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To achieve a reduction in spending in the short term will be more complex than I had perhaps appreciated when we started the study, but if it is not grasped, and if the regime improves itself, I fear that production will suffer very much at the expense of greater imports from around the world. At the end, consumers will be the judge through quality and price.
8.07 pm
Lord Cameron of Dillington: My Lords, the current EU wine regime typifies all that is bad about a subsidised and politically controlled industry. It costs approximately £1 billion a year and yet fails to address the problems that beset the industry and actually hampers, by its petty rules and restrictions, the ability of those involved successfully to trade their way into a sustainable future.
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The sad thing is that out there is a potentially great EU wine industry. The even sadder thing is that many of the wine growers whom we met recognise that if they were allowed the freedom that they craved, they could succeed in the world marketplace. But the politicians say, “Why change?”. Why make it easier for the young, new viticulturalists to come in and undercut those who are doing so well from the current system?
Only vines, they say, can provide such a high number of jobs. There seems to be no concept of the economic opportunities of the non-land based rural economy. Yet, at the same time, we learned that of the 26,000 wine growers in Languedoc-Rousillon, less than half of them are full-time estates. The majority are run as a hobby by local families, shopkeepers and businessmen who keep their small family holding going as part of their family heritage—frankly, without much interest in the quality of their produce. So there clearly is an alternative rural economy.
The saddest example of the dependency culture espoused by the politicians is in their attitude to new plantings. The argument goes thus: how can you allow new plantings to happen when at the same time you are paying others to leave the industry and grubbing up their vineyards? The point here is that that argument holds good only if growers had equal business and marketing skills, produced the same quality of grapes at the same cost, and grew vines on equally ideal terrain.
What the politicians cannot understand is that in a proper marketplace not controlled by politicians, new business men and women are always coming in with new ideas and better skills to undercut and outsell the old guard. Change is a constant factor in any industry and even more so in the wine industry where fashions in taste are so fickle. We should help the old guard to retire gracefully by grubbing up our vineyards but we should also allow others to expand their production if they want to, provided there is no safety net for them, no crisis distillation if they fail to sell that wine. Sadly, it seems to me that the Commission has not quite achieved all that it wanted in this respect, owing to some of the freedoms to be allowed by the national envelopes.
Finally, I believe that Europe can still produce some fantastically attractive wines at a range of different prices. The EU wine industry deserves to succeed and I pray and hope that this reform might just give it the jolt it needs to propel it successfully into the 21st century.
8.11 pm
Viscount Ullswater: My Lords, I first wish to congratulate the chairman of Sub-Committee D, the noble Lord, Lord Sewel, for introducing the report from the committee in such a comprehensive and articulate way. It has been a pleasure to serve under his chairmanship, which he has conducted with charm and wit.
At a recent meeting with the Agricultural Commissioner, Mariann Fischer Boel, I was impressed by her clarity of thought and her pragmatism. She is an astute politician who understands the art of the possible rather than aspiring for the unattainable. It is in this light that the reform of the wine regime must be judged—a profound reform and yet budget-neutral.
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Two measures are designed to assist this approach and are in my view necessary if not essential. The first is the distillation subsidy and the second is a grubbing-up policy that will help,
as the Minister put it in his reply to our report—and perhaps help the older generation to retire from the business altogether. The two policies can work together to reduce the land under vines where the only market has been for low-quality wine or even producing wine for distillation itself.
These two measures are structural and essential if the EU wine industry is to make any progress in dealing with the biggest problem that it faces: market share. It is evident from the amount of penetration into the marketplace by wines from the New World that, in the EU, marketing and listening to the consumer have been neglected. But there is a wasted opportunity with other parts of the Commission’s proposals which, frankly, have not faced up to the challenge posed by competition. I shall mention two: the planting ban which is being discussed, to be extended from 2010 to 2013 or, now, even 2015; and the labelling rules.
If I were to approach a car manufacturer in Europe and say to him, “You cannot increase your manufacturing capacity in Europe in order to take account of market conditions so as to protect other manufacturers until 2013—and by the way, we will also limit the number of vehicles you can produce from each factory”, he would say, “What! Are you living in the real world?”. And yet that is the proposal facing EU wine growers. By the way, as my noble friend Lord Plumb said, it is excellent news for English wine growers that there has been agreement not to introduce a planting ban where none existed as at 31 December 2007. The planting ban, to my mind, is industrial suicide and should be scrapped tomorrow.
The system of wine labelling in Europe is designed to protect the producer rather than to be of interest to the consumer. I was taken aback by the statistic that some 70 per cent or thereabouts of wine is bought from supermarkets and probably 85 per cent of the purchasers know little and care less about protected geographical indications or protected designations of origin. Wine makers should be free to describe their wines as they wish. More and more wines, especially those from the New World, have back labels which give much greater information about the variety of grape or the blend of grapes and whether the wine is suitable as an aperitif, for drinking with fish or meat, or just as a light wine for picnics and so forth. That should be the way forward.
I have concentrated my remarks on four measures which I think are essential for moving the wine regime into the 21st century. Two are proposed by the Commission—the end to subsidised distillation and an accelerated grubbing-up policy—and two are so fiercely guarded by the producers that even the pragmatic Mrs Fischer Boel will not be able to shift them. It is a missed opportunity and I hope that those reading this report will reach the final conclusion of the committee at paragraph 84. If EU wine producers are to have a brighter future, they must look to the marketplace and make the industry competitive.
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8.15 pm
Baroness Jones of Whitchurch: My Lords, as a member of EU Sub-Committee D, I would particularly like to pay tribute to our chairman, the noble Lord, Lord Sewel, not only for his skill in steering the committee towards such a radical and far-reaching set of recommendations but also for his courage in taking our arguments directly to the Agriculture Committee. At the time it was described as Daniel going into the lions’ den. I believe that it helped to create the momentum for change which culminated in the 19 December agreement.
Wearing another hat, I am a board member of an organisation called WRAP, the Waste and Resources Action Programme. They have a very good public campaign running at the moment called Love Food, Hate Waste, which aims to reduce the amount of food waste ending up in landfill. It occurs to me that there is scope for a European version entitled: Love Wine, Hate Waste. The scandal of the current wine regime in Europe is not just the level of subsidy involved; it is also the waste of land, energy and human endeavour, producing wine which nobody wants.
When we started this enquiry it was a revelation to me that EU taxpayers subsidised the wine sector to the tune of nearly £1 billion a year. At least 10 per cent of this is surplus production for which there is no market. As Defra said at the time:
“The current regime perversely protects inefficient and poor quality producers and prevents those with a strong market demand for their wine from expanding”.
While it might be considered glib to talk of a wine lake, the truth is that excess production has been distilled or stored on site for many years. As a pro-European I have to say that it is as well that this was not more widely known, as it does not enhance the reputation of the EU.
Notwithstanding the current welcome agreement, there are two areas of reform where I hope further progress can be made. First, as we have heard, the agreement transfers much of the current subsidy into national envelopes, with the intention that the funds can be used over a transitional period to help growers move away from surplus production and adapt to new market conditions. However, this will be achieved only if member states have an appetite for major reform. Crucially, they need to insist that producers become more responsive to consumer preferences and trends. It may be quaint to have production methods handed down through generations, but if consumers no longer want to buy the end product, it deserves to be in a museum, not a market.
During our inquiry, we heard time and time again that the new world producers, particularly Australia and New Zealand, concentrated on producing grape varieties that were popular, produced to a high quality year on year, and marketed as internationally recognised brands. They have tapped effortlessly into the middle-price sector where all the major expansion is occurring. This evidence from the new world contrasts painfully with some of the EU producer attitudes in which the consumer seems to be blamed for not recognising the superiority of their product. Breaking this cycle and delivering the
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Secondly, the proposals for wine labelling fall short of the reforms recommended in our report. We heard considerable evidence that consumers were confused by the 10,000 or so geographical indicators currently used to define quality wine. Although the proposals allow more flexibility in labelling, maintaining that link between quality and geography is still lost on most consumers. I agree with many of my colleagues here today who have a preference for a new labelling regime under which producers are required to list the additives, grape variety and country of origin, and then have the freedom to market their products.
Finally, the irony of the whole issue is that the EU still produces the best wine in the world. We have the knowledge and the skills to take on the global wine sector and reverse our declining market share. I hope that, based on the report that we have in front of us, member states and individual producers seize the opportunity to expand their markets and become world leaders again.
8.19 pm
Lord Moynihan: My Lords, in 1980, when the last British governor of Southern Rhodesia, Lord Soames, tasted the wine before dinner, his Rhodesian butler pointed out that it was the product of a vineyard a mere 20 miles away, to which after a pause Lord Soames replied, “It clearly doesn’t travel well”. Tonight, we are considering a report on the wine industry, which has travelled smoothly across European borders, earning plaudits from those in the industry who have sipped its prose and ingested its recommendations. It has already had a positive effect on officials in Brussels, not only because it has been superbly served by the clerks to Sub-Committee D but because my colleagues on the committee demonstrated their commitment and commendable breadth of knowledge on the subject, as evidenced this evening.
Such has my work with this committee piqued my interest in the subject that I am considering planting the inaugural vines of a very modest private vineyard at Shack Moynihan just outside the village of Frant in east Sussex. With this in mind, for just three minutes, I shall concentrate my remarks on the wine industry in this country, specifically English and Welsh wine. I would like to draw the important distinction between English and Welsh wine and British wine. English and Welsh wine is made from grapes grown in England and Wales; British wine, on the other hand, comes from concentrate juice or grape must, which is imported into the UK and fermented and processed here. English and Welsh wines are far superior products.
I was delighted to note that just before Christmas, as has been commented on this evening, the EU Parliament agreed to what amounts to a permanent exclusion of the UK from the planting rights regime. This means that the existing extension to the EU-wide planting ban on new vines will not apply to the United Kingdom, as we have heard. The planting ban
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When the United Kingdom Vineyards Association came before your Lordships’ committee to give evidence last February, removing the planting restrictions was at the very top of its agenda. Its position was fully supported by our committee, and I believe it also received significant cross-party support in another place. I send the United Kingdom Vineyards Association my fulsome congratulations, and wish it and its members every success. Particular progress has been made in the sparkling wine sector in this country. Some parts of southern England, as we learnt, where the subsoil is chalk and limestone, have almost identical geological properties to the Champagne region of France. The possibilities are considerable. However, although we might quite justly relish the success story of English and Welsh wine, we must not allow this small triumph to obscure the wider issues that the committee has been looking at. We are in agreement that there must be increasing opportunity for genuine market forces to operate within the EU wine sector.
It is hard to see how a sustainable balance can be achieved across the Union unless we allow the focus of the industry to be squarely on the consumer, which means marketing in response to demand. The success of the new world bears testament to this. New world producers offer consumers what they want: wine that is reasonably priced, well labelled, approachable and consistent in terms of both flavour and supply. As such, their growing dominance in the market seems inexorable. Perhaps what gives me the greatest cause for hope in this context is the wine industry in this country, which is growing steadily, totally unsubsidised, and is now free from the bureaucracy that threatened to stifle it. I believe that it will stand the test of time, for this is indeed a worthy model, supported by a fine committee report.
8.24 pm
Lord Watson of Richmond: My Lords, I declare an interest as non-executive chairman of a wine importing company, Raisin Social, which imports wines from both the New World and continental Europe. It struck me that there was a kind of collective interest that we should all declare. Out in Old Palace Yard is the equestrian statue of Richard the Lionheart, favoured son of Eleanor and Henry Plantagenet. Of course,
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This is an excellent report, and we are all grateful to the noble Lord, Lord Sewel. Many tributes have been paid to him. As the noble Lord, Lord Moynihan, said, the report has travelled well, perhaps better than anybody could have reasonably expected. It is also a report, essentially, about the Commission initiative. Many people in the debate have recognised the significance of the Commission proposal. My noble friend Lord Teverson referred to it as a large and radical reform; the noble Viscount, Lord Ullswater, referred to it as a profound reform. At the centre of its effectiveness is the ending of distillation compensation. That is, indeed, radical. We are also reminded, however, that we have to continue with all this. The noble Baroness, Lady Jones of Whitchurch, made the point that there was more to be done, and member states must retain their appetite for this reform. We will hear from the Minister in a moment about what finally occurred on 19 December.
There is a lot to applaud in this. I want to make just two points. It is a rapidly changing scene. Looked at from the perspective of the English and Welsh wine industry, there is a lot going on. Great successes have been achieved. We need to be rightly ambitious about our own wine industry. Despite all the detriments of climate change, in this particular regard it may be working for us somewhat. The French are now eyeing large estates in Kent because the soil is the same and the climate is now arguably becoming better than it is in Champagne for the production of champagne. Who knows? We may be the most enthusiastic supporters of appellation contrôlée 15 years from now. Richard the Lionheart might approve of that.
I have one reservation about the report. I have to say this: we must be careful about the labelling regime. Of course, the label at the rear of the bottle on New World wines, describing what you should drink it with and so on, is attractive. That is very useful, but our experience of labelling in so many areas of retail is that it is easy to dumb down but hard to recover. There is, as far as wines are concerned, a real and important relationship between geography and quality. We should not just set that aside. It is foolish to underestimate the intelligence of consumers. I say that with some passion. We are, after all, asking consumers, including supermarket consumers, to be more and more intelligent and literate when reading labels on many sorts of things. I think the reforms that are being proposed by the Commission and the suggestions on labelling are very good, but there is at the heart of the labelling regime an insistence on the relationship between quality and geography—and even terroir—and we should set that aside with great care. It would be easy, in a burst of enthusiasm, to make a mistake in that area.
Overall, we are looking at a surprisingly brave commitment to reform by the European Commission, which, if it succeeds, will place the European wine industry, which still makes the best wines in the world, in a much more competitive position in the decades ahead.
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8.29 pm
Baroness Byford: My Lords, it is a particular pleasure to speak in the debate, although I must admit that I shall be looking forward to a glass of wine when it is completed. I begin by thanking the noble Lord, Lord Sewel, for his chairmanship of the committee and for the erudite way in which he has presented the report this evening. I also thank other noble Lords who served on the committee.
I wish to pick up on one or two of the recommendations made in the report. The important reforms are indeed welcome, as has been reflected tonight. I strongly support the ending of all subsidies for wine distillation. It seems wrong that subsidies are paid to producers of inferior wine who are unable to sell their product in an open market. The committee recognised that, without the removal of the subsidies, other proposed measures would not be able to deliver the efficiency gains that are necessary to set the industry on its feet again.
I am glad that the Government have accepted the concept of national envelopes, as mentioned by other noble Lords. However, is the Minister able to give us more detail about the proposed envelopes, how they will be developed and whether there will be a cap on the amount that national Governments can spend? Does he accept the possibility that countries could continue funding the distillation of surplus wine into industrial alcohol, and, if so, what representations has he made at European level?
The Government have indicated their support for the voluntary grubbing-up programme for uncompetitive vineyards. We also support the proposal but would like to see a tightly proposed definition of exemptions. We certainly do not wish to see a circumstance in which such money could be used for a particularly uncompetitive vineyard and then be used for the purchase, for example, of a new vineyard.
I am reminded of the debacle surrounding the EU proposals for the decommissioning of fishing vessels. In this country we simply decommissioned some of our vessels. Other member states used their subsidies to upgrade their vessels, enabling them to land even larger catches. We do not wish to see that situation repeated with the voluntary grubbing-up scheme.
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