This article was taken from BeverageDaily.com
02/05/2005 - An EU Commission committee has promised extra money to help French wine makers distil more than a million hectolitres of quality wine into undrinkable industrial alcohol after the French government promised to rip up vines and make structural changes across the sector, reports Chris Mercer.

The Commission’s Wine Management Committee proposed ‘crisis funding’ for up to 1.5 million hectolitres of quality French wine to help reduce the burden of overproduction that has sent French wine prices crashing by more than 30 per cent in some cases.
Problems surrounding France’s production surplus have been a main focus of a series of vintner protests in the country in recent weeks, with some younger activists even hijacking lorries and ransacking shops containing foreign wine imports.

A Commission spokesperson told www.BeverageDaily.com its offer had been conditional on the French government promising to do more to re-structure the country’s wine sector.

He said French officials at the committee meeting claimed their government would consider destroying up to 15,000 hectares of vines and limiting re-planting rights to curb overproduction.

The government also wants to regulate the quality wine sector more tightly to enforce these measures, they said.

The plans will send new shock waves through the industry, especially as this is also the first year quality assured ‘Appellation Contrôlée’ wines have required crisis distillation to keep them from gathering dust on shelves.

Some vintners are likely to greet the government’s plans with anger. Many are already enraged at what they claim has been a lack of government support for French wine on both domestic and foreign markets.

Some producers in the Languedoc-Roussillon region are also annoyed that their efforts to reduce production over the last two years have been blighted by production surpluses in Bordeaux.

Others, already resigned to the need for streamlining in their industry, may take the news more philosophically.

“Many businesses are struggling to survive now and a lot will have to close in the future, particularly smaller ones but also co-operatives,” said Michel Bataille, a senior member of a co-operative business near Béziers.

The EU crisis distillation budget, if endorsed by the Commission, will be €145 million and will also be used to help Spain distil up to four million hectolitres of table wine.

“Spain gets more because it produces more table wine and that is harder to sell because of its lower quality,” said a Commission spokesperson.

Greece is also likely to be offered crisis funding within the next few weeks, but the EU’s other big producer, Italy, is expected to go without because it did not apply.

The EU budget already sets aside around €220 million every year to fund wine distillation, but has not had to find such extra crisis funds since the 2001/2002 season; mainly because Italy, France and Spain had managed to reduce wine production by a combined 22 million hectolitres (14 per cent) from the year 2000.

However, Spanish production crept up by eight million hectolitres in 2003 and the French and Italians followed suit in 2004, increasing their production by 11 million and 8.5 million respectively.

The wine surplus has caused particular tension between Spanish and French producers.

Some French vintners, faced with falling domestic consumption and struggling to compete on the international market, blame cheap imports from Spain for worsening their plight, and believe the EU is propping up an irresponsible Spanish wine industry producing too much low quality wine.

The French government has offered €70 million from its own pocket to help vintners, but again industry officials, while welcoming the action, have criticised the aid for its poor direction and lack of focus on the long-term.

The EU should make its crisis funding available after 23 May if the Commission endorses the wine committee’s decisions.