On the ‘relaxation’ of planting rights in the European Union

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On the ‘relaxation’ of planting rights in the European Union

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There’s been a lot of discussion on changes to the rules on planting new vineyards in the European Union. For as long as I have been alive, there have been restrictions on planting new vineyards in Europe. The system of planting rights that stood until the beginning of this year was first introduced in 1976 (if you are interested, you can read all about it, and the way that it has changed with time here).

For ages, there were plans to abolish this set of restrictions, in order to make the EU wine sector more competitive. But they have been put off, and then put off again. Why? Because producers are worried about the dangers of over-production.

So, for the last couple of decades, you couldn’t plant a new vineyard in the EU without buying an established vineyard and ripping it out, and then transferring the planting rights. Or you could buy the planting rights when someone else has ripped out their vines. For an ambitious young (or old!) producer who wanted to make great wines from a potentially great unplanted terroir (or a great terroir that had been abandoned) this was a frustration.

Also, in the New World, no such rights exist. Anyone can plant vines. If they make great wine and can sell it: brilliant. If they fail, then they’ll have wasted a lot of money and they will probably go out of business. It keeps the wine industry in New World countries lean and competitive. So over recent years, the acreage under vine in Europe has declined, while the New World has kept growing.

So why have planting rights? Why pay people to rip out vineyards (as happened in the past)? It’s a different way of thinking. The idea is, if there’s a surplus, then the price will go down. So keep the price higher by trying to match demand and supply quite carefully, always making sure that there isn’t more wine than the market wants. This is something that Champagne, as a region, has managed very well: the non vintage model helps here. Monitor how much wine is entering the marketplace, and sit on stock rather than damage price by over-supply.

With the rest of the EU’s wine regions, it is not a strategy that has worked terribly well. It is essentially protectionist, and it fosters and shelters mediocrity. Too many European winegrowers feel they are owed a living. While I understand that there’s an argument in favour of buffering changes in the market place that occur on a faster scale than the wine industry can manage (for example, it takes three years after planting a vineyard before you get your first grapes, and market changes can occur on a shorter timescale), insulating the wine sector too much creates a culture of dependency and allows poor performers to hitch a lift, or hide.

Some buffering is justified, chiefly because of the lag phase: it takes a long time to produce more wine once you’ve taken vineyards out. It’s just once you start interfering in the market, there’s an internal pressure from within the industry to keep doing it.

Meanwhile, while the EU has soldiered on with a policy that maintains the status quo, the rest of the world has been busy planting vineyards with abandon. Cut free of regulation, and with no alternative than to be commercially successful and relevant or die, the New World producers have begun to snatch market share that used to belong to Europe. This is pretty bonkers, because Europe has some amazing terroirs for growing top quality wine grapes. At the fine wine end of the market, Europe is doing wonderfully. At the very commercial end, it’s a bit of a disaster, and this is the end that needs tightening up. Even within individual regions, there’s often a big discrepancy between the fortunes of the top producers and those at the bottom.

So, on 1 January 2016, the de-regulation of planting rights came into play. From what’s been written in the press you’d think that anyone was now free to plant vines wherever they want. But this isn’t the case. Until 2030 there is a ‘relaxation’ of planting rights, but within strict limits. Vineyard surface area can only increase 1% per annum, which means France will have the potential for planting another 8000 hectares in 2016. It’s not exactly a free-for-all.

I don’t think this continued protectionism is the best way of dealing with the woes of the bottom end of the wine sector. Making better wine, and being better at selling it would help. At that end of the market, there’s the need for stronger brands. But limited success (staying in business while performing badly) is often the enemy of true success (making wines that people enjoy and want to buy). The real future for the EU wine sector is to respond to competition by making more interesting wines and hence winning new customers, rather than squabbling over divvying out a declining market share.

For those innovative producers who want to plant new vineyards – after all, it costs a lot, so no one is going to do it without a sense of vision and purpose – and who are lucky enough to get planting rights, they could be doing some really cool things. For example, wouldn’t it be fun to scout out potentially excellent vineyards next door to Champagne with good soils, and start making some top notch sparkling wine? Or buying apricot orchards on potentially stunning terroirs in the Northern Rhone and planting them to Syrah? Now you can do that, as long as you label your wines VSIG (vins sans indication géographique). Scattered throughout France are some brilliant vineyard sites that never got replanted after phylloxera, or which are now viable because of global warming. There’s a lot of fun to be had out there.

Ultimately, these first baby steps in liberalization of the wine market in the EU are to be welcomed. But they are too cautious, and may not make much of a difference in practice.

2 Comments on On the ‘relaxation’ of planting rights in the European Union
wine journalist and flavour obsessive

2 thoughts on “On the ‘relaxation’ of planting rights in the European Union

  1. “…trying to match demand and supply quite carefully, always making sure that there isn’t more wine than the market wants.”
    That’s never worked has it: what about the much-touted “wine lake”, and distillation issue? Surely there’s more than enough vineyard area to cover demand?
    Perhaps those 8,000 hectares are earmarked for Champagne so they don’t have to buy up more of the South Downs.

  2. Nice overview, thanks.

    I perfectly agree (a dream of) a totally free wine market. Overproduction may be a problem at the beginning but a truly open market will regulate itself. Good wine will sell well, bad wine will not: this is true in theory, with two caveats.

    1) Of course the importance of wine critics/experts will increase much more in this scenario. They will need to help people to distinguish between good and bad wine. Today “Storytelling” is the marketing strategy in wine. Storytelling can sell any mediocre wine, especially to the new generation of Millenials. It will be even more important that critics/experts will do storytelling based on few fundamentals that will be understandable and transparent to people. This kind of “good” storytelling based on expertise/science/knowledge will be strongly antagonised by the kind of “bad” storytelling coming from the marketing departments. Identifying GOOD VALUE wines (that may arise in good number in a free market scenario) will be much more important than identifying just GOOD/GREAT wines.

    2) I really hope this freedom in planting will come together with strict regulations and controls on the planting material. We do not want to risk to destroy a whole wine region with virus-filled material or new parasites, ending up like SouthAfrica before its recent renaissance. Moreover, even when we use excellent planting material, we will need to be very careful to not destroy the delicate eco-system of each terroir. Sometime apricots/apples/olives/flowers etc. are extremely beneficial to keep nature (plants/animals/insects/bacteria) alive, even if the soil where they are planted would be so tempting to be exploited for growing grapes. A landscape filled with vines may be very nice for some picture to be used for storytelling purposes, but (IMO) will not be such a prodrome to great wine production. We are humans and we make mistakes. Especially in gold rush-like situations mistakes can be quickly to happen, but nature (and economy) will take a long time to recover from our errors.

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