EU subsidy cut plan assailed

The 270-nation European Union has been on an ambitious pace in recent times to change the face of the alcoholic spirits industry.

The latest flap is over an EU proposal to ban crystal sugar from European wines and end subsidies for concentrated grape juices, both of which are currently used to raise alcoholic content in wines unable dued to various agricultural conditions to rise to the needed level on their own.

The EU wine industry has been plagued by increasing competition from the U.S., Australia and South America along with its own overproduction causing lower retail prices. EU economists say sugar and subsidized juice, widely used particularly in northern Europe where cooler temperatures don't create as much sugar in the grapes, spur overproduction.

EU Farm Commissioner Mariann Fischer Boel says that if EU policies continue unchecked, excess wine production would reach 15% of output by 2010. Currently, the EU spends $700 million of its $1.9 billion wine budget to get rid of unwanted wine.

Not unexpectedly, opposition is strong in areas that would be most affected.

Friedlinde Gurr-Hirsch, state minister for Baden-Wuerttemberg in Germany, told Business Week magazine, "This is an important issue for us. ... Let me be honest: This is a very difficult area. Everyone has to share both the pain and the gain."

Luxembourg Farm Minister Fernand Boden, whose country has a healthy sugar-induced wine industry, has rejected the plan, telling the magazine, "We do not understand that the Commission relentlessly comes back to this when there is a clear majority of member states that have repeatedly spoken against this."

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