Memorandum by the United Kingdom Vineyards
Association (UKVA)
(i) The United Kingdom Vineyards Association
(UKVA) represents the growers and makers of the majority of grapes
and wine in England and Wales. We thank you for this opportunity
to provide evidence on the reform of the EU wine sector.
(ii) Before answering the specific questions
prepared by the committee, we would like to draw to the committee's
attention the main EU wine reform issue of concern to the producers
of English and Welsh wine (wine made from grapes grown in England
and Wales; not to be confused with British Wine, which is wine
fermented in the UK but made from imported grapes or must).
THE ELIMINATION
OF PLANTING
RESTRICTIONS
(iii) The elimination of any hindrance to new plantings
in the UK is the UKVA's primary objective in the reform process.
Whilst many EU wine regulations restrict how our members are permitted
to operate, we have proved over recent years that we can produce
wine of the highest quality, and make and sell that wine within
the current regulatory system. In the UK we see a need for rural
diversification. For growing numbers of farmers and land owners,
vine growing for English and Welsh Wine represents a real, sustainable
development opportunity. We wish to see our industry be able to
expand without regulatory obstacles. At the current rate of planting,
we will shortly exceed the 25,000 hl de minimis limit that exempts
the UK from the EU-wide planting ban. If we became subject to
that ban, it would curtail any further development of our industry
just when wine production in the UK is making great progress without
any subsidies.
(iv) The planting ban is due to expire in
2010, but there are forces within the EU that are looking to extend
the ban to 2013 or even later. We are concerned not just about
the potential for the ban to prevent planting, but also its adverse
effect on vineyard business planning and, hence, disincentive
to investment in our industry. If the ban is removed, businesses
will be able to make expansion plans with certainty.
A. THE NEED
FOR A
REGULATION
1. What is the nature of the case for having
a wine regime at all?
1.1 English and Welsh wine makers and grape
growers have never benefited from the market support measures
that are central to the current EU wine regulations. The small
but flourishing English and Welsh wine industry has made excellent
progress despite, not because of, EU wine regulations. Whilst
many member states are consumed with getting their share of the
wine budget, we are far more concerned in seeing a reduction in
red tape and disadvantageous restrictions to permit our industry
to continue to grow and develop. The wine reform should seek to
promote quality wine production and increase competitiveness.
In the medium term, we believe all EU producers would benefit
from the reduction in bureaucracy that we seek. We therefore support
deregulation subject to minimal, necessary, responsible regulations
to protect consumers and the environment.
2. Why should wine quality be regulated? Why
cannot consumers choose between wines as they do between other
products?
2.1 Wine quality should only be regulated to
the extent that it is preventing inaccurate or fraudulent labelling.
Where a GI has effectively become a "brand" with significant
value, it should be possible for producers in that GI area to
have more local control over the way that brand is exploited.
2.2 However, the whole area of labelling should
be focused on the consumer rather than the producer. Currently,
many producers are prevented from putting much useful information
on a label, such as vintage, grape variety or region of production,
which can only be helpful to the consumer provided it is accurate.
B. THE MARKET
3. Given the existence of a wine regime, how
might a better balance be achieved between the supply of and demand
for wine and wine products produced within the EU?
3.1 A balance will only be achieved when the
focus is on the consumer—ie demand. The current market mechanisms
support producers that are producing wine that nobody wants to
drink. These measures must be removed.
3.2 Similarly, those producers that are making
wine that consumers wish to drink should be permitted to expand.
For this to happen, planting restrictions need to be removed.
3.3 The New World has given the EU an object
lesson in the importance of focusing on the consumer rather than
a "traditional product". The result is that New World
wine has been winning over consumers at the expense of EU wine.
3.4 Of course, many of the world's best wines
are made in the EU and enjoy strong demand. These producers will
no doubt continue to produce excellent wines based on the traditions
they embody. However, this should not mean that all traditions
are supported, if the resulting wines do not enjoy consumer support.
4. Is the EU wine industry, within the current
regime, sufficiently competitive within the global wine market?
How can it be made more so?
4.1 Others will be able to provide detailed
data on how poorly EU wines are currently competing. However,
the core problem is as B3 above: it is necessary for the EU wine
sector to focus on what the customer wants.
4.2 With the exception of the UK, every EU country
shows falling wine consumption whilst USA, China and India are
all very large, growing markets. Subsidies given to EU growers
provide an excuse for compensating tariffs to be applied by importers
thus reducing EU competitiveness in these markets.
5. Is it to be expected that barriers to trade
in wine will continue to diminish as the result of WTO negotiations?
If so, what impact can this be expected to have on the cost of
the EU wine regime and/or on its effectiveness in protecting farm
incomes?
5.1 No answer provided.
C. STRUCTURAL
MEASURES
6. Are current measures (eg grubbing up, restrictions
of planting rights) an appropriate means of bringing supply and
demand into balance? What further measures need to be taken in
these or other areas?
6.1 These current measures have been tried for
several years, and the results speak for themselves—surpluses
are increasing, "crisis" measures are becoming the norm
and EU wines are losing market share.
6.2 One cannot beat market forces of supply
and demand. The EU wine market must be permitted to respond to
demand by deregulating planting rights and permitting producers
to compete on a level playing field with the rest of the wine
world in areas such as oenological practices and labelling.
6.3 We recognise that some measures may have
to be put in place to reduce the "pain" during the transition,
but the aim must be, as the Commission indicates, to deregulate.
7. How significant an issue is illicit planting
for the supply situation?
7.1 Commenting from a UK perspective only, it
is not an issue in the UK.
8. Is there a case for the continuance of
remedial measures ("crisis distillation") to deal with
exceptional market conditions?
8.1 These measures should only be considered
if they really will apply to genuinely exceptional market conditions.
In the past, they have tended to become an ongoing part of subsidising
those producers that make wine for which there is little demand.
9. What alternative outlets (ie other than
wine sales) exist for excess production?
9.1 No answer provided.
10. What is the potential impact on wine producing
areas of liberalisation of the market? How sensitive are these
economies to change?
10.1 There are producing areas that rely substantially
on subsidies to survive. However, this cannot be beneficial to
the tax-payer or the EU wine sector in the medium or long term.
We recognise that measures may be required to soften the transition,
but this should not stop the necessary changes being made.
11. How effective have current arrangements
been in supporting diversification of rural economies away from
the wine sector? What contribution will the European Agricultural
Fund for Rural Development make, post 1 January 2007, to development
of the rural economies of wine-producing regions? What further
measures might need to be taken?
11.1 No answer given.
D. MARKETING
12. Given continuance of an EU wine regime,
what are your views on labelling and quality issues? Are current
arrangements conducive to consumers understanding what they are
buying? Is there scope for rationalisation and simplification?
12.1 Labelling is extremely important for consumers.
Making labels more understandable has been one issue that has
helped New World wines increase their market share. Customers
expect to know the vine varieties, the vintage and the source
of the wine, regardless of its quality rating.
12.2 Quality ratings would seem to be a good
idea, but in practice they are not usually overly useful. Anyone
with a reasonable understanding of the appellations of European
wines knows that it is often not enough just to know how the quality
system works. In Burgundy and Bordeaux, for example, knowledge
of the individual producer or chateau is also essential.
12.3 The important element in labelling is to
ensure that it is accurate and not misleading. Quality would probably
be better delivered at the local/regional level, where all producers
involved have an interest in increasing quality, rather than through
national or EU regulations.
13. What part has marketing played in the
rise in sales within the EU of wine produced outside the Community?
13.1 Marketing and targeting what the consumer
wants has been fundamental to achieving such high market penetrations.
The doubling of the UK market in the last 12 years has been from
"New World" wines, which are clearly and understandably
labelled.
14. What lessons might be learned from the penetration
of non-EU wines into the EU market?
14.1 Focussing on customer requirements has
been all important. Other respondents will be able to provide
you with a much more detailed view of how the New World has achieved
its success.
E. WINE MAKING
PRACTICES (WMP)
15. How suited are current regulations on
WMP to a competitive global market in wine? What changes would
you like to see?
15.1 The current regulations on EU oenological
practices put EU producers at a disadvantage to New World producers.
Where consumers perceive a quality product that uses traditional
and more restrictive practices, it is sensible for those producers
to continue to build on their heritage. However, other producers
need to innovate and adapt to customers' requirements and for
that they need to be able to compete on a level playing field
with the rest of the wine world.
15.2 The OIV is recognised as the inter-governmental
body that sets out acceptable oenological practices. The EU should
adopt OIV practices as the Commission has suggested. It is also
important that final acceptance of individual practices lies with
the Commission so that the issue becomes less politicised.
16. How should enrichment (with sugar or must)
be regulated? Should there be financial aid for enrichment?
16.1 Some maximum needs to be set on enrichment,
but this issue should be viewed in relation to the quality of
the resulting wine. In certain years and for some varieties, producers
in Northern Europe may need to enrich by up to 3.5% above. Without
this, they would be unable to make the quality of wine they would
wish, as alcohol (ethanol) is important in the balance of a wine
and also as a carrier for a number of flavour and aroma compounds.
16.2 It seems slightly odd that enrichment is
singled out by the Commission without any mention of acidification.
Enrichment and acidification are simply opposite ends of the same
spectrum. In cooler climates, grapes may not produce the desired
level of sugars so musts are enriched to achieve balance. In hotter
climates sugars are adequate but the grapes often lose acidity
and, therefore, musts are acidified. Both are important in producing
the required quality of wine.
16.3 In the process of seeking to balance the
EU wine/grape market, we see no place for artificial subsidies.
F. ENVIRONMENTAL
AND SOCIAL
IMPACT
17. To what extent does the wine sector have
an impact—favourable and unfavourable—on the EU environment?
Are measures needed to support good environmental impact? Should
they be selective?
17.1 No answer provided.
18. To what extent and how should reform of
the EU wine regime take into account concerns over the potential
for alcohol abuse?
18.1 Whilst alcohol abuse is a serious subject,
it is not central to the current EU wine reform process. This
reform already covers a very wide and complicated set of issues
and we feel that the issue of alcohol and health should largely
be addressed separately. This reform should concentrate on measures
to ensure the future prosperity of the EU wine sector, which represents
a very significant part of EU agriculture.
6 February 2007
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