Wine bottles were “destroyed” to make disinfectant or biofuel. This is the solution adopted by the European Commission to deal with the consumption decline mainly caused by inflation. Faced with a backlog of unsold bottles, Brussels has therefore taken extraordinary measures to support winemakers. Europeans are drinking less, while production increases thanks to last year’s excellent harvest. “The wine sector is affected by the reduction in consumption due to a good 2022 harvest and the current inflation in food and beverage prices leading to stockpiling, along with the consequences of market challenges during the pandemic,” the European executive underlined in the note.
Where you drink less
The situation causes serious imbalances in the market. This year, EU wine production is up 4% year-on-year, with starting stocks already 2% higher than the average of the last five years. It is necessary to combine these data with data on the decrease in wine consumption for the current year. -7% recorded in Italy. Worse still, in Spain (-10%) and even in France -15%. We can speak of a real collapse in Germany (-22%) and Portugal (-34%). The extent of the phenomenon also concerns exports, which were 8.5% lower in the January-April 2023 period compared to the same period of the previous year. As a result, inventories increased. “The most affected are the red and rosé wines of parts of France, Spain and Portugal, although other wines and/or Member States may face similar challenges in certain production regions,” the note published by Palazzo Berlaymont said.
Crisis distillation
The intervention of Brussels stems from this situation. First, the measure will allow Member States to include “crisis distillation” in their national support programs for the wine sector by 15 October this year. Through this process, surpluses are converted at EU expense and distilled wine can only be used for industrial purposes (non-food) and as biofuel. This measure was already taken during the pandemic, when unsold bottles were converted into distillates to produce disinfectants and medicines due to the sharp drop in consumption. The financial compensation instrument for distilled wine will instead be limited to a quota based on recent market prices.
Sustainability in the vineyard
The Commission also allowed flexibility in implementing support programs for the wine industry, thus opening up more financing for this summer’s harvest using eco-sustainable methods, increasing the EU co-financing rate from 50% to 60%. certain activities such as vineyard restructuring, ‘green’ harvesting, promotion phase and investments. “It was necessary to take temporary market measures to prevent unsold wine from burdening the entire domestic market, and to prevent producers from freeing up sufficient storage capacity for the new harvest,” Brussels said. Winemakers receive an annual budget of around one billion euros from the European Union, which allows them to harvest their harvest as well as invest, innovate and promote their bottles.
Umbria ahead
In the case of Italy, a comparison of the 2011-2021 decade data revealed a downward trend in wine consumption as the number of consumers in luggage increased. The regions most prone to consuming wine are Umbria, with a consumer share equal to 62% of the population. It is followed by the Anthems with 60%, followed by Veneto, Emilia-Romagna and Val d’Aosta with 59%. For the south and the islands, Sardinia and Sicily emerge with a consumer share of 48% and 45% respectively. The data published by the Italian Wine Union Observatory (UIV) according to Istat data speaks of 30 million Italians who usually drink wine, equaling 50% of the adult population.
First of all, the way it consumes it has changed over time. It is a sector that is considered by the people who use it not as a “hard drink” like the others, but as a “cultural status” defined by Gambero Rosso, paying attention to the mixture and arousing more and more curiosity and attention about selection. Soil, peasant knowledge and technological innovations that characterize producers and cellars.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
