EU Commission launches wine policy group to tackle major “challenges” in sector
23 Jul 2024 --- The European Commission is inviting member countries to participate in a “high-level” wine policy group to address “significant challenges” in the sector. The Commission is calling on the industry to adapt to the “new realities” of a volatile market to ensure it retains its historic global market dominance.
Stakeholder members are invited to present their assessment of the industry and potential solutions to problems at the “High-Level Group on Wine Policy.” The group will hold its first meeting on September 11, 2024.
The plans were announced by Janusz Wojciechowski, EU agriculture commissioner, in a recent council meeting after requests from the European wine sector, which has voiced concerns about a declining industry.
According to the World Trade Organization, France, Italy, and Spain are the world’s biggest wine exporters in terms of value. Meanwhile, according to the EU, Europe remains a global leader in wine production, accounting for 60% of market share and 48% of wine consumption. It contributes an estimated US$142 billion (€130 billion) to EU GDP.
However, this dominance is at risk as traditional EU wine export markets are impacted by de-consumption and geopolitical factors, leading to erratic import patterns. The EU reports that wine consumption is at its lowest level in the past 30 years, with European red wines being replaced by fresher and lighter wines or other beverages.
Challenges and opportunities
“Over the past two decades, the EU wine sector has been a success story. Framed by a comprehensive regulatory system, the EU has been leading in the world, with exports that tripled in value over that period,” says the Commission in a statement.
FEVS reported a 5.9% decrease in wine and spirit exports last year compared to 2022 and a 10.4% volume decline.“Despite this success and its significant contribution to EU GDP, the sector is now facing significant challenges due to a long-term decline of domestic consumption, a shift in consumer preferences, and an unstable and less globalized international context affecting our key export markets.”
Unpredictable production conditions and harvests due to climate change are also cited as challenges exporting countries face. The Commission adds: “The EU wine sector must adapt to these new realities, and the policy framework should be fit for accompanying the required transition.”
The group will meet three times a year and is expected to deliver conclusions and recommendations for future policy by the beginning of 2025.
Structural crisis
Daniela Ida Zandonà, advisor to the European Federation of Origin Wines, tells Food Ingredients First that the policy group is needed as the wine sector is in the midst of a “structural crisis,” and there is a big problem with the oversupply of red wine in particular.
“Most consumers drink on special occasions, once or twice per week. Wine has become more like a gift. People tend to buy wine for €7 (US$8) or €8 (US$9), not €1 (US$1) or €2 (US$2) anymore. We eat less meat, less heavy meals, so there is a shift in human behavior,” she says.
She explains that although some suppliers are doing well in the current market, many businesses are struggling. “We need to rethink how we promote wine and how we commercialize wine,” says Zandonà.
She hopes the EU policy group can tackle pressing issues such as climate adaptation and offer support for suppliers who are having difficulties.
However, it’s trade disputes that she predicts may hit the sector hard in the future. “[Trade disputes] are completely out of our control. There’s no policy we can write for that,” she adds.
In recent months, trade relations between the EU and China have deteriorated, with suggestions that the wine sector could be impacted in the future. Earlier this month, the director general of the World Trade Organization (WTO) warned countries against using trade as an instrument for “tit-for-tat retaliation.”
A wake-up call for the industry
In the midst of such turbulence the industry is being urged to do more. At the beginning of the year, the French Association of Wine and Spirits Exporters (FEVS) said that 2023 was defined by high inflation and a decline in consumption linked to a decrease in disposable incomes.
Harvests have suffered unpredictable production conditions due to climate change.
FEVS reported a 5.9% decrease in wine and spirit exports last year compared to 2022 and a 10.4% volume decline.
Gabriel Picard, the association’s president, said at the time that the figures should be a “wake-up call” for exporting companies.
“It reminds us of the continued need to adapt to changing consumer and market demands. It also demonstrates how much the sustainability of the export success of wines and spirits requires strong and long‐lasting support of the public authorities: new markets must be opened, and others must also be prevented from closing, in particular through trade retaliatory measures.”
Last year, the European Commission adopted “market measures” to address imbalances in the wine market in several EU regions. The temporary measure allowed member states to include crisis distillation to remove excess wine from the market.
By Sade Laja
