultural Policy Figure 19: CMO Instruments Enforce in Distillation.Figure 18: CMO Instruments in Force in Planting. Source: Common Agricultural Policy 23 .

Source: Common Agricultural Policy 24 .Figure 20: CMO Instruments Enforce.

there is not concept of geographical indications. This regulation reduces the EU¶s competitiveness. Figure 21: Consumption by type of wine (EU-15) source: Eurostat On the mean time new world countries created easy geographical indications gaining market share in world wine¶scostumers. In addition due to different trade agreements the EU wine sector is very complicated. In the wine sector any laws that deals with protected geographical indications or designation of origin. This and the fact that qualities wines have increase make consumers more confuse.3. Therefore a reform of the current wine structure is need it. Figure 21 shows the increase of quality wine consumption. EU production of ³vin de cépage´ is limited. On the other hand there are also problems with the concept of ³quality wine produce in specific regions´ (QWprs) since there is not an actual definition at the international level. depends of the WTO trade its intellectual property rights agreements (TRIPS). demand changes. therefore weaken the value of the quality wine system and the credibility of the label. to improved the 25 .2 The CMO Regulations Inefficiency Still due to different factors such as the success of the new world producers. since no blend of one variety wine of differentorigins is allowed. production and commercialization strategy the CMO have not yet reach sustainable point for European wine market. the EU distillation crisis.

Subsequently different market situation took the wine sector to a crisis. First in the early years (1960) the wine was produce with not any regulations. The main strength of the EU includes wine producing traditions. The history of the CAP reform and the CMO for wine is summaries in figure#22. obligating it to created new regulation in order to reach competitiveness. cultural identity. being both productive and competitive. Until nowadays where the market keep changing and the goal is to actually reach a sustainable wine sector. the past years the industry have been facing some complex 26 . Figure 22: History of the CAP reform and the Wine CMO Source: European Commison.3 The EU Situation/Problem Definition The past information have shows us undisputedly the EU is a leader when it comes to wine. Still when making and objective analysis the EU wine industry has weakness as well as strengths. 2.4 million wineries providing rural employments. centuries of well know high quality reputation. In spite of its huge market potency.quality wine system. Common Agriculture Market 3.

imports have grown by 10% per annum. is declining by about 750 000 hl or 0.. This decrease has concerned almost exclusively table wines. 10% in Spain and 5% in Italy (Anderson et al. whereas higher quality wines have seen their market share increasing progressively. 2008). However. This appellation models affect the production and commercial strategies. 27 . The CAP bases the control of vineyard production potential on the prohibition of new plantations and yield limitation in the DO areas. preventing producers from adapting their wines to changes in consumers taste. causing a higher production cost that are then reflect in the price. 68% in Australia and 47% in Chile. The small production is not adequate to the needs of today large-scale retailers. Over the last ten years. In addition labeling rules are complex andinflexible. ³EU wine consumption. in the major producing and consuming countries the net tendency has been to decrease: between 1989 and 2004. Another explanatory factor of increasing competition on the world wine markets is the evolution of demand. 2006). the proportion of quality wine consumption within total wine. while exports are only increasing slowly. Consumption has increased from 30% in 1986 to 46% in 2006 (European Commission. The wine is differentiated base on where it was produce through the recognition of Designations of Origin (DO) and Geographical Indications (GI).65% annually´. against respective figures of 13% in France. In aggregate terms. Having smaller production structure make it difficult to reach to economy of scale. In the European Union (EU). total wine per capita consumption has fallen from 72 to 55 liters in France. The wine sector is evolving in an increasingly competitive international scenario characterized by the irruption of new producing countries with innovative strategies in production and trade (Campbell and Guibert. from 62 to 49 liters in Italy and from 54 to 34 liters in Spain. according to OIV (2008). like UK and new emerging markets. confusing consumers and restraining the marketing of EU wines. The new world producers have taken an significant market share of the tradition European wines market.problems that are causing the falling of the EU wines in both the international market and the EU market. While on the other hand European wine follow the model of product differentiation. In the new world wine producers are highly concentrate: the five top companies control 73% of wine production in the United States. 2001). like China. and expensive marketing strategies. global wine demand has increased by 9%. the tendency towards reduction in world consumption experienced during the decades of 1980s and 1990s has been reverted in 2000 (since then.

They do not allow efficiency and obstruct the development of new production techniques and marketing methods.Overproduction of wine depresses the market price and is very costly to the CAP. The EU spends around half a billion Euros every year just trying to eliminate surplus wine for which there is no market. but also because of continue use of traditional production techniques and a lack of willingness to adapt to consumer trends. The over supply and distillation crisis of the pass years show how the ban on new plantings has not completely managed to control production. taste and marketing. Which until a certain level shows the inefficiency of applying the law of the CMO. The New World wines are competitively priced. On the other hand some other regulations have created barriers for in the EU wine industry. most of it activities have stop. both on the domestic and on the export market. today this classification does not provided trust to consumers. Moreover.Another cause for concern is that European wine market is being left with large quantities of surplus wine that require costly measures to manage (through disposal. storage or distillation into alcohol). making it extremely confusing for customers. It also contradicts with the concept of geographical indications for wines. On the opposite the CMO distillation measures and other market tools encourage overproduction.1 The CMO Problem This situation reflects the inefficiency of some of the CMO policies. the fact that each state in the EU can define the table wine from the quality wine. not only due to decreased consumption. 4. Furthermore. A perfect example is the labelling rules. even though there is a grubbing up regulations. making it impossible to reach market equilibrium. and 28 . The Common Market Organization for Wine 4. which are very rigid and varies too much. especially when the surplus is distilled into bioethanol. These handicaps have led to a large loss of the market share of EU wines relative to competing wines. which have succeed in their prices. If continue current trends. excess wine production will reach 27 million hl (15% of annual production) by 2010/11. In addition competition is coming from new regions with modern business techniques. Overall the EU wine sector is indeed in decline. modern in image.

making provision for the smooth integration of the Bulgaria and Romania wine market and keeping full respect of our international obligations. wine makers. were also in the agenda of the Commission. animal and plant health. recovering old markets and winning new ones in the European Union and worldwide.In 2006 it released a discussion paper.htm) 29 . the environment and animal welfare (cross-compliance) contained in the Regulation. horizontal approach and cross compliance2. importers. market-oriented and sustainable wine sector. In order to reach this target the CMO should achieve the following objectives: y y Ensure a better quantitative and qualitative balance between supply and demand. The CMO have decided to change some of its regulation and reform the current CMO policy.´ In addition topics such as ensuring the sustainability for producers. This changes will determining its success. (http://europa. consumers and other stakeholders on the future of the EU wine sector. 4. o Meet the requirements and preference of consumers y Enhance market orientation. retailers.some consumers think they have a better taste. Increase the competitiveness of the EU wine sector by: o Strengthening the reputation of EU quality wine as the best in the world. to a more competitive one.2 The CMO Reform As a responded to this situation the European Commission created a new reform towards a more forward-looking. Farmers may receive direct payments provided that they maintain their land in good agricultural condition and comply with the standards on public health.eu/legislation_summaries/other/l11089_en. to facilitate debate among growers. exporters. 2Cross compliance is a mechanism that links direct payments to compliance. The of the EU wine industry will depend on its ability to counter to the ongoing threat from the New World. ³Towards a Sustainable European Wine Sector.

Commissioner for Agriculture and Rural Development introduced the proposals in 2006. Safeguard producers' incomes. show the sustainable legal framework that the EU will like to reach with the new CMO reform. The final version of the reform included several steps meant to increase efficiency in the EU wine industry. health and consumer protection and environmental matters. as well as increasing its competitiveness in the global market.y Create a wine regime that operates through clear. Figure 23: The Three Elements of Sustainability for the EU Wine Sector. 30 . the European Commission approved proposals for a reform in the European wine sector.g.3 The CMO Options Evaluated for the Situation Taking into account the situation of the wine sector and what the policy aims for. Figure 23. y y y Create a wine regime that preserves the best traditions of EU wine production. on July 4th 2007. simple and effective rules that balance supply and demand. 4. WTO Provide for a smooth integration of Bulgaria and Romania in the EU by enhancing the modernisation and restructuring of their wine sectors. Integrate wider society concerns. e.g. Mariann Fischer Boel. y y Respect international obligations. e.

after more than one year of consultation and four month of negotiation the CMO believed that making a profound reform of the wine sector was the most adequate solution for the situation. to reform the wine CMO along the lines of the CAP reform model and to pursue a complete deregulation. to maintain the status quo.Social Acceptability Ecomic Viability Enviromental Integrity Wine Sector Sustainability The Commission considered four possible options for the modification of the wine CMO. political and environmental effect that each option could have in the overall EU and wine industry. social. Three of the propose options.´ ( European Commission) Figure 24 evaluates and summaries the different economical. The challenge was to obtain a reform that will create a sustainable and competitive European wine industry. 31 . while using efficiently the budgetary means. the needs and the particularities of the wine sector. Instead. ³This reform option would provide for in-depth revision of all the policy tools of the CMO. do not gives the right answers to the problems. which nevertheless would still preserve its specific character.

³a merely cosmetic amendment would not be sustainable economically or politically. and Fitting in with the reformed CAP. notably the planting Restrictions. Applying the rules correctly in some Member States.Figure 24: Expect Impact of different Options. Source: European Commision Common Market Organization Option 1: Status quo with possibly some limited adjustments In view of the serious difficulties of the current CMO in terms of: y y y y y Achieving a better market balance.´ 32 .

The commission believes this is not a good option since the current CMO regulations have not provided the right solution to changing wine industry. It has not eliminated surplus or increase international and national market share. Maintaining today's wine regime even with small changes, would lead to increasing surpluses, making impossible a market balance. On the other hand in all other policy options, the abolition of market measures would guarantee a better market orientation of wine production, therefore achieving market balance in the long term. Overall the commission believes that many changes are necessary for this option to work in today¶s wine market.

Option 2: Radical reform of the CMO of wine: This is the option that Commission seems to prefer. This option gives the most appropriate answer to the current wine industry crisis. It combats in both the short and long-term the problems of the wine sector. This option will introduce a national envelope, which aim is to transfer funds to Member State for rural development. This subsides will help winemaking regions in Members States to adapt EU measures to local circumstances and needs, resulting in more targeted subsidize. It has three main elements: y Reducing production through a ban on new plantings and permanent abandonment (uprooting) of vineyards y The removal of measures such as crisis distillation, potable alcohol distillation and export refunds that provide price support and encourage over production of wine and y A reduction in over complex rules associated with wine quality policy (production and labeling rules) and oenological practices. It has two variants A and B. A short term one, variation A, which provides a quicker respond to the present difficulties, but required a more rapid and demanding adjustment. In contrast, variation B, the long term variants, aim to obtain the same results but providing longer time frame, making easy to adapt and apply the new regulations. Later on a deeply description off option 2 and all its measure is given on the section call ³CMO Profound Reform´ Option 3: Reform along CAP reform lines 33

For this option the main change is the conversion of all or part of the wine budget from direct payment ³Single Payment Scheme (SPS).´ This will be distributed on wine growing hectare basis, solving some environmental concerns. In addition an advantages would be a major simplification and the introduction of cross-compliance for all vine growers. This reform will frame flexible. The commission have agrees that overall this policy is adequate for the long term but not for the short term. In the long run it will achieved market equilibrium and will address environmental concerns. However, this is not the appropriate reform since in the short run the market will have to undergo through a very difficult adjustment process, which could cause a major crisis in the EU wine sector. With this policy, public intervention would mostly focus on supporting farmer¶s income and not in improving the market balance. In addition the overall budget would be too little to compensate for the loss of market support for many growers.

Option 4: Deregulation of the wine market This policy aims to achieve a complete liberalization of the sector by eliminating all policies instruments for the management of the production potential and of the market. Tools such as the ban on new plantings, and grubbing-up, the policy of restructuring and reconversion and all market measures would be abolished. On the other hand the budget would be cancelled or transferred to the second pillar for ³ Rural Development RD´ policy in general. Even though the liberalization of the sector could in the long term achieved some of the CMO, but the fact that this policy would have to be implement immediately in the short term it can cause several economics and social impact on the wine regions because of the lack of complementary structural measures.

5.The Profound Wine reform: Option Chosen by the CMO
"While strengthening our best traditions, this reform marks a point of no return for a greater orientation towards the market and will help us mobilizing our sector in order to better meet the consumers' expectations in an increasingly open and competitive context", said Lamberto Vallarino Gancia, President of the CEEV. (6)

The Commission considers this option as the most appropriate response to the challenges. The 34

reform has two variants, which main difference time frames in which they are suppose to be done.

5.1 Profound Reform of the CMO ± Variant A: One-step
The key point for this option is that by the 1st of August of 2010 all the planting right system and the grubbing-up scheme should be eliminate. Vine-growers would be free to do grubbing-up but at their own expense. In addition cultivated areas will enter into a single payment scheme. Furthermore, each member state would maintain the right to limit the areas of wine production with geographical indications. Figure 25, summaries the first step of the reform. It was implemented on August 2008. Figure 25: First Step Action of CMO Wine Reform.

Variant A: First Step August 1st 2008
Measures kept and/or Strengthened
Planting rights Grubbing-up Restructuring Rural Development Enviromental Requirement Promotion/information

Measures Added
National Envelopes

Measures Deleted
Private storage Distilation subsides Export funds Alcohol public storage Must aid for grape juice

Measure deleted at EU level but remain optional at Member State level
Potable alcohol crisis and by-products distillations aid Must aide for enrichment

5.2 Profound Reform of the CMO - Variant B: "Two-steps"
The target of this variance is in the first phase is to restore market balance and the second step is to improved competitiveness. The principal characteristic of variance B is that it acts as a structural adjustment, i.e. temporarily reactivating the grubbing-up scheme. In addition the 35

regulations on plating rights would be extended until 31 December 2013. Like this, the least competitive wine producers would have a strong incentive to sell their planting rights. Rapidly, competitive producers can be expected to focus more on the competitiveness of their enterprise, as the cost of planting rights will no longer slow down expansion. Therefore in the long term this could reduce the farmer¶s fix production cost. The grubbing-up premium will be set at an attractive level. Once grubbed up, the agricultural area formerly used for vine production qualify as an area under the SPS and be granted a certain payment. Furthermore, minimum environmental requirement would be attached to the grubbing up premium to avoid land degradation. Figures 33, 34, and 35 show the timetable of Variation B

5.3 Common Features of Both Variation A and B
Both variants contain common measures such as:

Abolition of all market measures: Market management tools would be abolished from day one, such as: y Support for by-product distillation, y Potable alcohol and dual-purpose grape distillation, y Private storage support, y Must aid in relation with enrichment and for making grape juice. Crisis distillation: The aim of this measure is for the distillation scheme of surplus wine to be gradually eliminated. It would be dropped or replaced by an alternative safety net mechanism using the national envelope. With this change producers are expected to produce more wine only when they are sure they can sell it. There would no longer be an incentive to over-produce. The abolition of the crisis distillation will have different steps. The next four years will be the transitional period. During this period EU member States, can finance crises distillation only under certain conditions. Furthermore the distilled alcohol must be used in the industrial sector. The subsidies for this crisis distillation will vary during this four years. On year one, the budget for distillation may be up to a maximum amount of 20% of their national envelope. Following by 36

15% in the second year and a 10% in the third and 5% in the final year. This information is illustrated in the following graph.

Figure 26: Crisis Distillation: National Envelop Limits

Source: Common Agricultural Policy

Creation of a National Envelope: National Envelope is the term created by the CMO to describe the funding giving to each Member State according to their individuals¶ priorities. Each wine producing state will have a budget envelope calculated to a certain criteria. This will allow EU Members States to choose, according to their preference and needs from a list of 11 measures to support its wine industry. Some of these measures are: y Promotion to third countries y Restructuring and conversion of vineyards y Modernization production chain y Green harvesting y Mutual funds (mutual funds are a means of sharing risk among groups of producers enabling farmers to be compensated in the event of loss) 37

Table 7: shows the amount of national envelopes corresponding to each EU wine producing Member Sate.229. Still the envelope will be subject to certain common rules. Figure 27: Allocation of National Envelopes Under the National Envelop there is the possibility of promotion in international markets. 38 . y Various crisis management measures y Vineyard restructuring/conversion scheme.5 million in 2009 to ¼1. In addition. The main function of the rules is to prevent distortion of competition and to let Member States adapt measures to their particular situation.y Harvest insurance (Crop insurance) against natural disaster. production and historical expenditure. the vineyard restructuring/conversion scheme would be maintained under the national envelope. Overall the national envelope will give economic support to achieve the modernization of the wine industry current structure. The amount available for each country is calculated according to vine area. The overall budget will vary from ¼782. including environmental rules.5 million in 2015.

39 . The rural development activities will be financed by the EU and by each Member State. support to cover additional costs and income foregone in maintaining cultural landscapes. Rural Development: In order to finance structural measures for the rural development there will be a transfer of funds from the CMO¶s wine budget to the European Agricultural Fund for Rural Development (EAFRD)3. In 2010. 3Utilization of the European Agricultural Fund for Rural Development (EAFRD) is in accordance with the objectives and strategic framework of Community rural development policy as defined in this Regulation. since only 5% of the overall budget. that the rural development was created for entire agricultural sector. It is important to highlight. the Commission believes that the current economic recession is less attractive for Member States.Still the Community funding contribution for these activities should not exceed 50% of the given budget. On the other hand because of this same situation the commission expects that for 2010 one third of the funds will be used for the restructure and conversion of the wine yards. Mainly the budget will be used to improve the quality of the wine. has been used for this purpose. Still. Italy. support for producers' organizations. significantly reducing the wine budget.Early retirement and agro-environment support could provide significant encouragement and benefit for vine growers. These development programs will play a key role in the improvement of the economic welfare of the wine sector. improving marketing. Many measures in the Rural Development regulation could be of interest to the wine sector. ¼140 million where allocated in the promotion of wine for third countries. The reminder will be payed by the each local authority. This activities will improved the competitiveness of the Member State¶s wine since it includes the relocation and improvements of vineyard techniques. and to ¼150 million from 2011. as well as in preserving the environment for the wine producing regions. vocational training. This is a much less significant amount than the one in the Commission¶s original proposal which suggested Rural Development spending to be ¼400 million a year by 2014 (USDA Foreign Agricultural Service). The rate of EU co-financing varies between 50% and 80% depending on what are the funding activities and the region. The amount of wine budget to be transferred to the EAFRD is set at ¼50 million in 2009 and increased to ¼100 million in 2010. France and Spain. only three Member States are allowed to use RD¶s funds for the wine sector.

The aim is to confirm. some of the budget can be used for environmental purposes such as keeping vineyards on slopes in areas where other types of agriculture are difficult and have a risk for land abandonment. Simplification of the Quality Policy: Concept of Quality Wine: Nowadays the Community definition for quality wines is: ³Quality wine produce in specific region´. Italy.Still. y Encourage balance production of quality wine y Establish conditions of fair competition in the EU The Commission will try to achieve these aims by revising the current quality regulation scheme with the purpose of balancing the policy with international rules. Furthermore. Still with in the EU this definition received different treatments. Austria and Hungary the concept of ³quality´ is more important that the concept of ³Origin´ on the other hand in the south of Europe. which nowadays are the 40% of EU wines. in order to better control and manage the quality of the wine. countries such as France. Furthermore the CMO quality policy will be reliable to the current horizontal quality policy (on Protected Geographic Indications (PGIs) and Protected Designation of Origin (PDOs)). This policy aims to simplify the concept of quality wine covering both the production and the labeling. Spain. Wines with GI would be further divided into wines with a PGI and wines with a PDO. Wine Making Practices (WMPs): 40 . adapt. In countries such as Germany. and Portugal. This policy aims to: y Maintain a high quality standard for quality wines produced in specific regions. In order to gain market share and promote the EU wine. the CMO wants to keep working with the concept of geographical origin approach. focus more on geographical indications. promote and enhance this concept worldwide. The Commission proposes to establish two classes of wines: wine without GI (Geographic Indication) and wine with GI. there will be an expansion in the role of theinter-professional organizations. Causing confusion in customers mind.

This policy will transfer the responsibility for approving new or modifying existing oenological practices to the Commission. It is prohibit in several ³New World´ wine producing countries such as: Argentina. Chile. y Eliminating the minimum natural alcohol requirement. whereas the wine producing countries in the south of the Union considered this an unnecessary and unwanted 41 . Therefore the wine producing countries in the north of the EU strongly made the case for this process to be kept. Nowadays in the EU the adoption of new oenological practices depends on the competence of the wine producing country (Member State) through the Council of Ministers of the European Union. Enrichment: Wine enrichment can be achieved by adding sugar before the fermentation process. y The banning of sucrose y The abolition of aid for concentrated must y Bans on imports of musts for vinification and on blending. This process is called Chaptalization and is done to raise the level of alcohol. Some of the changes the Commission has proposed are: y Allowing European wine for exports to use the wine making practices forbidden by the EU legislation. Still EU wines for the internal market will comply with the European legislation for the winemaking practices. This process is mainly used in cold climates in which the grapes may not ripen sufficiently to generate enough sugar for the fermentation process. which can raise the alcoholic level of wine by 1%-3%. Overall the OIV does not recommend this process. In addition another way to raise levels of alcohol is by using concentrated musts. it will continue to block the production of rose by blending red and white wines together. which will include all those allowed by the International Organization of Vine and Wine (OIV) incorporating them into the list of accepted EU. Although the Commission will allow the OIV wine making practice. Australia. Nowadays this law is redundant since there is a limitation of wine enrichment and there is a legal minimum for alcoholic strength by volume of the wine marketed y To ensure an acceptable minimum level of environmental care in the wine making process.

Slovenia. which may disturb the equilibrium. and Malta) where the maximum should be 1%. A second step of this policy is the reduction of maximum level of enrichment. In addition Member States may request the Commission to increase the level of enrichment with 0. will enable the balance to be maintained between north and south. Producing a bad quality product. Slovakia. Portugal. All producers will then make wine purely from grapes and unsubsidized must. Cyprus. these were: y Increase the aid for must. with grape must to 2% except in wine growing zone C (meaning certain parts of France. y Leave the level of aid unchanged. The following table shows the criteria changes of the use of chaptalization depending on each zone.0 1. Ending chaptalization and the aid for must. To solve this problem the Commission had three options. Spain. Hungary. Italy.5 percent for exceptional climatic reasons.5 2. which is difficult to sell and have to be store or distilled.0 Starting 2009/2010 Sugar % 3. y Remove the aid and ban the use of sugar.practice.0 2. Greece. They increase the yield of wine with low alcohol and then use these enrichment methods to raise the alcoholic levels. producers frequently use enrichment to produce greater volumes of wine. The Commission decided that removing the aid and banning the use of sugar would be the best option since it will not only save budget while increasing the channel for must. Unfortunately. and simplify the rules for producers. increase the outlet for concentrated grape must. Figure 28: Geographic Allowed Level Of Chaptalization Zone Zone A Zone B Zone C Current Sugar % 3.2 With this measures the commission aims to improve the quality image of EU wine. to compensate the reduction in the sugar price. Wine Labeling: 42 .5 2.

Most wine producers cannot allow them self to have an advertising budget. table wines with different geographical indications and quality wine produced in a specific region. The current EU wine labels follow different laws such: y Different labels between types of wines and location appellation wines. Most of then belong to the EU and they are mainly divided between wine protecting the design of origin or wine protecting the geographical indicators. When doing so the commission took into account WTO policies and tried to adapt the policies to the trademarks structure. The Commission proposed the possibility of the vintage year (year harvested) and the variety (type of grape) to be indicate on the labels of the wine. When comparing to the rest of the world the EU has more than the double of geographical indications. so the label is the only medium for them to communicate with consumers. Figure 29: Division of Geographical Indicators Between EU and Third Countries. when buying EU wine. Furthermore. The labeling rules should be simple and constant since they provide universal information to the consumer. which will be applied to all the different categories of wine. in the world there are a total of 2873 wine geographic indications. The Commission proposes the liberalization of labeling by simplify the labeling setting up a single legal labeling framework. trade partners and structure wine supply on the market. y Limiting the information: vine variety or vintage can only be mention on the labels of quality wines psr or table wines with geographical indication. This labeling simplification will answer to the needs of consumers while enhancing with the wine quality policy. This would allow EU wine to compete better with the wines from the ³new world´. Today¶s CMO labeling regulations seem to prevent winemakers from achieving the transparency that an increasing global market requires. The following graph shows the world division of geographical indications.Wine labeling rules are extremely important since they give information about the product. This is one of the main factors that confuses consumers. 43 .

already well establish national quality labeling system. These labels would inform customer about environmental and health aspects. Also the changing of language rules will help the gain internationals customers¶ market share. have been kept. Figure 30: Quality wines / GI s 44 .Source: Eurostat The new reform bases the concept of the EU quality wines on geographical origins (quality wine produced in a specified region). Another proposition was to have the option to put or not put the Geographic Indication of vine. but still inform the consumer of the origin of the product through appropriate labeling rules. Wines with Geographical Indications will be divided into wines with Protected Geographical Indications and those with Protected Designation of Origin. such as France¶s AOC (Appellation d'Origine Controlee) and DOC (Denominazione di Origine Controllata) in Italy. However.

The following are the plans of the promotional activities of the main EU wine markets. specialized outlets. trade shows and fairs. promotion in different points of distribution such as. 50 percent co-financed by the EU. In addition information and responsibilities campaign will also be carried out outside and within the EU. and Asia. mainly in Europe. Sopexa gives funds to the french in the new French Association for Horticultural activities and Wine Products call Agrimer and also for foreign promotions. Promotional activities are mainly focused on advertising campaigns. y Germany: The German wine industry is focusing mainly in promoting Riesling in the USA 45 . In addition. The main purpose of this company is to promote and educate about French wines and food in the EU and overseas. This will include a budget of ¼120 million out of the national envelopes for promotion measures outside the EU. Each promotion activities will be different for each member state and will be managed by national companies.Table Wine Table Wine Wine Classification Quality Wine psr Table Wine GIs Wine with GIs PDO Wine without GIs PGI Promotion and Information Policy: This policy tries to gain the EU wines more market recognition by carrying out ambition promotions products outside the EU. in hotels. The overall French budget for wine publicity is unknown. There will be new information campaigns within the EU on wines with Geographical Indications and responsible/moderate wine consumption. the Americas. in stores. restaurants. y France: The domestic and international promotions are managed by the National company call Sopexa. with an increase of co-financing rate by 60 percent for the latter.

along ³ Wine from Spain´ are the organizations responsible for promoting Spanish wine. Chicago. Furthermore. Norway. The Spanish wines industry aims to promote their wines under geographical indicators. y Austria: the Austrian Wine Marketing Board (AWMB) manages the promotion budget. For the period of 2008-2010 the German Wine Institute will spend ¼1.market. the ICE is an agency of the Ministry of Economic Development. meeting with journalist. which is the main funds source for the Italian wine marketing and promotion. accounting for about ¼3 million. workshops and being done in the target export market. contributing with ¼2. wine tasting. United Kingdom. Canada and Switzerland. where the cost of national pavilions is shared with private companies.5 million in different promotional activities of the Reisling wine in the USA. Intra-State Australian wines are promoted mainly to Germany.5 million and the Australian federal budget. y Italy: the company responsible Italian wine and food promotion is the Italian trade Commission (ICE). the federal State. Currently they are executing the 2010 Marketing plan that includes activities in 30 countries. with about ¼1. On the other hand their main non-EU target are Switzerland and the United States. such as Australia and Chile are taking big market share of what used to be main exports. Japon. New York. ICEX. New competitors of wine in bulk. Las Vegas.5 million. The institute of Foreign Trade called. trade shows. Italian wine promotion is mainly focus in the United States. Due to budget constraints in 2010 the total amount of expenditures to promote Italian wine with in the EU and in third countries has been cut to no more than ¼3. Several promotion activities such as. and San Francisco. Ireland. thus more added value. Mainly the budget is being spend in media presence and the creation of a Reisling-week in restaurants in the main US cities. In addition most of the budget is being expend on fairs and trade shows. with higher quality wine. The Spanish wine industry wants to create name recognition. wine events. Their main promotional activities are. Other activities include financing trade teams 46 . sales of point promotions. The main purpose of this organization is to market Australian wines within the EU and international. y Spain: Spain exportations are concentrating in wine in bulk. Its exporting industry is high in quantity but low in value. wine tasting.5 million. The budget for all this marketing and promotions comes from the Austrian wine industry. and the Czech Republic. Sweden Great Britain. seminars. Belgium. Italy.

The eligibility of all wine-growing areas to qualify for the Single Payment Scheme means that environmental standards under Cross Compliance1 will be applied more widely. The original proposal from the Commission was projected to reach 200. About five percent of the total vine area (175. and increased funds for agroenvironmental schemes in Rural Development programs. Growers who wish to leave the sector will be offered a voluntary grubbing-up premium. covering the main environmental effects (notably. the use of plant protection products. and the cost expected to decrease from ¼430 million in the first year to ¼59 million in the fifth year.e the current premium raised by 10% 2010/2011 ¼ 276 i. and organizing wine tastings. Other Point highlighted by the Profound Reform: Grubbing-up scheme: Grubbing up is the practice of giving money to winegrowers to turn vineyards over to other use. Minimum Environmental Requirements for the Wine Sector: The process of wine growing and wine making produce a negative environmental impact.000 ha will be divides the following way: Figure 31: Yearly Allocation of Subside Budget 2008/2009 ¼ 464 million i. the current premium raised by 20% 2009/2010 ¼ 332 million i. restructuring and green harvesting.e. soil erosion and contamination.e.000 of grub-up ha at the end of the five year period. In the final proposal a three-year voluntary grubbing-up scheme is expected to help remove surplus and uncompetitive wine from the market. There will be minimum environmental requirement for grubbing-up.000 hectoliters of wine per year.to Italy. and waste management). Cross Compliance will apply for all grubbed-up areas. this policy aims to diminish this impact.000ha) should be grubbed-up. It tries to introduce some small environmental requirements. The grubbing-up scheme will not be offer to countries that produce less than 50. the current premium 47 . The budget for the grubbing-up of the 175.

The following graph shows the division of the grubbing-up territory in the EU main wine producing countries. With the aim of controlling this oversubscription.000 hectares to be grubbed up over periods of three years. Figure 32: The Grubbing-Up Scheme in Countries Superficies Source: Cal-Med Consortium Workshop IV As mention before the EU has targeted an area of 175. the sum of application submitted by Member States reached about 160. and labor intensity. In addition each Member State is permitted to allocate additional national aid of 75% of the entire grubbing-up subsidy. and to stop grubbing-up if the total reaches 8% of its area under vine or 10% of country's area under vines. to encourage uptake from year one.000 hectares. which overall represent about 4% of the all EU vine planted area. it will decrease over the 3 years of the scheme. Only in 2009. have caused an oversubscription of the grubbing-up program. low wine prices. the EU Commission responded by creating a 48 . To avoid social or environmental problems. financial difficulties. the premium will be 20% higher than current levels and. The current wine industry situation characteristics such as. each Member State is free to exclude or limit grubbing-up in mountains and steep slope vineyards and in environmentally sensitive regions.In year one.

and wine-makers would base their production decisions on the market. the payment will not exceed ¼350/ha. Still replanting is allowed where producers have undertake grubbing-up activities. In theCommission¶s original proposal the suggestion was to fully liberalize planting rights as ofJanuary 1. Once again for 2010 there is oversubscription. the commission is expecting a reduction in the coefficient of 45. The final decision is within the Member State. the commission allowed equivalent areas to be planted with vines. However. It has answered by arguing that it is a two step process. Planting Rights: Planting rights are the right for a wine producer to plant vine. Furthermore Member States are given the possibility to extend the prohibition until 2018. thus ensuring that they are maintained in good agricultural and environmental condition. The grubbing up program works by the commission distributing the allocation to each interested Member State. 2014 for wines protected by designations of origin and geographical indications. Single Farm Payment: This policy aims to bring the wine sector in line with the reformed Common Agricultural Policy (CAP). grubbing-up would help balance the market. with some Member States being able to keep them at the national level until 2018. In step one.9. In the agreed reform.The European Commission has been criticized for contracting the laws on having both a grubbing-up scheme andabolishing the planting rights. and those that are grubbed up will automatically qualify for the payment. The reform allows all areas under vines to be qualified for the Single Farm Payment. keeping them in good 49 . 2015.The decision to increase production will depend on the producers' ability to sell what they produce. The member state can decide whether to distribute its allocations to all applicants given them only a small compensation or it could prioritize which applicants are accepted.³reduction coefficient´ which scaled down the grubbing up area for 2009 to 73.e. The planting right is not an immediately measure. which will then decide how to spend that money. planting rights will be abolished in 2015. and in step two planting rights would beabolished. there is currently a prohibition of new plantings that will last until December 31. allowing competitive wine producers to expand their production. These activities will create good environmental effects since it would mean that the cross-compliance rules would be applicable i.000 hectares.

agricultural and environmental condition. 34. 35. between 2012 and 2015 keep measures in action Rural Development Enviromental Requirement Promotion/information Measures Added in action Eligibility of vine National Envelopes Oenological practices Geopgraphical Indications/ Quality Policy Labelling Measures Deleted Potabe alcohol and crisis distilation aid Must aid for enrichment Grubbing-up Measure deleted at EU level but remain optional at Member State level Planting rights Figure 35: New Reform Variant B. summarize the time when each measure will be put into action. Time Table 3 50 . Time Table 2 Following Steps. 33. Time Table 1 Second Step. The following figures. August 1st 2009 keep measures in action Planting rights Grubbing-up Restructuring Rural Development Enviromental Requirement Promotion/information Measures Added National Envelopes Oenological practices Geopgraphical Indications/ Quality Policy Labelling Eligibility of the grape (activate single payment entitle) Measures Deleted Measure deleted at EU level but remain optional at Member State level Figure 34: New Reform Variant B. They illustrate the addition and elimination of the new reform mention from August 2009 to 1st of January 2019. Figure 33: New Reform Variant B.

Final Step 1st January 2019 Keep measures in action Rural Development Enviromental Requirement Promotion/information Measures Added in action Eligibility of vine National Envelopes Oenological practices Geopgraphical Indications/ Quality Policy Labelling Measures Deleted Planting Rights 5. Still. due to the fact that in the EU Wine production levels depends mostly on weather. Figure 36: EAGGF . It was replaced by the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) on 1 January. Expenditures variations on the CMO wine (in Million) European Agricultural Guidance and Guarantee Fund (EAGGF). the budget fund is likely to change. due to the over production of wine a important part of the budget was also expended in the public storage of alcohol.5% of the total EAGGF. overproduction rises to the top. Overall the wine CMO represents only 3% of the total EAGGF expenditure. 2007 4The 51 . thus more money is need than in a normal years. However the new development of bio-fuels and other distillation methods were helping in the improvement of stock disposal. Moreover. At first it shows the budgetary changes for the reform of 1999. Overall the budget varies between 2. During that time almost the entire budget was consume for the permanent abandonment and some other necessary measures for the application of the reform. During good weather years for wine.4 Budget: The agency that finances the activities of the wine CMO is the guarantee of the European Agricultural Guidance and Guarantee Fund (Guarantee EAGGF4).5 and 5. Due to the strong harvest years of the early 2000 years distillation cost remained high. The following graph shows the budget expeditors since 1993. market storage and different measures. for distillation.Guarantee Section.

40% was allocated to Spain. and the overall expenditure varies widely. production methods.0%). Since each Members States has different weather conditions. Portugal (5. one year before the new reform started being discuss. and even sometimes laws.5%) (EAGGF) The following graph shows how the budget of the EAGGF was allocated among different wine producing Members States. each has different costs. In 2004 from a total of ³¼1092 million in 2004.The CMO Wine budget is divided differently through the EU wine producing countries. 28% to Italy and 22% to France. Germany (2%) and Greece (1. Figure 37: Expenditure for the COM in Wine by Member State in 2004 In addition the figure shows how the budget was distributed between 1993 and 2005. The main changes are since from 1999 to 2000 52 .

y 65% where expend in market intervention measures. o 16% (¼198 million) aid for must used to enrich wines o 5% (¼70 million) in aide for private storage of wine and must. Figure 38: Wine budget expenditure 1993 ± 2004 and 2005 the budget estimation. o 1% (¼17 million) export funds 53 . in ¼ Millions In 2005 the CMO of wine distributed ¼1269 million the following way: y 35% (¼446 million) where expend in the reconstruction program in place since 2000.when the past reform was putted into practice. this were divided the following way: o 40% (¼506 million) In distillation a public storage activities.

Finally 7% of will be given for the rural development programs. about 1. Commissioner for Agriculture and Rural Development and main person behind the CMO wine reform said after the approval of the new wine reform. "Instead of spending much of our budget getting rid of unwanted surpluses. Mrs. where Member States are able to choose from a variety of options how to expend their part of the budget.3 billion per year. This means that. I hope the Member States will make good use of the new tools available. Figure 39 illustrates clearly through a graph the allocation of the CMO budget. we can now concentrate on taking on our competitors and winning back market share. Even though The CMO¶s new reform is budgetary neutral. there will be many changes in the allocation of the money. 78% of the budget will be allocated in the National Envelope. Must of the money was concentrated on distillation and public storage of alcohol. even though there will not be an increase or a decrease in the overall level of support to the sector. We didn't get everything we wanted.y Less than 2% ( ¼31 million) foe the grubbing up vineyard measures. Grubbing-up activities will receive 11% of the all budget for Community level and then a 3% for the decoupled payment for coupled up areas. The graph shows us the change on the money¶s allocation. 54 . Overall it reflects how after the reform of 1999 less money was put to the permanent abandonment and for exporting funds. to be allocated for the executing of its measures." The CMO will receive a budget of 1. but we have ended up with a well-balanced agreement. The distribution of the budget among the other measures did not alter significantly.3 billion a year over the period 2009-2015. Mariann Fischer Boel.

Figure 40: Budget Evolution by CMO Measure Source: European Comission Agricultural and Rural Development 6.3 3% 1% Residual 7% 11% Community Level Grubbingup National Envelopes Rural Development Measures 78% Decoupled Payment for Grubbed-up areas Furthermore Figure 40 shows the future allocation of budget among the different CMO measures. Expected Effects of the Wine Reform 55 .Figure: 39 Budget Allocation of the CMO for Wine Wine Budget 1.

all wine-industry employees will be more focus on what the industry actually wants and needs. At this point the prohibition on new planting would finally happen.1 Economic Impact: Among the policy changes proposed under this option.The main goals of the new CMO wine reform is to reach a market balance by decreasing overproduction and making the wine sector more competitive both in the national and international markets. 6. the following have a direct effect on the Market balance of the wine sector: ±Abolition of market measures (in particular distillations). social. 56 . The idea is that this equilibrium point would be reached mainly by production falling into line with demand. However. Demand a supply will flow more naturally leading the invisible hand to create a market balance in the long term. reaching the minimum level of surplus. rather than through a downwards and subsiding adjustment of wine market prices. ±Strengthening of the policy of permanent abandonment. Abolitionofmarketmeasures (distillations. ±New provisions on wine enrichment (suppression of must aid and ban on the use of sucrose). Since this legislation removes all economic incentives for producers to produce low quality wine. and environmental sector of the wine producing regions. must aids and private storage) The liberalization of the market would guarantee a better market orientation of the wine sector. current data shows that the wine industry is working to resolve the conflicting interests of tradition versus profit. The results of the reform are not yet to be seen. The idea is for wine stocks to be stable over time. ±Measures introduced under the national envelope or rural development policy. This new policies will cause both positive and negative effects affecting not only farmers and producers but also the overall economic. This will lead prices and agricultural income to reach acceptable levels helping the sustainability of the wine industry. Through measures of grubbing-up and changes in production techniques. New policies both radicals and conservatives are being created to reach this goal. and is willing to comply with measures that will ensure an adaptability of the new measures. the wine industry in Europe is adopting modern methods and providing solutions to wine producers who want to compete in the global market.

Still it is important to highlight that the wine sectors mostly depends on the weather of each year. causing a reduction of its production. when the EU wine production increased by 24 million hl. since there will not be anymore support for distillation into potable alcohol. or by fulfilling the market with low quality wines. 57 . Figure 41: Supply balance for the EU-27 wine sector at the Forecast of 2010/2011 The domestic wine based spirits are likely to suffer from this reform. This is exactly what happened in 2004. Which in the long run can cause the EU to be less competitive in the overall alcoholic beverages market. the finalization of all market measures means that the wine production surplus will not be removed form the market through the process of distillation. This situation will make the wine market more competitive decreasing prices and consequently lowering agricultural incomes. The truth is that it only needs two successive big harvests to unbalance the wine sector. such as distillation and private storage could cause a greater market imbalance. However in the short term. instead it will be accumulated as additional stock. More important. The change in the distillation measures would an addition of 15 million hl of surplus in the wine market in a normal condition. The table bellow summarizes the EU-27 wine sector and forecasts of the 2010/2011 years assuming no change in the CMO policy. The effects of such harvest are still hitting the market. Also with the prohibition of distillation the market will be filled with table wines. causing largest annual fluctuations. the prohibition of some production measures.

The following table shows a forecast of the following. and the different support that the CMO is offering (national envelopment or rural development policy) for making this process smoother and quicker. So the ban on the use of sugar will increase production costs in the wine regions currently using chaptalization. This decline will increase year after year until market balance is reach. The Commision of the European Community believes that after the first two years. Moreover the ban of wine enrichment will help producers to plan cultivation with lower yields to obtain grapes with higher sugar contents. affecting even more agricultural incomes. The CMO has calculated an increase of 3.7 million hl per year. causing wine prices to decrease. agricultural income would have decline. obtaining better wines. which in the long run will contribute to the achievement of a market balance. New provisions on wine enrichment (abolition of must aid and ban on the use of sucrose) The prohibition of wine enrichment brings with it many changing specially in the way of producing wine. and based on some ³model farms´. representing the most significant typologies of table wine producers in several wine-producing EU regions. The commission of the European community assumes that the replacement of beet sugar by concentrated grape musts would produce a reduction of 6. In addition as mentioned before the reform will at first create more market surplus. Helping in the overall market balance. plantings rights. Still with time this surplus will be eliminated through the new reform measure such as grubbing-up programs. Another positive externality is that the outlet for grape must will increase when replacing sucrose with grape must. The change in agricultural income of 7 typical wine producing farms in five different European regions. It will affect in different ways different regions. The increase cost of production will cause a significant income loss for the agricultural sector.8 million hl in total wine production. On the other hand the degree of alcohol derived from sucrose costs approximately one third of the cost of the degree of grape-based alcohol. For example in Germany the wine production that is relaying on chaptalization could increase by 15-25%.helping to the increase of the wine surplus problem. In the northern and central European countries it will replace sugar with concentrated grape must. The impact on incomes generated by the forecasted price drops was simulated with information of the Farm Accountancy Data Network (FADN). 58 .

The fact that wine growing 59 . In addition the incentive for grubbing up vine producing areas will cause some wine producing jobs to be eliminated.2 Social-Economic Impact on the Rural Areas: In the EU vine growing and wine producing is an essential part for the economic of rural areas. wine activities can represent about 10% of the overall value of the agricultural production in certain rural regions. which could reduce wine surplus by approximately 3 million hl.Figure 42: Evolution of FNVA/AWU before and after implementation of the CMO profound reform. The CMO profound wine reform will affect not only wine producers but also others parts of the rural economy. reducing the agricultural employment in the wine sector. In the short term. Franco) The other structural measures under second pillar reduce it by further 1 million hl.1 EU wine productions. as mentioned above the reform will cause income lost. The new practices of grubbing-up would cause the abandonment of 80 000 ha of vineyards per year. Strengthening of the policy of permanent abandonment: The enforcement of this legislation would encourage less competitive producers to leave the wine sector. 6. As mention before in section 2. (Angelini.

However. With this new incentive some vine growers. First wine cooperatives can increase in size merging together and reaching economies of scale. For the grubbing up scenario. However. The past planting right measure was inflexible and it actually caused wine producer¶s income to be lower than it could be. in the long term. The wine industry can answer in different ways to the overall reduction of wine produce. (BB) The grubbing up scheme will cause a decrease in the production area and in the amount wine produced. who used to send their production to the wineries. The elimination of the planting rights will promote competitiveness allowing the most efficient producers to optimize the size of their holding and to operate at the most convenient production scale. Even though this could lead to some possible loss of jobs. the complete abandonment of wine growing could cause serious damages since some of these areas often lack of economic alternatives. These measures will give the adequate support for non-competitive or older vine-growers. Perfect examples of the support offered by the new reform are the grubbing-up premium and the early retirement measures under rural development. it will make the EU wine producing industry more efficient. the new reform has tried to facilitate the process by allocating some funds in the national envelope. These funds will moderate the short-term economic and social effects of the reduction of wine production. will no longer have any production. The off-farm wine production involves 8 600 cooperative cellars or private wineries.plays such an important role in the social economical development of some regions. especially in the agricultural sector will increase due to the rise of wine prices. farmers will receive a SPS that will allow them to reconvert the production on the grubbing up areas. planting rights have led smaller and more traditional producers to operate with in a market that 60 . the abolishment of planting right will bring many positive social economical effects. The reform will not only cause job loss in the agricultural sector but also in the overall wine market chain and related sectors. While the market balance is reached. as wine market balance is reached level of income in the wine industry. thus could not send anything to the wineries. which employ about 76 000 persons in total in the EU. Efficient producers have not been able to expand their business and market share. They will be able to leave the industry having some king of money in their pocket to invest or just retire. creating a more sustainable economy of scale. Moreover.

In general the abandonment of planting rights. could improve the product¶s information transparency for consumers. quality and geographical indication system. and Spain there are about 256 distilleries employing a total of 6800 workers. This has a negative environmental impact. water. Increasing use of irrigation in certain regions. Likewise. as well as education and information campaigns. the intensive production of grapes although more profitable. The reform also refers to the new rural development funds. even making some of them close down. Excessive specialisation. public health and consumer protection. In addition. (BB). Intense use of plant protection products (in particular fungicides).could otherwise would have transform to a large scale producer market. the simplifications of the labeling rules. compaction. Only between Italy. and agrichemicals. Moreover. which are available for investment in new technology. Still entrepreneurial distilleries can take advantage of this situation and focus in the demand for the alcoholic beverages. but also to limit soil erosion. In addition the aim of reducing surplus through better market orientation of production. Sadly. The prohibition of distillation activities will therefore put into threat some of these wine distilleries. Disposal of by-products of wine making. loss of organic matter). Risks resulting from a disordered grubbing-up. the new reform does not provide any real law that imposes the idea of being 61 . France. The main vine cultivation harmful effects are: y y y y y y Impacts on the soil (erosion. another industry related to wine production that will be affected with this new reform is the wine distilleries sector. In order to prevent these harmful environmental externalities many complex measures have to be taken. 6. often involves the use of more fertilizer.3 Environmental impact: The maintenance of wine production in many traditional regions is essential not only to safeguard the landscape. increasing its competitiveness specifically among the imported wines. and the end of distillation subsides will most likely have a positive impact in the wine quality. will improve the EU wine sector. The distilleries can find some of these funds to their advantage.

princeton. since it generally reduces monoculture5 In addition the new distillation measure will impact positively the environment. This is why is necessary to educated and make vine growers more responsible. One of the main problems that the wine producing industry has is how to eliminated residual matter of wine making. After the land is damaged or dry out it is very difficult to make it grow able again. dry it and spread it on the soil. It is essential to maintain winegrowers working in traditional regions. there are still many measures that can be used to change the situation. 6.4 International Effects: 5 The cultivation of a single crop (on a farm or area or country)http://wordnetweb. which will replace minerals or chemical fertilizers. Even though there are many alternatives such as. and profitability. make bio-ethanol. A solution could be making all Rural Development support tools conditional to the respect of the environments. Distillation requires both big quantities of energy and the transportation of wine to de distillery contributes with pollution. but most important to limit soil erosion in this regions. However.environmental friendly. not only for preserving the landscape.edu/perl/webwn?s=monoculture 62 . and in the long run improving the overall organic matter in the soil. In addition a lot of products based on wine are recycled in the farms as fertilizers. use as biomass. agro-environmental programs. Furthermore the incentive for grubbing up could cause a bad impact if the land is abandoned or replaced with stronger crops. Still if the grubbing-up scheme is done correctly in the run long could have a globally positive impact in the environment. It seems as if the new reform does not actually have any tool to control the effect of the environment. composting and even distillation. there is not an optimal solution for the proper elimination of wine matter. Overall the EU must find a nontrade distorting way to balance rural development. The solution will depend on the type of product and the region where the producer produce.

During the period of 4 years.htmp) The EU has decided that no more money will be spend in such actions. Figure 43: European. 2003 -2006 (in million gallons) Source: EU Statistics (http://ec.europa. this reform will affect many ³New world´ wine-producing countries. Internationally the most important reform¶s measures are: y y y y y End of distillation support The grubbing up scheme Wine enrichment Labeling Elimination of the planting right In the past couple of years the EU spent about 506 millions of euros. subsiding surplus wine distillation and wine storage. Due to the fact that the EU is a huge force in the wine sector. The main aim is to increase competitiveness of the EU wine producers worldwide. the 63 .eu/agriculture/markets/wine/facts/index_en. French and Spanish wine production and share of totals disposed through distillation intervention. starting in 2009.The CMO profound wine reform is an answer to globalization. Figure 43 shows how in recent year about 15% of the EU wine productions have to be treated in such scheme. eliminating the subsides for wine distillation and storage.

and the promotion of their wines. Some of these funds will also go to the modernization of the supply chain. So some bulk wines from the new world such as. Furthermore as lower quality wine will become cheaper. The new reform has canceled the plating right policy leading success producers to expand there and reach a better economic of scale in their wine production process.reform will begin to phase out the distillation programs. new funds will be available for wine producers to restructure their vineyard. It is expected for the decrease in price of lower quality wines to also pull down price of some higher quality wines. Elimination of Planting Rights: Throughout the years the EU vine-growing area has been strictly controlled thought the use of planting rights. France and Spain. in the short term this will cause a bigger market surplus. With the grubbing-up scheme voluntary farmer will be compensated through payment to grub-up their vineyards. As mentioned before. Therefore causing a worldwide price for the low quality wine. benefit from the distillation measure. Overall this will reduce the impact of the distillation reform not only in the EU but also worldwide. this three countries are well wine recognize world wide. making it easy and cheaper for wine producers to get to consumers. increase the competition for ³New World´ producers. With these policies not only producers will gain competition but also they will be able to create a better 64 . California and Chile will face a bigger competition. Thus. It is important to highlight that most of this distilled wine used to come from Italy. Before the least efficient producers or/and those who fail to find market for their product. some consumers may shift from higher to lower quality wines since the price quality might be better. Funds for Reconstruction and Promotion: Furthermore. Grubbing-up Scheme: Vineyards that are producing low quality vines. which will cause the reduction of price for low quality wine. these wine producers will become more competitive. due to its location will be removed. The scheme will help the adaptability for the end of the distillation subsidize and in the long run will limit the supply of low quality wines.

According to the German Wine Institute. This wine has been exported all around the world leading customers to develop a taste for stronger wine. making information simpler and clearly to consumers. This changes aim to allow EU wine markers to compete with ³new world´ wines that have gain market share by their innovative labels. Becoming a bigger threat to the third countries producers. Labeling: The reform has simplified labeling rules. Still it is important to highlight that most well known European wines come from a geographical indication. Also the promotional fund will allow EU wines to get a better name recognition. Wines without a geographic indication. thus gaining intrastate and international market share. A perfect example to illustrate the situation is the German red wine industry. in 2006 nearly 38% of all German wines were red. Third world producers will face increase competition from European wines which will now supply customers with the information they want to know such as.quality wine for a lower price. cannot state the vintage and grape variety on their label. and are naturally produced in some third world countries. The past couple of years. Before the reform. New world wines such as Californian resemble this type of wine naturally. Chaptalization: In the EU the amount of chaptalization depends on the geographical zone where the wine is produce. 65 .5 % of alcohol to the wine. the German red wine industry has been rapidly growing. The new reform has not eliminated chaptalization. which will not be able to follow this labeling format. Since customers have already develop a certain taste for red wines that can not be produce in some areas of the EU with out the use of sugar. The new reform lower this maximum to 3%. in Germany chaptalization could add up to 3. grape varietals and vintage. Third world producers can take advantage from the EU new chaptalization measure. but instead it has lower the percentage allowed to be use by zone Figure 28: ³Geographic Allowed Level Of Chaptalization´ shows the division. This could be a threat for EU wine since this wine can be exported not only to Germany but also the EU and the rest of the world.

Still with only three million euro allocated to the promotion budget it is not possible to develop a strategy that can promote wine in the selling points and educate consumers on the positive aspects of a responsible way of wine consumption. insurance and mutual funds. 66 . In order to prevent the taking advantage of this measure. this measures are not adequate for managing economic crisis. Also it will be of great interest to add cultural information in the third countries promotional campaigns. Likewise. Tourism created a bond between the person and the region or the product. The national financial envelopes should also include crisis management measures. For the wine industry it is essential to educate consumers. Also even though the ban of distillation will cause many positive effects. Also tourism helps in the developing of this wine producing area. Recommendations: National Envelope: The present economic crisis has shown us the vulnerability of wine sector in difficult times. but it is also even more important to not loose current consumers. creating more jobs and name recognition. Studies show that tourist feel more identified. In addition this promotion should focus on countries where consumption is going down and a where wine imports form the ³New World´ are raising. This type of activities will not educate customers about wine and the typical regional products. one should think whether and an emergency distillation system for especial situations could be provided for within the national financial envelopes. wine tourism should be promoted. it should also finance the promotion of the wine within the EU. Promotion: The national envelope only finances promotion to third countries. but also it will show the importance of wine to the EU culture. they show shared responsibility among wine-producers. It is important to highlight that about 70% of the EU wine is consume intra-state and that the new world competition is conquering that market.7. not only about wine tasting or wine origin but also about the benefits of moderate wine consumption as an integral part of a healthy diet and a modern lifestyle. Most of the promotion budget is being use public relation and events creation. Even though the national envelops offer various helping measures such as harvest. It is important to promote to third countries. and are more like to purchase a product form a visited region.

since producers do not have any incentive.The promotion strategy should focus more in developing good Internet marketing campaigns. The idea of the package will give insensitive to young people to enter the wine sector and to help them in the different steps of the wine production chain. .0²which Internet tool incorporates components such as social networking. The Commission should motivate Member States to promote not only their wines but also their typical products through the Internet.blogs. Web 2. the planting right ban should not be extend later than 2010.0 has the potential to change the way wine consumers interact with wineries. 6Wine 2.06 wine companies can create personal bonds with clients. Currently. still this measure jeopardizes the achievement of the economic. Planting Right: The liberation of the planting rules is a measure that should have been done long time ago. of the grape and as a result of the wine. there is not need for planting right to control production capacity. This measure will no only help for the quality of the wine. Through the Internet the information is always available for reaching a larger share of the target audience. There is a serious need to attract young people with innovative ideas into the sector. and interactive 67 e-commerce. leading the Member State to achieve better name recognition. This package can mainly include studies aid. but it will also positive contribute positive with the environment. the EU wine sector suffers from aging. By eliminating the subside distillation. planting. and even communication. is to reduce the number of grapesduring flourish. Through the use of Web 2. and others wine consumers. The rural development surely created a budget that supported green cutting. A package for young farmer should be establish as part of the rural development policy. As the young farmer or enologist become more prepare the package can give them better aids for. wine production. vlogs. The Commission should create a plan With the subsidies of grubbing-up programs and the ban of distillation. Rural Development: An easy way to increase quality. wine retailers. social and even environmental goals of the reform. Internet is an effective economic way of reaching consumers everywhere in the world.

Another particular measure of this reform is the new authorization for using specific international WMP only for the EU export wines. producers and consumers. if there are not strong control agents. Since the new Wine Making Practices are somehow confusing. this measure will also confuse and even disappoint consumers. The reduce of chaptalization and the ban in distillation activities will help to reach a higher quality wine still there should also be laws limitating the amount of wine produce per hectare. Wine Making Practices: The most important aspect. Furthermore activities such as. based on language and information. one for international markets. is to produce a high quality wine. This will ensure the quality of the wine. wine makers can take advantage of the situation and perform illegal procedures. one for national markets. Also it will be difficult to control each winery producing international wine and export wine. This is a dangerous move since the EU wines are recognized for their making traditions. This is likely to cause furtherer problems.Control: Even though there is a time set for the introduction or elimination of different measures there are not any effective instruments to measure the achievement of the new laws. overdressing grape and grape mash should be ban they weaken the quality of the wine. such a misuse of budget through different Members States and wine producers. Even though is true that it will allow EU producers to be more competitive and operated on the world market at the same level than nonEU competitors. With this law there will be two types of wine being made. is an 68 . but they should not promote the production of two different wines. Labeling: The simplification of the labeling rules is necessary for the success and the competitiveness of the EU wine industry. in order to be more competitive and gain market share. if consumers find out about this new practices they could be displease and even think is not worth paying the extra money when buying EU wines. If the commission wants to increase their competitiveness. at the end it can cause a bigger confusion among. they should allow some international WMP. Comprehensiveness of labels.

it is also important to preserve the Old world cultural identity. Even though the simplification of rules is necessary. Wines with geographical denomination represent the strong point of European viticulture.000 hectares. the sum of application submitted by member state reach about 160. after which subsidies to these lands would cease. the budget will further be divide eliminating some of these extra applications. especially in times of crisis. which overall represent about 4% of the all EU vine planted area. Even though grubbing up most ultimately is a choice of the vine grower. and wine producing traditions. Moreover it is unreasonable for the commission to spend more that a third of the available budget in the grubbing-up program. In the EU there is a huge linguistic diversity that can act as trade barriers. In order to truly inform consumers the practice of wine enrichment should be indicated in the label. The EU needs to allow a larger vine area to be grub-up. it entailed grubbing-up of unproductive vine land in exchange for monetary compensation. Overall grubbing-up is a delicate matter. In addition due to the fact that wine enrichment is still allowed in the EU. Environment: 69 .important key point for trading within the Member States and third countries. Grubbing-up: Studies have show that grubbing up measures are necessary to increase market balance. By allowing a larger area to be allocated. only in 2009. The EU withdraw scheme is only of 170 000. Therefore the Commission should find a way of putting mandatory information through symbols such as the pregnant female symbol to indicate that it is not good to consume wine when being pregnant. which until are already recognize in international markets. Therefore it is relevant conserve the current distinction between table wines. wines with geographical indication and wines with denomination of origin. A possible reason for this high application amount is the money incentive. it cannot be treat as a simple agriculture action. the Commission should set up a clear regulatory framework to ensure protection of environmental and social conditions.

An education program should be carried through all the different levels of the wine production and selling chain. Nowadays most wine producers want to be located in plain regions since it easier and cheaper to produce wine in these types of regions. This type of activities will offer a future for young people. the agricultural ministers agreed on the European Union wine reform. through taxes incentives. and the seeds. compared to what is currently anticipate. it contains the plum. It contains potassium and organic sustains that can be use as fertilizer. Therefore. In addition. in these often under develop areas. the commission should aide the elimination and recycling of pomace. Organic wine should been clearly shown with in labels. They will be taught about vine growing techniques and how to be environmental friendly.Even though this reform offers financial incentives for environmental friendly practices. Conclusion After polemic negotiation. Penalties for chemicals abuse should be imposed. In the long run this education program will help to the production of better quality wines. it is necessary to increase the aids for the restructuring for mountainous areas. better vineyard management. In addition they can learn about vineyard and cellars management. the skins. the cost for wine production varies a lot between plain areas and mountainous regions. Also organic friendly production should be promoted. Moreover. environmental campaigns and others. Still it is environmental sustainable to growth vine in mountainous areas. better product communication. sponsoring young local people who are eager to start making wine. Education should start at the production stage by sector. where production is nearly always qualitatively advanced. All that was kept and new measures are nowadays being enforced through all the 70 . environmental control should be reinforce. Pomace is the remains of grapes after being press. allowing the economic development of rural areas and helping in the creation of a sustainable wine industry. Education: Education is essential for the success of the wine industry.

Today there is no room for wine that cannot compete on quality. Yes. Each member state has different needs. The National Envelope has started to provide funds to different Members States for the innovation. The European Union is full of different viticulture history. in order words it sales itself. little attention has been given to the overall quality of the EU wine. And even though the policies are universal for all the Member States. the European wine industry has the essential tools to reach its aim and become a more competitive and sustainable industry. which as a result will prevent wine surplus. promotion. Focusing mostly on the EU economic needs and social obligations. Grubbing-up activities have already started. in this case quality wines are not difficult to sell. but other problems will remain or just evolve. consumption patterns and consumer attitudes. Even though. To reach this so called ³quality´. It appears as if the reform has been created to permanently deal with the current market weakness and threats. production techniques. the implementation is impartial. With the elimination of planting rights and labeling rules being simplified. But the real question is for how long? The new reform aims to restructure the wine industry while ensuring economic development. and competitiveness of their national wine industry. Leading to a the ideal market balance. It can be said that over all. Quality is a characteristic that in the long run will provide sustainability for that wine industry.Member States. The Commission not only has too seek for a balance between Member State needs. Creating the right reform is huge challenge for the commission. it might be true that attractive labels can increase demand of a product. Instead quality wines just need one sip to created name recognition and customer loyalty. but it is mostly needed for mediocre or low quality wine. social sustainability and environmental protection. Not 71 . History has shown us that good things. but this balance has to go hand in had with the world trade organization policies. Increasing and ensuring quality levels is essential for the European wine industry in order to succeed. So overall it will solve some problems. supply characteristics. Europe should start showing some positive signs and a better market balance. producers now have the possibility to become more competitive in this harsh market. less wine has to be produced per hectare. it is a wine reform. Over time fashion will pass and consumers will discover other attractive label. enforcing different types of pressure. the problems are not.

The European wine industry has to be prepared to fight new producers and give the best wine for emerging consumers. Making it most likely for the commission in 15 years to be revising some points and creating a new reform. 72 . There will be a massive market commercialization and change in wine distribution channels.preparing the industry for future threats. Globalization of the wine is a natural process. it is inevitable and irreversible therefore market will keep up opening.

. marketing and communication should expand to promote the remaining part. miscromprehension by customers of geographical indications/brands/labeling. What are the reasons of having a wine regimen? Do you agree with it? Reason is that wine .as an alcoholic product . History has shown that a specific regulation was necessary for the wine industry. On top of that. identity of wine. the restriction of planting rights and grubbing up. Should wine be treated as an agricultural product (following the Common Agricultural Policy [CAP] laws and regulations)? It is what is going to happen.ANNEXO 1 Name and Last Name: Stephane Laborie Occupation: General Manager. help to bring supply and demand into balance? Reports show that it helps bringing better balance. but wine shouldn't get the same CAP that other agricultural products.is not the same type that other agricultural products. wine has been culturally different of all other agricultural products and gets its own logics. In the meantime if uprooting vineyards where the soil/climate is not adequate to produce wine is a good solution. It is what is currently under process. Which laws will you created or change in order to reach a better market balance in the EU wine 73 .. Double Win International Trading EU Wine Industry What do you think are the main problems/threats that the EU wine industry is facing today? Overproduction. Do you believe that current measures such as.

Environmental Externalities 74 . better getting no new plantings.. Working more with OIV on a "global" oenological practice to reach the same economic results of competitors. Who is today aware of such change? What is the potential impact (economical. social and environmental effects of the grubbing up activities? Benefits to be seen on a long term period. Sorry. Wine Making Practice How should enrichment (with sugar or must) be regulated? Today's regulation works out fine. in order to keep a "balance" between supply and demand. What will be the economic.. Should the ban on new plantings be prolonged beyond 2010? The ban on new planting shows several derogations. getting regulations which are useful and understood by customers. How could oenological practices in the EU be improved? 1. Changing "Vin de Pays" in "IGP" was a big mistake for example. What possible alternatives do vine growing and wine production areas have? Promotion and/or lower the social costs.. Should definitive grubbing up be encouraged? Yes.. Focusing on quality and communicating around that. Law makers and oenologists should work more together. I am not an expert in this field. 2. social and environmental) on wine producing areas of liberalization of the wine market? Better competition!.. and necessary! Studies show that even if liberalization is "difficult" at first stage.. it is then more efficient for companies and customers.industry? Very complicated to answer but to sum up.

Marketing What is your view about the EU labeling and geographical indicators laws? Interesting in their philosophy but very complicated to enforce (wine production) The system AOP/IGP is too complicated to understand by customers. (it is getting better and better). would be to keep a minimum of regulation. 75 . A more simple system for customers: quality products with an AO (difficult to get) and other products. Do you think the EU should take measures to prevent vine growing environmental externalities? All necessary measures have been taken already and are sufficient. would be to keep a balance with "useful" regulations to maintain quality and acceptable regulations for customers and producers. The US system works out perfectly and we should get the same. Probably. More convergence public/private wine sector. The best..To what extent does the wine sector have an impact²favorable and unfavorable²on the environment? Rather favorable compared to other industries. What percentage of consumers do you think understand the different between quality wines produced in specific regions and table wines with in geographical indications? 2%. The new CMO is more liberal than previous ones and that trend should continue with the next CMO.. Labeling: should be more open.max! How can the EU wine industry better meet the requirements and preferences of consumers? More promotion. and environmental terms taking into account the important role of vine growing and wine production in rural areas? The best. law makers should abet more "organic vine growing". social. Wine Sustainability and Competition How to ensure that wine production in Europe is sustainable in economic.

76 . Trader: getting more money for travel expenses and promotion (it is getting better) Do you think the new CMO wine profound reform will help in creating a better market balance and increasing the competitiveness of the EU wine industry? Yes. The new CMO was necessary and is getting good results. trader and Retailer level? Producer: uprooting areas. Getting 2 real levels: "mass market" with wine without AO with almost no rules to compete with all other countries and "elite market" wine with AOC which are superior in quality with some regulations to increase quality. which are not interesting to produce quality wine. definitely.How to increase European wine¶s competitiveness at the producer.

The Wine Economist EU Wine Industry What do you think are the main problems/threats that the EU wine industry is facing today? It is a mistake to generalize about the EU wine industry. but the individual states have great flexibility in applying the principles in practice and not all governments seem to be taking effective policies. Regulation of agriculture has been a way to attempt to stabilize incomes in these areas. The current EU wine reforms represent and attempt to accomplish this goal for wine. What are the reasons of having a wine regimen? Do you agree with it? See above. Other parts are hopelessly uncompetitive. 77 . Which laws will you created or change in order to reach a better market balance in the EU wine industry? No response. the restriction of planting rights and grubbing up. Other more direct mechanisms to address incomes problems should be developed.ANNEXO 2 Name and Last Name: Mike Veseth Occupation: University Professor. Do you believe that current measures such as. And some elements could become competitive with reasonable reforms. This system worked in the short term but was problematic in the long run because stabilizing incomes resulted in permanent surplus production and budgetary deficits. This system needs to change. author. Some parts are very strong. both for wine and more generally. Should wine be threat as an agricultural product (following the Common Agricultural Policy [CAP] laws and regulations)? One part of the problem is that historically the EU has used the CAP as an incomes policy for rural agricultural areas. helping to bring supply and demand into balance? These are good in theory.

The EU reforms make progress in this area. I think best practice techniques are being rapidly adopted in those areas where the wine are marketable. Should definitive grubbing up be encouraged? What possible alternatives does vine growing and wine production areas have? What will be the economic. Wine Making Practice How should enrichment (with sugar or must) be regulated? I do not think that EU-level regulation is wise because local conditions vary so much. social and environmental effects of the grubbing up activities? Grubbing up is essential in areas where winegrowing is not competitive. How could eonological practices in the EU be improved? Impossible to generalize. Environmental externalities To what extent does the wine sector have an impact²favorable and unfavorable²on the environment? Do you think the EU should take measures to prevent vine growing environmental externalities? Wine is no different from other agricultural products in this regard. social and environmental) on wine producing areas of liberalization of the wine market? It will be very different both in different countries and in different regions within countries.What is the potential impact (economical. Marketing What is your view about the EU labeling and geographical indicators laws? A greater diversity of labeling standards is useful to match label information to wine type and market destination. What percentage of consumers do you think understand the different between quality wines produced in specific regions and table wines with in geographical indications? 78 . Should the ban on new plantings be prolonged beyond 2010? No.

trader and retailer level? Identify key markets and adapt to them. 79 . but we will revisit this issue in 15 years to deal with remaining problems. which has created these problems. How to increase European wine¶s competitiveness at the producer. There will be diverse outcomes. The policies are universal but the problems are no and implementation is uneven. Every winegrowing region in the world is struggling with economic.The percentage is quite low for wine generally. It will solve some problems but others will remain or change. social and environmental problems today. Old EU policy put social sustainability (incomes policy) above economic and environmental aspects. Do you think the new CMO wine profound reform will help in creating a better market balance and increasing the competitiveness of the EU wine industry? Yes and no. although it is obviously much higher for certain types of wine and certain groups of consumers. and environmental terms taking into account the important role of vine growing and wine production in rural areas? Need to recognize that there are some situations where wine is not sustainable and should not be artificially sustained. This means stronger emphasis on geographical indicators and terroir in some cases and acceptance of branded wine practices in others. social and environmental effects of the CMO wine profound reform. What will be the main economic. How can the EU wine industry better meet the requirements and preferences of consumers? The EU reforms make good progress in this area. social. Wine sustainability and competition How to ensure that wine production in Europe is sustainable in economic. On the whole I think there will be improvements.

EU Laws: some EU laws complicate and increase the price of not only the production of wine but also the selling of the product. they do not bring supply and demand into balance. Vignerons Consultants EU Wine Industry What do you think are the main problems/threats that the EU wine industry is facing today? Market unbalance: there is a surplus of wine being produced that which is not being sale. Overall there is an over supply that creates pressure at various level of the wine industry. Which laws will you created or change in order to reach a better market balance in the EU wine 80 . causing major harmful effects to the agriculture sector and the overall economy of the Union. The EU have to ensure that this regions have work to do. but the market have change. When it was created the Commision had a good idea. Conquering some of the traditional EU wine consumers. and the system not longer work. the restriction of planting rights and grubbing up. it necessary. Should wine be treated as an agricultural product (following the Common Agricultural Policy [CAP] laws and regulations)? What are the reasons of having a wine regimen? Do you agree with it? Yes. This wine needs to be distilled or store under the money of the state. help to bring supply and demand into balance? No. International Competition: The EU faces growing competition from New World producers. International producers have gain market share Global market share. Many region of the EU depend on the wine producing activities. if the regimen is eliminated the system will fall.ANNEXO 3 Name and Last Name: Romain Bocchio Occupation: Wine Consultant. Do you believe that current measures such as.

Should the ban on new plantings be prolonged beyond 2010? No Should definitive grubbing up be encouraged? What possible alternatives do vine growing and wine production areas have? Promotion and/or lower the social costs. social and environmental effects of the grubbing up activities? Yes. The soil is mainly affects since for many years the plant is taking out soil¶s nutrients. What will be the economic.industry? Eliminate the planting right system. Do you think the EU should take measures to prevent vine growing environmental externalities? There are many unfavorable effects that vine growing activities have in the enviroment.. obligating farmers to plan better their activities. living that soil unusable. In addition. In addition the use of chemical fertilizing also harm the soil. First the liberalization of the market will bring foreign investment. Wine Making Practice How should enrichment (with sugar or must) be regulated? No. Affecting not only soil. but also in the atmosphere 81 . over time it will actually die. since in the long run they will have to do it either way. What is the potential impact (economical. producers will actually produce what they think are able to sell. social and environmental) on wine producing areas of liberalization of the wine market? It will have both favorable and unfavorable impacts. This guarantees a better quality.. If not knowing how to threat the soil. which will not only create jobs but will Increase the over all GDP levels of the countries. If there is not help from the EU for distillation of storage. and motivates them to produce a better wine. it is better to do it know. Environmental Externalities To what extent does the wine sector have an impact²favorable and unfavorable²on the environment? Rather favorable compared to other industries. it is fine how it is right now. How could oenological practices in the EU be improved? By decreasing the allowed hectoliters to be produce per hectare. it will created competition.

which in general is a tradition and takes part from their histories and cultures in most of the European countries. Wine sustainability and competition 82 . But I also think that an special legislation for the EU would be very beneficial. protects the wine and the wine industry while its regulations wont be the same strict regulations that exist for other alcoholic beverages but more flexible and protective. Wine Barrels Financing. even coming from the government or the institutions in charge. the region etc so customers can buy a bottle knowing for sure what they're getting.ANNEXO 4 Name and Last Name: Ana Isabel Dao Occupation: Ex employee for H&A Location. Should wine be threat as an agricultural product (following the Common Agricultural Policy [CAP] laws and regulations)? I think that considering wine as an agricultural product as they already did in Spain for example. they should be more explicit with a description of the wine. stimulating the wine producers and customers and the wine activity in its whole. What percentage of consumers do you think understand the different between quality wines produced in specific regions and table wines with in geographical indications? Depends on the regions but the point is to inform the consumers through the labels and the other available methods of communication. which in many cases have high standards of quality for a lower price and also are giving a new modernistic image to the wine instead of the predominant classic image that projects many of the actors in the European wine industry.. Marketing What is your view about the EU labeling and geographical indicators laws? I believe the geographical indicators law are allright and the system is adjusted to reality but I think also that talking about labels. What are the reasons of having a wine regimen? Do you agree with it? The fact that the Wine Industry is a very specific activity that takes a very important place in most of the european countries economies makes it deserve from my point of view. EU Wine Industry What do you think are the main problems/threats that the EU wine industry is facing today? I believe one of the main threats that the European Wine Industry is facing is the increasing tendency of the market to try the wines from New World Countries as Australia and the United States for example. specific laws and regulations comprehending all the possible situations and actors in the industry. France. the method. Bordeaux.

and environmental terms taking into account the important role of vine growing and wine production in rural areas? I believe the best way is promoting all related activities through laws and information campaigns and well of course promoting sales nationally and internationally. 83 . social.How to ensure that wine production in Europe is sustainable in economic.

help to bring supply and demand into balance? I believe the answers in not have a regulation but propose a new way to sell our wines. A new way of thinking appelations A lack of big players A non innovative industry Should wine be treated as an agricultural product (following the Common Agricultural Policy [CAP] laws and regulations)? No What are the reasons of having a wine regimen? Do you agree with it? NA Do you believe that current measures such as. Which laws will you created or change in order to reach a better market balance in the EU wine industry? Stop the Evin Law 84 . The probleme of French vignerons is based on their own division.ANNEXO 5 Name and Last Name: ANTOINE-GENY / Olivier Occupation: Wine Consulting AOC CONSEILS EU Wine Industry What do you think are the main problems/threats that the EU wine industry is facing today? A lack of marketing and export stratégy. the restriction of planting rights and grubbing up.

studying.ANNEXO 6 Have you heard about the Common Market Organization (CMO) New Wine Reform? 100 90 80 70 60 50 40 30 20 10 0 YES NO Non-European European Answer I asked this question to 50 people who are related to the wine world. (Working. From those 8. everyday consumers). 6 were European and 2 were Non-European. Out of 50 only 8 people have heard about the CMO wine reform. about the wine sector and what is currently happening. 85 . These results show the inefficiently of the CMO to inform its target audience.

86 .

....... 42 Figure 29: Division of Geographical Indicators Between EU and Third Countries...........000 Hectoliters..................... 30 Figure 24: Expect Impact of different Options...................................................000 Hectoliters.... 24 Figure 21: Consumption by type of wine (EU-15) .. 23 Figure 20: CMO Instruments Enforce............. 15 Figure 11: Volume of wine production by Member State (EU-27) ± ave........... 25 Figure 22: History of the CAP reform and the Wine CMO ..... ................................................... 38 Figure 28: Geographic Allowed Level Of Chaptalization ...... 19 Figure 16: EU Wine Exports and Imports in Volume ...................................................................................................... Totals and Shipments from EU25........S......... Quantity in 1......... ............................................................................................................. 20 Figure 17 :EU Wine Exports and Imports in Value ...............................................................Figure Index Figure 1: Global Wine Production Distributed by Continent................. 11 Figure 7: Share of Wine in Agricultural Production................... 18 Figure 14: Value of U................. 16 Figure 12:Value of wine production by Member State (EU-27) ± ave. 9 Figure 4: Evolution of the world wine consumption ......................... 14 Figure 9: Map of the EU Wine Producing Areas ........................ ...................................................... Value in $.................................... 20 Figure 18: CMO Instruments in Force in Planting................................. 15 Figure 10: Wine Production in Selected EU countries (1..... 32 Figure 25: First Step Action of CMO Wine Reform......................... .............................. 26 Figure 23: The Three Elements of Sustainability for the EU Wine Sector................... Quantity in 1........ 2002±06 ..................... 23 Figure 19: CMO Instruments Enforce in Distillation.................. ..... 10 Figure 5: Top 10 Wine consuming countries (wines below 15% of alcohol) ........................ ................................................ 7 Figure 2: Top 10 Wine Producing Countries ....................................................................... 8 Figure 3: The Principal Wine Producing Countries (in thousands of hl) and Its Development.................. 37 Figure 27: Allocation of National Envelopes .................... .................................................................................... 35 Figure 26: Crisis Distillation: National Envelop Limits ......................................................... 11 Figure 6: Global over supply 1997-2004 ................................................. 13 Figure 8: Average incomes of the EU wine producers according to the type of wine (2003) .................................000 Hectoliters) .................................... ....... Value in $.................. Wine Imports................................... 43 87 .............. ................................................... 1996-2007 ............................................... 2002±06 ... 16 Figure 13: EU-27 wine Export............ 19 Figure 15: EU Wine Imports...............................

................................ French and Spanish wine production and share of totals disposed through distillation intervention.......... 63 88 ...................... Expenditures variations on the CMO wine (in Million)........................................................ 50 Figure 35: New Reform Variant B........................................................................................................................ 2003 -2006 (in million gallons) ...................... Time Table 1 .................. 50 Figure 34: New Reform Variant B.............................................. Time Table 3 ................... 55 Figure 40: Budget Evolution by CMO Measure .......... 52 Figure 37: Expenditure for the COM in Wine by Member State in 2004 ........53 Figure: 39 Budget Allocation of the CMO for Wine .............................................. Time Table 2 ............................. 58 Figure 43: European..........................................................................................................................Figure 30: Quality wines / GI s .......................... 45 Figure 31: Yearly Allocation of Subside Budget ............................................................................................ 52 Figure 38:Wine budget expenditure 1993 ± 2004 and 2005 the budget estimation....................................... 57 Figure 42: Evolution of FNVA/AWU before and after implementation of the CMO profound reform ...................... 48 Figure 33: New Reform Variant B.............................. 51 Figure 36: EAGGF ....... 55 Figure 41: Supply balance for the EU-27 wine sector at the Forecast of 2010/2011 ...... in ¼ Millions««««««««««««««««««««««««««««««««««................................................................. 47 Figure 32: The Grubbing-Up Scheme in Countries Superficies ..

and Guibert. India Wine Academy. Eurostat. Franco. Council Regulation 1493/1999 ± Common Organization of the Market in Wine http://europa. (2006).. D. and Castaldi.int/eur-lex/lex/LexUriServ/site/en/consleg/1999/R/01999R1493-20040501en. (2001). Campbell. S. Cholette. Discussion Paper nº 0143.pdf Details of EU wine sector reform plan. presentation and protection of certain wine sector products http://europa. An Analysis of Globalization Forces in the Wine Industry: Implications and recommendations for Wineries. Hussain. Adelaide University. 21 (1): 33-47. M. 89 .Bibliographical Reference Angelini.int/eurlex/lex/LexUriServ/site/en/oj/2004/l_344/l_34420041120en00090010. 108 (4): 233-242. G. Centre for International Economic Studies. Journal of Global Marketing. N. R. 07/08/2010 <http://www. http://europa. designation.calwinexport. (2008). Mondovin.eu.ec.eu/cache/ITY_SDDS/en/ext_esms. 05/03/2010 <http://www. ³Global Wine Production". and Wittwer. <http://www. Nossiter. G.eu. "Calwinexport".html> European Commission (2008). Wine in the old world: new risks and opportunities Anderson.com/GLOBAL_WINE_PRODUCTION.htm. Old World strategies against New World competition in a globalising wine industry. California Wines Export.M. 2004. "External Trade Agreement".int/eur-lex/lex/LexUriServ/site/en/consleg/2002/R/02002R0753-20050901en.eurostat.allbusiness.europa.htm>. 06/07/2010 <http://epp. Globalization and the world¶s wine markets: Overview. K. British Food Journal.pdf Commission Regulation ± allergen labeling http://europa.int/comm/agriculture/markets/wine/ index es. Jonathan.com/>.indianwineacademy.eu. Norman.pdf Commission Regulation 753/2002 ± laying down rules for the applying Council Regulation 1493/1999 as regards the description.com/retail-trade/foodbeverage-stores/4497951-1..eu.html>.

(1999). In The European agro-food system and the challenge of global competition. 05/05/2010 <http://news. Mike.fas. "The Wine Economist".thedrinksbusiness.php Pomarici. E.pdf> Veseth.reseauconcept. Tender AGRI/EVALUATION/2002/6 vols. pp: 157-186.oiv.pdf>. INSTITUTE FOR AGRICULTURE AND TRADE POLICY May 14. The Common Agricultural Policy: A Brief Introduction Prepared for the Global Dialogue Meeting . Competitiveness of the western European wine sector.com/> What is the current situation of the European Union's wine sector? Commom Market Organization.org/uk/accueil/index. <http://www. Ismea. 2007: 90 . WineEconomist. The Spirits Business. 06/07/2010 <http://wineeconomist. USDA Foreign Agricultural Service.Organisation Internationale de la Vigne et du Vin (2009). Roma. http://www.net/images/oiv_uk/client/Commentaire_statistiques_annexes_200 6_EN.com/2007/12/24/draining-europes-wine-lake/>.gov/gainfiles/200707/146291815. "Vinexpo chief sees the future in Asia".usda. 06/04/2010 <http://www. Organisation Internationale de la Vigne et du Vin (OIV) .OIV . "SITUATION OF THE WORLD VITICULTURAL SECTOR IN 2006 ".

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