Europe Poised to Turn Quality Wine into Automotive Fuel

BRUSSELS, Belgium, June 8, 2006 (ENS) - The European Union is about to distil more than six million hectolitres of French and Italian wine into undrinkable industrial alcohol because producers are making more wine than they can sell. Called crisis distillation, the conversion will allow the producers to make some money for their surplus, but EU officials say it indicates the need for deep reforms in the wine industry.

The EU Wine Management Committee voted Wenesday on proposals from the European Commission to open crisis distillation of wine in France and Italy.

For France a maximum of 1.5 million hectolitres of table wine and of 1.5 million hectolitres of quality wine can be offered for crisis distillation.

Surplus wine production is forcing crisis distillation again this year. (Photo by Ian Britton courtesy FreeFoto)

The proposals still have to be formally adopted by the European Commission, but if approved they will apply from June 29 for France and July 3 for Italy.

Further demands from Spain and Greece are still under examination.

The raw alcohol resulting from this distillation can only be used for industrial purposes or as biofuel in order not to disturb the market for potable alcohol.

European Commissioner for Agriculture and Rural Development Mariann Fischer Boel said, "Crisis distillation is becoming a depressingly regular feature of our common market organization for wine. While it offers temporary assistance to producers, it does not deal with the core of the problem – that Europe is producing too much wine for which there is no market."

"That is why a deep-rooted reform of the sector is needed urgently.

The wine Common Market Organisation provides for the possibility of a crisis distillation in the event of exceptional market disturbances due to major surpluses.

Since it started in 1982, the crisis distillation fund has been used every year apart from 2002/03 and 2003/04.

The EU has set aside €131 million this year to fund the crisis distillation. Considerable surpluses have been recorded on the wine markets in different member states resulting in a fall in prices and a worrying rise in wine stocks.

Commissioner Boel said it is time to turn back the crisis and she has a plan that she intends to make public in about two weeks.

Vineyards in the Burgundy region of France (Photo courtesy Cyclomundo)

"We must increase the competitiveness of the EU’s wine producers, strengthen the reputation of EU quality wine as the best in the world, recover old markets and win new ones," Boel said. "We must create a wine regime that operates through clear, simple rules and ensures balance between supply and demand."

According to figures from the International Wine and Vine Organisation, a bumper crop in Australia, Argentina and Europe put global wine production at an estimated 287 million hectolitres in 2005, the highest since 1992.

Over half of this increase is attributable to France, Italy and Spain - the world's three largest wine producing countries.

Thousands of French wine makers last year demonstrated in streets of southern France to urge more government assistance avert the crisis. Wine production rose 23 percent in France last year, and prices fell by as much as 40 percent in some areas of the country.