Alcohol sector pushes for EU-Mercosur deal amid falling consumption and US trade tensions

Alcohol industry organizations are calling on the European Commission to adopt the highly contested EU-Mercosur trade agreement’s legal text and initiate the ratification process “without delay.” 

They believe the deal is significant for the future of the European wine industry, which is facing challenges like a decline in wine consumption in traditional markets.

The EU-Mercosur trade agreement is seen as a landmark development for European wine and spirits producers, offering expanded market access, tariff reductions, and stronger protection for geographical indications (GIs) in South America.

Pauline Bastidon, director of Trade & Economic Affairs at spiritsEUROPE, emphasizes the urgency of the European Commission ratifying the agreement.

“With a population of 280 million and a combined GDP of nearly US$3 trillion, the Mercosur region offers significant untapped potential for EU spirits exporters. Yet this potential has been hindered by a range of tariff and non-tariff barriers faced by our members in this region,” she tells Food Ingredients First.

She highlights two reasons for urgently adopting the agreement. “First, this agreement was a historic achievement, offering a tangible first-mover advantage to EU exporters. Each additional year of delay weakens that advantage, increasing the risk that others will catch up — or even surpass the EU.”

Bastidon says EU producers could gain a first-mover advantage if the deal is ratified without delay, unlocking growth in an untapped region.Secondly, establishing brands in new markets takes years, so “complacency” is not an option despite EU brands already being present in Mercosur countries.

Ignacio Sánchez Recarte, secretary general of the European Committee of Wine Companies (CEEV), agrees that delaying ratification would halt the diversification strategy of European wine producers.

“We see a structural decline in wine consumption in traditional markets, and EU wine producers are more and more dependent on exports. In addition, we are suffering from international trade tensions in our first export market, the US.”

Impact on market access

Recarte mentions that the Mercosur wine market mostly refers to Brazil, which offers a significant opportunity for EU wine producers. But without the Free Trade Agreement, they continue to suffer from a 27% import duty and non-tariff barriers that limit market access.

Michael Degen, executive director of ProWein, a trade fair for wine and spirits that provides a platform to discuss industry trends and challenges, agrees that the agreement could increase market access for European wines by “lowering tariffs and simplifying customs,” making them more price-competitive, especially in Brazil.

Meanwhile, Bastidon underscores that the agreement’s ability to eliminate tariffs and remove non-tariff barriers will boost the competitiveness of EU spirits in the Mercosur region. 

Brazil, Uruguay, and Argentina represent key markets where the spirits sector has untapped potential, and this deal could be a “game changer” for growth.

Without a Free Trade Agreement, EU wines face a 27% import duty in Brazil that limits market access and investment, says Recarte.

Increasing wine affordability

With tariffs removed, EU companies’ wines will be more affordable and accessible in Brazil, according to Recarte. “It takes time to develop a wine market, but we could expect double-digit export growth in the next few years.”

Degen predicts that the broader variety of EU wines introduced to Mercosur countries through this agreement will impact consumer preferences. “This exposure may shift preferences toward premium and origin-specific wines, especially from well-known EU appellations.”

“Additionally, increased availability and competitive pricing may encourage younger consumers and urban professionals to explore imported wines more frequently, driving diversification of the market.”

Preserving origin and identity

Bastidon says the EU-Mercosur agreement will protect 350 European GIs, banning imitations and the use of misleading terms, symbols, flags, or images in spirits.

GI protection helps educate consumers and promote genuine quality in European wines, says Degen.“Leading EU spirits GIs — such as Irish Whiskey, Swedish Vodka, Polish Vodka, and Cognac — will be recognized and protected under the deal. In addition, the agreement will strengthen controls over the use of pre-existing trademarks that include GI names, offering an added layer of protection for EU producers.”

However, she highlights that while certain GIs, like Cognac, will have a seven-year transition period for complete protection, Scotch Whisky is excluded as it is a UK GI and not part of the EU-Mercosur deal.

Degen reiterates that the GI protection under the agreement is essential to safeguard the authenticity of European wines.

“In markets like Brazil and Argentina, it helps educate consumers, prevent imitations, and promote genuine quality — a win for producers and wine lovers alike.”