Examination of Witnesses (Questions 120
- 139)
WEDNESDAY 28 FEBRUARY 2007
MR JOHN CORBET-MILWARD, MR PHILIP GOODBAND AND MR
PATRICK MCGRATH
Q120 Baroness Jones of Whitchurch:
Is it a system which is also strangling some good producers of
quality wine elsewhere in Europe?
Mr Goodband: Yes, it is, and that is why I was
careful to say that there are some appellations which have
world-standard, benchmark qualities. The other problem is that
there are far too many GIs, far too many. It is a complete nightmare
for the consumer, who has no idea what most of them mean and,
therefore, there is a desperate need to simplify that whole situation.
It is indeed strangling producers within those areas who could
very happily produce very attractive, accessible and saleable
wine and who are currently not able to do so.
Q121 Chairman:
But how would you do it?
Mr Goodband: How would I do what?
Q122 Chairman:
You said that there is a need to change it because it is strangling,
so how would you reform it?
Mr Goodband: Well, the number of appellations—and
perhaps we can use the term "denominations" to stretch
it further than France—has arisen because of the notion
that anything which has a denomination of origin is automatically
considered to be quality wine, and that simply is not the case,
as I have tried to explain. So there is a need to ensure that
the notion of origin is separated from the notion of quality.
Mr McGrath: The appellation rules originally
were introduced really to guarantee authenticity and that was
the basis of them. Then they tried to guarantee quality at the
same time and actually, I think, introduced far too many regulations,
which actually has been stifling the quality of course. In many
parts of France, I know of many people who go around the "New
World" in envy, saying, "I wish we could do this and
that, because I am not allowed to do it within the system".
I think generally, as Philip said, that you would have to strip
it out and simplify it dramatically. It is important that you
guarantee the origin, but actually I personally feel that complete
deregulation ultimately would lead to quality, because you would
let market forces decide. Particularly with the change of climate,
why in time can we not plant Shiraz in Bordeaux? If you look at
the "New World", they have complete freedom, although
there are problems of over-production in the "New World",
and the same applies to certain GIs in Europe. The Champennoise
very strongly defend their origin in terms of protection of the
appellation, but also they have progressively over the
last 15 years tightened up their entire appellation system
and controls to increase quality and increase minimum age in the
bottle, etc. When we look at other countries around the world,
countries like New Zealand who have very high internal standards,
but, within that, still have a complete freedom of what they can
do in terms of wine-making or in the vineyard, and quality comes
to the surface, it is a combination of quality and then of course
marketing in terms of how you talk to the consumer.
Q123 Baroness Jones of Whitchurch:
So how would you then define "quality"? How would you
define it for the consumer?
Mr McGrath: I would say it is a balance of what
the consumer will pay for. I think there is a danger often in
wine that we think it is different from you and I going to buy
a stereo or buying a piece of furniture. It is market forces and,
as long as the consumer believes he is getting value for money,
whether it is £50 or £5, people will have different
views of what it represents.
Mr Goodband: It is very much delivering value
at whatever price level. That is really the definition of "quality".
Q124 Viscount Brookeborough:
Mr Goodband, just to follow on from that on quality, you said
that there were several million hectolitres of questionable-quality
wine that is surplus.
Mr Goodband: Yes.
Q125 Viscount Brookeborough:
If it is surplus, are people actually producing it in order that
it goes for "crisis" distillation? If they are producing
this and you can tell that it is of questionable quality and they
presumably know, then what is making it practical for them to
keep doing so?
Mr Goodband: They are continuing to produce,
knowing that they will be able to receive funds for distillation,
and crisis distillation is no longer a crisis, it has become structural.
Mr Corbet-Milward: Absolutely.
Q126 Baroness Jones of Whitchurch:
In your experience of importing and trading, do you have any indication
of any fraud that is going on, because obviously there is that
surplus and the easy thing to do would be somehow to redefine
it to get it on to the market so that you can sell it. I just
wondered if you had any experience of fraudulent producers or
middle men trying to do that, to put wine, which is not what it
says on the label, on to the market?
Mr Corbet-Milward: I have had experience of
that only at the trade association level. I remember a few years
ago that the harvest dipped in France, and, surprise, surprise,
there was a tremendous drawdown on wine from Cyprus: where that
went was blindingly obvious; it turned itself miraculously into
French wine, but we could not prove anything.
Mr Goodband: One of the ways in which fraud
works, given the complexity of regulation and so on, is simply
the paperwork, and I have had personal experience of seeing how
the switch of paper works. Wine of undrinkable quality comes in
from somewhere, comes into a cellar, they have the paperwork for
the undrinkable-quality, appellation, denomination wine,
and other wine comes in from somewhere else which has cost a lot
less, but which is actually more drinkable, and the switch takes
place. That is a direct result of too much paper flying about
because of the regulations.
Q127 Baroness Jones of Whitchurch:
They switch the labels?
Mr Goodband: They switch the paperwork, the
certification.
Q128 Baroness Jones of Whitchurch:
Do you think that is quite widespread?
Mr Goodband: I have no idea.
Q129 Baroness Jones of Whitchurch:
I am asking you too much here, but do you think it is going on
a lot?
Mr Goodband: I have no idea, I am afraid.
Mr McGrath: Interestingly, I am always surprised
that there is not more fraud in terms of premium brands. If you
look at the price of a case of Cha®teau Latour Mouton-Rothschild
2005, it is at a ridiculous price, most of the box of which will
not be opened for 15 years, and then you look at the people who
go to lengths to forge banknotes. Relatively, there is very little
there; it is a wooden box with a stamp on it and a label, and
most people will not realise that they have been conned for 15
years. The Cha®teaux now do go to lengths and they will put
tiny ink marks on bottles, but I am pleasantly surprised that
more people do not do it, given the value of premium wine, how
little there is and the money you could make out of it, if you
were so inclined.
Q130 Chairman:
Could you give us a little sort of private talk!
Mr Goodband: I think, in reality, the level
of fraud we have been describing has to be quite low, I really
do, because it would surface through the tastings that we go through
in order to market the wine and, quite honestly, we do not see
a lot of it.
Q131 Chairman:
This will be grossly offensive to you, but could you not tell
by chemical analysis?
Mr Corbet-Milward: No, you cannot. It is very
difficult indeed and people have been scratching their heads for
a long time, including scientists, in order to solve that particular
conundrum, but have so far failed. There is an EU organisation
(ISPRA) which is looking at the sugar levels in wines. Coming
back to your question, sure, there is fraud, there always has
been fraud in the wine sector, but our experience has been that
it is patchy and obviously, if there are downturns or difficulties,
climatic difficulties, then temptation is greater.
Q132 Viscount Ullswater:
Just before we leave quality aside, is there any difference, in
your experience, between the definition of quality of New World
wines and the definition of quality within the European Union?
Is this a European Union problem? I know the "New World"
wines are much more unregulated and obviously they will have to
sell either on brand, quality or reputation, and I am not quite
sure what I am talking about here. But it seems that there is
a big structural problem on labelling, appellation, and
geographic areas which seems to be very, very much in Europe.
Mr McGrath: I think a lot of it comes down to
marketing in terms of the "New World". They will have
their own regulations in place and most of them will have to get
export certifications, particularly out in New Zealand where they
have very rigid regulations, but ultimately they are more driven
by market forces. They work better, so they will have their own
generic bodies in most of the countries and they will put on their
own generic tastings, so they will have their wines available
on a far more organised basis to the trade and indeed to consumers,
and I think it is easier for the consumer generally to get an
impression of quality or to get more clues regarding quality from
a "New World" label, a front label, than they do from
most "Old World" labels, which are actually a complete
minefield. They have never heard of the cha®teau, they do
not know what "appellation contrôlée"
means, there is no clue about the grape variety, and there are
less clues for the consumer.
Mr Goodband: In many cases, there is nothing
on the label at all and there is no informative back label whatsoever.
In terms of whether there is a big difference, standards of quality
in the "New World" also tend to be built on, as you
say rightly, reputation, and that reputation comes from winning
medals and awards at wine shows and national competitions held
under very strict rules, and those are widely used in Australia,
New Zealand and many other "New World" producing countries.
Mr McGrath: There is more of a competitive spirit
between wine-producers and wine-makers in a friendly way, or not
so friendly, but there is much more of a system to challenge each
other to win a gold medal, and they seem to have more value, they
are better organised and they are more structured. There are wine
shows in France, but I think an Australian would be pretty critical
of them compared to a very organised, sophisticated competition
system in Australia.
Mr Goodband: I have participated as a guest
judge in those international competitions in Australia and they
are very, very highly organised. The results are widely publicised
and much sought after by the producers.
Q133 Viscount Ullswater:
Is there scope for a review of all this labelling within the European
Union, within the CMO, in order to compete on an international
basis where international standards are being dictated by the
"New World" generally or by the WTO (I am not sure who
would be in charge of the international standards) but for the
EU to grab that rather prickly nettle?
Mr Corbet-Milward: Yes, the answer is that there
is scope—plenty of scope—for simplicity. We talked
earlier on about the multiplicity of GIs and appellations. The
Commission, believes, as we do, that simplification of the labelling
system is winnable. It is blindingly obvious, it is a no-brainer;
if EU producers want to sell their wines to consumers, many of
whom barely understand wines outside their own region or wines
produced outside their region, there needs to be an overhaul of
the present labelling regime. The detailed work has not been done,
but there are certain things that were mooted at the last reform
about five years ago and including the permitted use of wine variety
and vintage on a label of table wine. What could be more obvious
than that, but it is the rules that are blocking these changes:
there is plenty of pressure coming from the Comité du Vins,
from our association and from other trade associations in Europe
for these changes to be made so that people, like my colleagues
either side of me, can sell their products to consumers and ensure
that those consumers come back to the brand that they have already
bought.
Q134 Chairman:
Can I take you up on crisis distillation. You have rightly said
that it is no longer crisis distillation; it is structural, and
you are agin it, which I think everyone is, honestly. You then
go down the road and you favour "national envelopes"
to fund both restructuring and, what you call, "certain crisis
measures". What are you thinking about there in terms of
certain crisis measures? And is there not the danger that, if
we go down the "national envelope" road too much and
there is lots of money there, then that actually is a backdoor
route into this thing that we are trying to get rid of?
Mr Goodband: I totally agree, but there seems
to us to be an opportunity in those areas, and there are some
areas undoubtedly where, if all the vines were taken out, there
would be real and significant social problems. So, if there were
a fund available, which was nothing to do with support for viticulture
or wine-making or anything else, but to deal with those social
issues, they could also cover environmental issues and other things
which could be dealt with on a national basis, and that was really
the area we were thinking of.
Q135 Chairman:
So what you are really saying on this is to move away from supporting
crisis intervention on the wine side and move over to the rural
development part?
Mr Goodband: Yes.
Q136 Chairman:
That is a helpful clarification.
Mr Corbet-Milward: We also made the point in
our written evidence about the mutual funds: maybe I drafted it
rather loosely, but the thought was that perhaps the growers themselves
might fund the funds rather than government so that, if there
was a dip in yields because of bad weather, then they could draw
on something. That sort of approach happens in other sectors,
I know.
Q137 Lord Plumb:
The word "simplification" has been used once or twice,
and I think we all share your view that, if at the end of the
day the regime could be changed so that it is simplified, and
quite extensively, then that would be welcome. How you do that
when you are dealing with living and growing things, when the
quality will change and the quantity will change year by year.
And then of course, when you get it growing and prepared, in the
industry outside Europe the quantity and the quality perhaps may
be coming in in larger quantities, and that is going to affect
the regime? Of course, there is no doubt that growers in Europe
are looking at that and are concerned. You have said very clearly
in your statement that you are opposed to a ban on new plantings
and you believe that, if there was an end to the grubbing up scheme,
then that would encourage the development of large-scale enterprises,
economies of scale and the better ability for growers to compete
in the global marketplace. That has a similar ring to it to that
of the CAP in the way things are changing in various directions
following the reform of the CAP. It might be true of course of
the wine industry in this country for the simple reason that we
have not reached the maximum growth area which is assumed, but,
if you are going to face competition from British-grown and British-made
wine, and of course there is still room for expansion, then when
we get to other countries of course they may think differently.
The French, I know, in their own evidence to us, are saying, "Well,
yes, we have been encouraged to do more grubbing up, which is
fine, but what we have done now is allowed in the New World wines
because, while we have been grubbing, they have been expanding
their market", and so on and so forth. Well, we can all listen
to those sorts of argument, but I think the real question is:
whilst you do not support the grubbing up scheme, which is envisaged
under the Commission's preferred option for reform, there has
to be some reduced capacity and it has to be done fairly quickly
if we are really going to get this under some sort of control.
So, if it is left to market forces, and we all might be in favour
of moving in that direction, that might be fine for simplification
and stopping a lot of the paperwork if we did, nevertheless, if
we moved in that direction, what would you expect to survive at
the end of the day from what we have at the moment?
Mr Corbet-Milward: I think that is a very difficult
question and a very good question. With regards to grubbing up,
we are certainly not against it and, in our written evidence we
put to the Committee, we thought we had made that reasonably clear.
We broadly agree with what the Commission has put forward, but
there has to be a balance between the planting bans and the grubbing
up scenario. Exactly how that would work in practice, I think,
is a matter for debate.
Mr Goodband: There is clearly a need to reduce
capacity and that is why we are for grubbing up rather than against
it. The ban on plantings is the other side of that coin and definitely,
because of, as we see it, the drive towards free market situations,
that ban on planting should be lifted because that would enable
the more efficient growers to plant and gain the benefit of those
efficiencies in the competitive marketplace, so those are the
two sides of the coin. It is a matter of having the vines in the
right places, being farmed by the right people making the right
products for the market.
Q138 Lord Plumb:
Going back to some points you were making earlier, I have always
argued that there is not a wine lake, there never has been a wine
lake, there is a "plonk" lake, and the point you were
making is that there are surpluses, but the surpluses have increased
at the lower end of the scale rather than the upper end of the
scale and, therefore, an important thing, I suppose, to recognise
is that there needs to be greater encouragement for quality wines
rather than the reverse.
Mr Corbet-Milward: The irony is that in the
latest bout of crisis distillations, quite a lot of wine which
was distilled was quality wine.
Mr Goodband: It was wine of appellation
status.
Mr Corbet-Milward: Good point, but it is deemed
to be quality wine and put into that position by the existing
rules and regulations.
Q139 Baroness Miller of Chilthorne Domer:
Mr Goodband, you spoke about efficiency as being one of the main
drivers in this and I wonder if you can define for us what your
view of an efficient wine producer is. Obviously in some areas
quantity is efficiency, but in this area it is not, but is it
just quality? What do you mean by "efficient"?
Mr Goodband: If I could come back to the point
I made earlier about value at each price level, in the world market
wine quality has risen as knowledge of viticultural techniques
and wine-making techniques have become more sophisticated and
known. There is undoubtedly efficiency available to New World
producers being able to plant, mechanise and use the knowledge
of viticultural techniques to produce optimum quality levels,
getting the grapes ripe within any given country, any given region.
In Europe, of course a lot of things are different; the weather
in some respects in some places is very different from that in
parts of the New World, the terrain is different and, therefore,
the definition of what is efficient is somewhat different, but
fundamentally it is being able to produce economic loads of grapes
on the vines, getting them ripe and being able to produce good-quality
wine to be sold at the right price level into the marketplace.
That would be my definition of efficiency. One of the key factors,
I think, determining that is that the growers should be much more
directly linked to the marketplace and what I see beginning to
happen, but only just in very recent months beginning to happen,
is a change in the way that négociants, for example,
in France are bypassing the old system and taking a direct interest
and partnership with those growers who are willing to do what
I have just described. That, I think, is key to raising the quality
and producing the style of wine which is going to be acceptable
in the marketplace at the prices that will be acceptable to it.
|
