Europe launches wine reform by proposing a new Council Regulation

Posted by Mike Tommasi on 13 July 2007 in Wine

Last week week the European Union released the full text of the “Proposal for a COUNCIL REGULATION on the common organisation of the market in wine and amending certain Regulations”, this had been announced a few days earlier on the website of the European Commission’s Agriculture and Rural Development section.

This new Common Market Organisation (CMO) for wine will lead to the repeal of current CMO as stated in Council Regulation (EC) No 1493/1999 of 17 May 1999

The main stated objectives are:
– increase competitiveness;
– strengthen the reputation of EU quality wines;
– recover old markets and win new ones;
– set clear, simple rules;
– preserve the best traditions of EU wine production,
– reinforce the social fabric of many rural areas,
– ensure that all production respects the environment.


What are Regulation, Council and Commission?

Before we start, here is a small reminder of three key European concepts that may help in understanding the new regulation and its effects.

The Council of the European Union is one of the two legislative institutions of the EU (the other is Parliament), it is composed of the ministers of all member states (currently 27), while the presidency is taken over every 6 months by a member state (currently Portugal). In reality there are several Councils, one for each ministerial subject, and so in our case we will be dealing with the Council composed of the ministers of agriculture. The Council composed of the heads of state is referred to, confusingly, as the European Council. The Council of the European Union should also not be confused with the Council of Europe, an international organization of 47 European states (out of 49) dealing mainly with human rights, currently presided by Russia.

The European Commission is the executive body of the EU that proposes legislation, including this new Regulation, and is composed of commissioners from each member state (currently 27), headed since 2004 by José Manuel Barroso.

A Regulation is a legislative act of the European Union which becomes immediately enforceable as law in all member states simultaneously; therefore it overrides all national laws. It should not be confused with a Directive, which requires implementing measures or laws to be passed in each member state. The most essential Regulations, such as the CMO on wine discussed here, are drafted by the Commission and adopted by Council, they are referred to as Council Regulation.

Overproduction and free market

Key to the new regulation is the introduction of simplified straightforward regulatory measures with fewer constraints for producers favouring competitiveness, with the elimination of the old system of planting rights, so that from 1 January 2014 onwards planting of vines will be free and each grower will become responsible for the decision to plant, based on his assessment of his ability to sell the produce.

The new CMO also addresses the issue of overproduction of low quality wines, by “granting alternatives to less competitive producers”. Producers have an attractive incentive to “grub-up”, in other words destroy their vineyard, with a target set at 200,000 hectares over 5 years; the incentives are highest in the first year, 2009, at around €7174 per hectare, dwindling to about €2938 per hectare in 2013, thus encouraging vine growers to act as soon as possible. While this has enraged the community of producers of bulk wine, these people have missed a key point, that the decision to grub-up is entirely voluntary, there is nothing compulsory about this European measure.

Market management measures currently in place under CAP will be removed as soon as the regulation gets passed in late 2008, these include: “crisis distillation, support for by-product distillation, drinkable alcohol and dual-purpose grape distillation, private storage aid, export refunds, aid for must for enrichment of wine”.

Gains made from eliminating inefficient current market measures will be compensated by new budgets for “export promotion…, vineyard restructuring…, green harvest… and crisis management measures”. The green harvest part grabbed my attention, the term usually describes an often used technique that consists in removing certain grape bunches early in the growing season in order to reduce yields and improve the quality of the remaining fruit, but in this Regulation it has a more radical meaning (see Article 11) “the total destruction or removal of grape bunches while still in their immature stage, thereby reducing the yield of the relevant parcel to zero”: in other words, you can get paid for destroying your crop! While other measures are laudable, this appears to be as inefficient as the current subsidies…

In addition, rural development measures are introduced to “help set up young farmers, to promote investments in technical facilities, marketing improvements, vocational training, to provide information and promotion, to provide agro-environment support (to cover additional costs and income foregone in providing and maintaining vinescapes/cultural landscapes), and to encourage early retirement by older farmers” who transfer their holdings to new ones.

Legally redefining wine

The proposed Regulation restates the legal definition of wine and the procedures and substances that may be used to make wine. The introduction of a new CMO would have been an excellent occasion to redefine wine and to restrict the oenological practices and treatments allowed, limiting or eliminating the more heavy handed treatments intended to “correct” defective wines, and keeping those that improve the making and conservation of wine.

Annex IV of the proposed Regulation states very simply: “Wine shall be the product obtained exclusively from the total or partial alcoholic fermentation of fresh grapes, whether or not crushed, or of grape must”. After this very promising definition, however, all sorts of allowances are made for the treatment of wine and for additives, with in addition some rather disturbing loopholes.

Thus the preamble of this new regulation proposal mentions
more adaptable oenological practices with:
– the transfer from the Council to the Commission of the responsibility for approving new or modifying existing oenological practices, including taking over the acquis except for enrichment and acidification;
– the assessment by the Commission of the oenological practices adopted by the International Organisation of Vine and Wine (OIV) and subsequent incorporation into a Commission regulation;
– the authorisation of the use in the EU of oenological practices already agreed internationally for making wine to export to those destinations;
– the deletion of the minimum natural alcohol requirement of wine.

A restatement of the first of these principle is found in the “whereas” section paragraph 19, stating that “For reasons of flexibility, the Commission should be given the responsibility for keeping those practices updated and approving new ones except in the politically sensitive areas of enrichment and acidification, for which the Council should remain competent as regards changes”. It would have been preferable to see explicitly mentioned in Article 23 the conferring of competence to the two bodies, Council of the European Union on the one hand and European Commission on the other, instead this is left quite vague: “Except for the oenological practices concerning enrichment, acidification and de-acidification listed in Annex V and the restrictions listed in Annex VI, the authorisation of oenological practices and restrictions … shall be decided in accordance with the procedure…

It is not clear why the practices assigned to Council are politically sensitive while the others are not. True, the many additives allowed by OIV might be of greater concern regarding health rather than politics. But if the stated goal is to “strengthen the reputation of EU quality wines”, it is paradoxical that the higher body, the Council, has entrenched the practice of allowing inferior or defective or unbalanced wines to be corrected – quality wines made from healthy mature grapes do not need acidification or enrichment, and inferior wines do not become better wines through such corrections.

According to the “whereas” paragraph 20, “Increasing the alcohol content of wine should be subject to certain limits and should, where applied, be carried out by adding concentrated and rectified grape must to wine. The addition of sucrose to wine should no longer be allowed.”. Quality grapes do not need any enrichment. Enrichment only “improves” wine in terms of alcohol, and today increased alcohol is neither a desirable quality nor a true measure of quality. The abolition of the use of sugar appears to be a step in the right direction, but the announcement of this restriction is followed by a recommendation to use rectified concentrated must (RCM) or even reverse osmosis (see Annex V). It is not clear why RCM or reverse osmosis is considered a quality alternative to sugar. RCM is produced by treating grape musts that are unsuitable for quality winemaking, by using ion exchange resins – polystyrene based chemicals with an environmental impact and requiring further treatment. Italy, the largest producer of RCM, receives huge EU funding, but this funding will be stopped by the proposed regulation (now we understand why the issue is politically sensitive!). Some argue that RCM is better than sugar because it contains grape sugars as opposed to sucrose, but in fact it contains impurities that can alter the taste of wine. In any case fermentation transforms both sugars into the same ethyl alcohol.

Any kind of enrichment is a form of cheating that allows producers to attain the highest yields possible, thereby contributing to the very wine surplus that the EU is trying to eliminate. And so enrichment, whether with sugar or RCM, is both a commercial fraud, in that it gives producers that use this technique an unfair advantage over those who make pure wine, and a consumer fraud, in that the consumer gets a doped wine without knowing it (there is no labelling of ingredients). Reverse osmosis is a much more attractive form of cheating, in that its usage is undetectable. By submitting musts to extremely high pressures, it removes water molecules through a special membrane; in so doing one concentrates the sugar content, but also the acidity (note that legally one cannot simultaneously concentrate sugars and acidity, one can do one or the other). Since wines that need these “corrections” may in all likelihood exhibit many defects (dilution, lack of balance, unpleasant aromas, bitter tastes), then all of these defects will also get concentrated by reverse osmosis.

In the current Regulation dozens of additives and procedures are allowed, but at least they are all listed and defined (see Annexes IV and V of the soon to be repealed Regulation 1493/1999). In this new proposed regulation, it appears that oenological practices are defined in a confusing way, there is at this time no list of allowed practices, only vague references to decisions to be taken based on the OIV’s rules (see International Code of Oenological Practices and International Oenological Codex (available online only in French, else order printed English version from OIV catalogue), a large list similar to current regulation, allowing the use of many additives and procedures. The proposed regulation’s Article 21 states that “only oenological practices authorised under Community law” are allowed. The preamble of this proposal refers to an “assessment by the Commission of the oenological practices adopted by the …(OIV) and subsequent incorporation into a Commission regulation”, but no article clearly states the need for adopting this new Regulation on oenological practices before the present proposal is adopted (failing which this Regulation would be incomplete).

Article 24 on authorization criteria states that “When authorising oenological practices …, the Commission shall:
(a) base itself on the oenological practises recognised by the OIV as well as on the results of experimental use of as of yet unauthorised oenological practices;
(b) take into account the protection of human health;
(c) take into account possible risks of consumers being misled…;
(d) allow the preservation of the natural and essential characteristics of the wine…;
(e) ensure an acceptable minimum level of environmental care;
(f) respect the general rules concerning oenological practices and restrictions laid down respectively in Annexes III and IV.

Aside from citing the wrong Annex numbers (read Annexes V and VI, instead of III and IV), the proposed regulation falls short of incorporating the OIV rules, and merely suggests basing decisions on the OIV rules, while allowing for other practices to be authorized. Of course one could counter that the Commission could also decide on stricter rules than those defined by OIV; but in fact, the Commission could decide in either direction, in other words it can do as it pleases (see below on exceptional practices allowed for exported wine). It is also disturbing to read that the decisions aim at ensuring an “acceptable minimum level of environmental care” – would it not have been better to word this as a “satisfactory level of environmental care”?

Thus the only restrictions on winemaking defined by this proposed Regulation are the definition of wine given in Annex IV, the rules for enrichment, acidification and de-acidification in Annex V, and the restrictions covered in Annex VI forbidding the addition of water or alcohol to wine. I note also that the minimum alcohol strengths defined in Annex IV apparently contradict the preamble of the same Regulation that refers to the “deletion of the minimum natural alcohol requirement of wine”.

More disturbingly, a loophole appears to have been opened to override EU rules for wines destined for export (presumably meaning export outside the EU). The proposed regulation appears to allow international agreements to overrule EU norms, allowing growers to apply oenological practices not otherwise allowed in the EU but applicable for exports to countries allowing these practices. This is confirmed by the “whereas” paragraph 22, that states “In order to meet the international standards … the Commission should generally base itself on the oenological practices approved by the … OIV. These standards should also apply to Community wines to be exported regardless of more restrictive rules which may be applicable in the Community so as to not hamper Community producers in foreign market”. Article 21 states that “the oenological practices and restrictions recognised by the International Organisation of Vine and Wine (OIV), and not the authorised Community oenological practices and restrictions, shall apply to products covered by this Regulation which are produced for export”. This would appear to be a double standard whereby health concerns and expectations of European consumers can be waived in order to help European growers do business outside the EU. Given the globalization of trade, it would seem that it would become difficult to prevent these potentially sub-standard wines from re-entering the EU, and it is not clear how allowing the export of these wines contribute to stated goals such as “strengthen the reputation of EU quality wines; … set clear, simple rules.”?

The classification and labelling of EU wines

Most consumers, both in countries that historically have always consumed wine and in emerging markets, cannot help but be confused by European wine labelling. Each country has a different and very complex system for classifying their wines, and despite the information on the label there is no guarantee that the wine will be a quality product. It is quite common for consumers to purchase, say, a French wine with the Appellation d’Origine Contrôlée label, and find that the wine is not good, or worse than a wine with a “lower” quality classification like a “Vin de Pays” (or worse, a non-EU wine!). A radical change would be needed to make EU wines more accessible, while still ensuring the identification of origin of the best wine producing areas. Limiting the number of appellations would be a start; for example, Germany alone has about 2600 Einzellage (classed villages), of which only a few hundred are recognizable as quality villages and merit being mentioned on the label. In the current system AOP wines will represent a large percentage of total production, when in fact the highest category of quality wine should be at least below 25% of the total to be credible.

The introduction of a new CMO would have been an excellent occasion to redefine the wine map of Europe and create a more easily understood system that applies to all countries and that truly guarantees quality.

Instead the classification and labelling of wines and the concept of geographic origin indications has been only slightly changed, by replacing the current notions of “table wine with geographic indication” (i.e. Vin de Pays, Indicazione Geografica Tipica, etc.) and the more noble “Quality Wine Produced in Specified Regions” (i.e. AOC, DOC, etc.) with an allegedly “clearer, more coherent and consequently more market-oriented wine classification and labelling”. This new classification is based on the concept of wines with Geographical Indication (GI), which are “further divided into wines with a protected geographical indication (PGI) and [higher level] wines with a protected designation of origin (PDO)”. A designation of origin is defined in article 27 as referring to a wine whose “quality and characteristics are essentially or exclusively due to a particular geographical environment with its inherent natural and human factors”, whereas a geographic indication merely refers to wine whose “quality, characteristics or reputation are essentially attributable to its geographical origin”. The designation of origin amounts to a convoluted but reasonably accurate description of terroir, and in particular of terroir interpreted in the wider sense, beyond the mere soil and weather of a particular place and including the “human factors” – it is a pity that the word “terroir” was not stated explicitly. To the human factors one could have even added “cultural factors”, thus further extending the meaning of terroir to include not only the individual style of a particular grower, but also more generally the collective winemaking traditions of that grower community. It is extremely important to prevent a designation of origin from becoming an instrument to force all wines in that designation to become homogenized to an arbitrarily defined notion of what is considered “typical” of that terroir. And another problems with the above definition of origin is that the regulation allows for infinite freedom of interpretation, potentially allowing totally uninteresting wine areas to claim PDO status.

The other criteria distinguishing PGI from PDO wines are more problematic. While PDO wines must be made 100% from grapes of the defined area, PGI wines only need to have 85% local grapes – this is an invitation to go and buy cheaper grapes elsewhere and thus reduce quality, in contradiction with the stated quality goals, and in flagrant incoherence with the idea of marking grape variety and vintage year on wines that are diluted with grapes of ill-defined origin. It is unfortunate that the geographic indication wines must be seen in this way as necessarily inferior – on the contrary, in order to remain competitive these wines must also abide by high quality standards; the less precisely defined origin, or rather, the absence of the notion of terroir should not be an excuse for lower quality, it is simply a way of addressing a different market sector, one that is even more competitive because dominated by new world wines and therefore one that needs full guarantees of quality and transparency.

According to the proposal’s preamble, “the EU wants to confirm, adapt, promote and enhance” the concept of geographic indication, and in so doing it is believed that “the quality policy will be made clearer, simpler, more transparent and more effective”. It is not immediately clear that the new classification is much different from the old, except in the details, such as allowing table wines with no geographic indications to carry vintage and grape variety labelling (table wines cannot display this information today). In fact, the differences between today’s system and the proposed new appellations are so subtle as to permit all existing appellations to be automatically re-entered in the new scheme, as stated in article 44 : “Wine names, which are protected in accordance with Article 54 of Regulation (EC) No 1493/1999 and Article 28 of Regulation (EC) No 753/2002, shall automatically be protected under this Regulation.”. Little will change, and there will not be a more rigorous selection of the areas that qualify for PDO status, all current AOC and DOCs, irrespective of whether they truly represent a quality and distinctive designation, will become PDOs automatically.

Labelling will be similar to what is defined in current regulation, but according to Article 50 some optional indications may be provided, including the vintage year; the name of one or more wine grape varieties, and terms indicating the residual sugar content (these remain undefined, while current regulation has precise definitions for words like “dry” or “sweet” etc.).

But the most burning question I wish to raise about labelling, given the comments in the previous section on the desirability of reducing the number of oenological practices allowed, is the following: why does wine continue to benefit from a special exemption on the marking of ingredients on the label? This is a unique case in the world of food and beverages, and totally unjustified. If consumers had had the opportunity to express their views on the CMO reform, they could have insisted on the labelling of wine ingredients. Since they were not asked to participate, is it not time to demand now, before the reform is passed, either that wine ingredients be printed on the label, or that wines be finally limited to the exclusive use of two ingredients, grapes and some sulphite? Could we imagine one day seeing, in conformance with the first sentence of Annex IV of the proposed regulation, the following compulsory labelling on all bottles: “Wine is the product obtained exclusively from the alcoholic fermentation of fresh grapes, with the possible addition of low doses of sulphites for conservation”?

Where is quality?

We read in the preamble to the proposed regulation that the main objectives include strengthening the reputation of EU quality wines, recovering old markets and winning new ones, setting clear, simple rules, and preserving the best traditions of EU wine production.

Unfortunately the proposed regulation stops short of defining any real measures to achieve these goals. EU wine can only thrive on uncompromising quality, clear understandable labelling, and a clear common classification of quality wine areas throughout Europe. We have already discussed labelling and classification, but on the quality issue we have also discussed the lack of any real substantive restrictions on oenological practices intended to “correct” faulty wines – everyone knows that corrective measures do not improve wines – it’s the time honoured principle of “garbage-in-garbage-out”.

The allowable oenological practices in this proposal are precisely the same as current regulation allows, only more loosely defined, and paradoxically wines sold outside the EU will be even more unconstrained. A serious confusion is made in this proposal between market freedom and competitiveness on one side, and freedom to operate with as few constraints possible. On the contrary, it is precisely on exports that conditions should be at least as good as domestic intra-European rules.

Without going to the extreme of a radical “natural wine” legislation, at the very least it would have been useful to ban those oenological practices that do not contribute to a real improvement of the quality of a wine, this would have been a great incentive to pay more attention to the prime ingredient, the grapes, and to encourage all wineries, large and small, to make wine only from healthy mature naturally rich clean quality fruit.

While the proposal does address the problem of over-pressing, it would have been desirable to include in this regulation many other quality rules, the most important being the limiting of vine yields, probably a value around 45 hectolitres per hectare, or better, a value expressed in terms of yield per plant. Most yields today are calculated on all land, including dead plants and unused land, with generous tolerances of 20% and not specifying that these must be true total mature fruit yields, not the limit of what you can harvest, leaving the rest on the plant, or worse, allowing the rest to be sold for table wine. This totally unreasonable way of determining yield may be responsible for part of the unwanted wine surplus, and for the low quality of many wines.

Other quality rules could be imagined, for example, enough is known about taste equilibrium to imagine regulating the balance of a wine, at least in terms of acidity and residual sugar – German law has its own more specific rules on this, but one could write a general rule for all quality wines.

Another issue that has not been touched upon is the limiting of the doses of sulphites. One could have imagined a reasonable compromise between the low levels advocated by radical winemakers, and the absurdly high levels allowed by current legislation and commonly used in winemaking. Sulphites are a hot topic poorly understood by consumers, it would have been useful to address this issue and even imagine regulation that would allow the EU to negotiate the absurd “contains sulphites” labelling requirements – the threshold is so low that 99% of all wines need to carry this meaningless labelling, whether they contain negligible doses of sulphite or head-wrenching but legally allowed levels.

The criticism here is intended as constructive, I intend to clearly differentiate these comments from the predictable protests of those winemakers who are least equipped to succeed on the world market, least inclined to change and most attached to conserving the absurdly generous financial advantages of the current CMO. I do not agree with the protests about the proposed regulation allegedly degrading the current appellation system (in fact not much has changed), nor can I support the cries of those who would like fight the grubbing up of poor quality vines and maintain the absurd current planting rights system, in fact free planting and the reduction of planted surfaces are some of the proposed regulation’s most interesting positive aspects.

The proposed regulation is clearly the result of discussions with all those concerned with Europe’s vineyards, all except the consumers, who did not get to voice their concerns about wine. It would appear that the resulting compromise does not introduce bold enough innovation and improvement to current regulation. While the positive measures concerning free planting and better use of EU funds do address internal inefficiencies in the EU wine world, the improvements tangible by the consumer may not be sufficient to stimulate the market and maintain and build the reputation of European wine.

Tags: reform, regulation, Wine

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