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Overproduction - the Greatest Challenges to the Wine Industry

Worldwide, overproduction has long been one of the greatest challenges to the wine industry.

In the last three years Spain, France and Italy's wine production has increased by over 24 million hectolitres. According to figures from the International Wine and Vine Organisation, a bumper crop in Australia, Argentina and Europe has put global wine production at an estimated 287 million hectolitres (the highest since 1992). Most of this increase is attributable to France, Italy and Spain - the world's three largest wine producing countries.

The European Union produces an astonishing 1.5 billion litres of unwanted of wine every year which equates to 4 bottles per person per year. EU spends half a billion euros every year turning wine we don't buy into spirit that's not needed, so that the vineyard owners can survive.

Since 1981, the EU has been distilling surplus wine into industrial alcohol which is a costly process. There is an annual budget of ?220 million which can be used to distil 11 million hectolitres of wine.

Until the 2002 vintage, there had been a crisis distillation each year since the mid-eighties. The last crisis distillation, from the 2001 harvest, removed an extra 7 million hectolitres of wine from the market.

But this year, a combination of higher production, a weak dollar and declining domestic consumption in both Spain and Italy, spells trouble for the EU wine industry - and consequently the possibility of reigniting crisis distillations.

Denis Verdier, president of the CCVF said: "It is the first time in the history that the gravity of the crisis has led to AOC wines calling upon distillation". In addition to the distillation, Mr. Verdier asks for financial assistance in pulling up vines, including 10,000 hectares in the Bordeaux region.

Several reports suggested that half the vineyards in the EU are to be grubbed up. These proposed measures are still being discussed. So the earliest any proposals can become a reality is 2008, this combined with plans to stop buying and distilling surplus wines and relax constrictive winemaking and labelling rules means that Europe is set to continue producing more wine that we want to drink!