Vintage Bureaucratic Snafu

Europe no longer the wine cellar to the world? Anyone who has picked up a wine list in the past decade should be aware that so-called "old world" producers have steadily lost ground to "new world" upstarts.

But recent statistics show that as of last year, traditional industry heavyweights in France, Italy, Spain, and Germany were poised on the brink of a rude awakening as wine imports came close to outweighing exports.

That's an embarrassing situation to be sure for the very countries that have long considered their wine regimes untouchable, thus ignoring the rise in competition from the U.S., Australia, New Zealand, Chile, South Africa -- and now even China.

So what's behind the stunning successes of new world growers? Better branding, for one, including simpler, snazzier bottle labels and sensitivity towards consumers' tastes.

Today's wine drinker is looking for mid- to low-priced varietals -- single-grape wines -- with big, fruity flavors. Whereas newer producers have adapted their products and marketing to meet these trends, the E.U. has remained set in its ways, clinging to traditional practices.

The European Commission, the executive branch of the European Union, snapped out of its long sleep fast enough to swing to a positive trade balance at the end of 2006, but the E.U. will need to respond to more fundamental industry challenges if it hopes to stay afloat.

It recently took a big step in that direction when, the commission has adopted a group of long-delayed proposals aimed at reclaiming market share and reviving a flagging wine industry.

First off are concessions to make the product more consumer-friendly. At long last the laws that are responsible for those intimidating, hard to remember (and to pronounce) wine labels will be dropped, in hopes of attracting wine buyers that have come to appreciate the "less is more" approach to providing producer information.

But the bulk of the changes are economic ones, rethinking how the 1.3 billion euros ($1.77 billion) that the commission spends each year to support the wine industry can produce better results.

Under the current system, the commission gives hefty subsidies to failing winemakers only to turn around and spend half a billion euros per year to get rid of unwanted surpluses.

The new plan leaves market forces to weed out (no pun intended) the weakest producers to control overproduction, and then focuses funds on marketing and promoting the industry.

European agriculture unshackling the market? It's so crazy it just might work.

by Liz Gunnison