Rabobank Group

According to a recently released FAR Report, the EU wine industry is losing market share in a time of over production and falling prices.

While New World wine countries are often blamed for the oversupply, the EU wine policy is a major barrier to making the industry more competitive.   Although Brussels has come up with new wine policy reform proposal to strengthen EU competitiveness, it has – once again – made the wrong choices. 

According to author Arend Heijbroek, “Real reforms have been postponed for too long and there are now huge problems as a result. The 2006 reform proposals contain more or less the same targets as in 1999.  The EU commission has chosen to reform the old regime through a phased version in order to allow the industry time to adjust.”

Shifts in competitiveness are most visible in the world trade with EU producers falling to 62.5 percent of world exports compared to 80 percent twenty years ago. New World producers have been able to increase their share from 2 percent to 27 percent during the same period and gain 55 percent of the growth in world trade.  

Oversupply is expected to last at least through 2009. The uprooting policy of the EU will theoretically bear fruit after 2009 and reduce global supply. However, other EU and New World companies will seek opportunities for growth.  It seems very unlikely that global supply will genuinely decline as a consequence.

Go to the FAR pages to read more on the report.

To obtain the full report, please contact your Rabobank Relationship Manager.