The EU’s support for wine

The Common Agricultural Policy is one of the European Union’s most controversial areas. But for those in the wine trade, it can provide welcome support – if you know how to get it. Andrew Rosenbaum takes a close look at the policies and procedures.

National Support Programme by country
National Support Programme by country

When Nick Wenman needed some help marketing his business, he applied to the UK Department for Environment, Food and Rural Affairs (DEFRA) for support. Wenman, of Albury Organic Vineyard in Surrey, was looking to build an online and trade fair presence. Fortunately, the regional agricultural agency has funds for just such situations.

“It involved a lot of paperwork, both for the application and even after we’d gotten the money, and had to report on how we’d spent it,” Wenman says. “But it was worthwhile – we got funds to completely redo our website, and to pay for some trade show presence. It definitely made a difference to the growth of our business.”

Wenman is not the only winemaker in Europe who’s been able to get outside help. The UK’s DEFRA provides some of this funding itself, but it also gets about half of the money for this kind of export promotion through the Common Agricultural Policy (CAP) – the pool of funds put together by the European Commission to support agriculture in all the member states.

Anyone can apply

Export promotion is part of the mandate for the funds provided through the CAP, although it’s up to the member state governments to decide how much money to spend on promotion out of all the funds provided to support wine.

The EU, under the Common Agricultural Policy (CAP), spent €143m ($191m) in 2012 on promoting wine exports, with another €171m spent in 2013. And this is only part of the total EU support for wine export promotion. But accessing the money is complicated because, like so many things the European Commission supports, the programmes are divided up into lots of different bits, under diverse headings, in different areas. But wine producers who have been able to cut through to the chase have found it worthwhile.

“Raising the quality of UK wine was highlighted as a key issue for the industry, and with  most quality issues down to expertise, the provision of a cohesive training programme was singled out as the most important area to address this,” explained Harry Crawford, a spokesman for DEFRA. “Given that training can be supported under the Rural Development Regulation measures and that transfers to the RDR are permitted under the wine regime, we decided that we should transfer approximately €180,000 each year to these projects.”

This has supported a wide range of projects and activities for the wine sector since 2009, including improvement to winery infrastructure including development of new wineries and tasting rooms, projects to encourage wine (vineyard) tourism, the purchase of new machinery, and industry seminars.

Any individual in the European wine business can apply for these funds. It takes, however, time and persistence, and a lot of paperwork. The national agricultural ministries can point the way to the best access points – it may make sense to apply through the national ministry, or through a regional agency. In Germany, for example, funds are split among national programmes and regional agencies that then offer a number of specific programmes. For anyone in Europe who is looking to unlock this funding, it’s best to go through either the regional agencies or through wine trade organisations.

A good example is the Lisbon-based wine producers’ organisation ViniPortugal. In March 2012 it ran a $3m promotional event for Portuguese wines in the US, partly funded by these EU CAP allocations. The campaign involved an integrated public relations and marketing campaign across the US, with targeted events, education initiatives and digital and social media aimed at the wine trade, press and consumers in the New York, San Francisco and Miami metropolitan areas, besides some initiatives in Washington and Chicago.

With an application made in September 2011, the funds were available for the event in March 2012. “There were no surprises, no bureaucratic hitches – it all proceeded just as the plan had indicated,” says Nuno Vale, director of marketing. “The promotions were quite successful, and we attribute them, in part, to the fact that we’ve raised our market share in the US. We’re doing it all again this year.”

It’s not only big organisations like ViniPortugal who can access these funds. Tiny Plumpton College in the UK, which teaches winemaking, managed to get a grant through DEFRA as well. Close to Brighton, Plumpton College has been teaching business to around 20 farmers of East Sussex each year since WWII. It has also developed a small programme for wine growers – one of the few such programmes in the UK – with about seven students. But the college wanted to offer more viticulture and winemaking resources and training through its WineSkills scheme.

“We asked DEFRA if the funds available under the CAP could be used for education, and DEFRA came up with a programme,” recounts Chris Foss, who heads up the Wine Studies department. “So we applied for quite an ambitious amount – and we got it, on the basis that we could match it.” The total programme was funded at about £400,000 ($621,000) over a five-year period, including matching amounts from the college. Foss applied again for funds successfully last year to keep the programme going.

Country differences

The lion’s share of Commission support for wine export promotion is to be found within the CAP. Reform was undertaken in 2008 which led to the establishment of National Support Programmes with specific budgetary ‘envelopes’, created to strengthen competitiveness of the EU wine sector. Eighteen member states were given the possibility to use their allocated budget to pay for ‘measures’ related to the wine sector, according to their particular needs, but chosen from a menu of 11 measures. NSPs last five years and can be modified twice per year, either by shifting money between measures, or by modifying the measures. Each member state can allocate portions of the NSP envelope to wine promotion. Between 2008 and 2011, member states spent a total of €236m promoting wine in third-country markets – that is, markets outside the EU – according to Roger Waite, a spokesperson for Agriculture & Rural Development at the European Commission in Brussels.

A number of support measures for the wine industry – potable alcohol distillation and crisis distillation, among others – were phased out by 2011, yet more funds should become available for export promotion in the NSP 
envelopes for 2012 to 2013. Member state ministries decide how much of the envelope is apportioned to wine export promotion, and how winemakers can access it. Italy spent €611m on wine promotion in 2012, more than any other country in Europe, while Austria spent only €2m. But governments could always choose, or be convinced, to spend more.

In the UK, for example, a would-be wine exporter would start out by making a call to a UK Trade and Industry Ministry adviser, to access one of many programmes that offer access to CAP promotional funds. For example, the ‘Passport to Export’ programme gets new companies started in exporting, and can help access CAP promotional funds, assuming that the business were eligible for them.

But the UK government has also marshalled a full-scale offensive for wine exports as part of a larger scheme. On 27 January 2012, DEFRA and the UK Trade & Investment (UKTI) Ministry announced ‘Driving Export Growth in the Farming, Food and Drink Sector: A Plan of Action.’

Working in concert with a number of industry organisations, the objectives are to: work to open markets and remove trade barriers; help build a business mindset of exporting as a key route to growth; encourage more small- to medium-sized enterprises (SMEs) to explore overseas opportunities and support those who already export to do more; and to shift the focus of the sector towards emerging economies where there is the greatest future growth potential. The part of the plan that involves support for agricultural and food exports uses, in part, funds made available under the CAP, although a spokesperson for UKTI declined to break down what part of the funds used for the plan came from what sources. The plan includes specific measures that enable support for export promotion for wine exporters. As Professor Sarah Beringer, of the Friedrich-Alexander Universität in Erlangen-Nürnberg points out, export promotion activities in the UK are traditionally funded and managed at the national level, due to the exceptionally centralised structure of the state. Development agencies are led and coordinated by the central government in London.

Such is not the case in Germany. There was a centrally-controlled fund for agricultural marketing in Germany, the Agricultural Marketing Fund, which promoted food and drink exports, and which was paid for by a tax on farms. This fund was declared unconstitutional by the German High Court in 2009. Since then, export promotion has been fragmented, due to the federal structure of the German republic. Every state (‘Bundesland’) and even small communities have their own export promotion programmes in addition to federal programmes.

The federal programme coordinates the regional programmes of the Länder through the German Central Marketing Agency for Agriculture (Centrale Marketing-Gesellschäft der deutschen Agrawirtschaft, or CMA). The CMA works with two private organisations, the Deutscher Weinfonds (German Wine Fund) and the Deutsches Weininstitut (German Wine Institute), as well as with regional programmes. The German Wine Institute, for example, is getting about €1m in funding through the CAP this year, according to Ulrike Lenhardt, director of marketing. In the period of 2012 to 2013, the German Wine Institute used those funds in promotional projects in a number of third countries.

Additionally, international trips to Germany are also sponsored. The ‘31 Days of German Riesling’ project, for example, offers consumers in key export markets a chance to win a trip to Berlin if they drink a glass of Riesling during the promotional period. About half the funds for this project were provided by the CAP export promotion facilities. “But we don’t necessarily get the same one million euros every year. We have to compete for it with other agencies, and other projects,” says Lenhardt. In fact, about €16m is distributed to the regional agencies for distribution on a wide variety of projects.

Other options

Aside from CAP, the European Union runs its own agricultural information and promotion programme, both within the EU and in third countries alike. The aim is to emphasise the general characteristics and added value of European products, including wine, and to complement national promotion initiatives. Proposals submitted by the relevant professional organisations through the member states are evaluated by the European Commission, which decides on their eligibility. The EU finances up to 50% of the cost of these measures, the remainder being met by the professional or trade organisations and by the member states concerned. For 2010, the Commission approved 19 programs, with a total EU contribution of €30m. In 2010, however, wine wasn’t one of the products on the list. It is up to producers and distributors to come up with innovative projects that will bring them these funds.

There are other options as well. Primary producers of wine who are SMEs may be granted export support aid in the following activities: consultancy services by third parties (of a non-periodic or continuous activity); organisation of and participation in forums to share knowledge between businesses, competitions, exhibitions and fairs; and publications such as catalogues or websites presenting factual information about producers from a given region or product.

In addition, vulgarisation of scientific knowledge and factual information about quality systems, generic products or the nutritional benefits of generic products can be funded, “provided that individual companies, brands, or origin are not named, and that products correspond exactly to a DO or GI protected by EU law,” explains Carlos Botelho Moniz, a lawyer specialising in export law with the Lisbon-based firm Morais, Leitão, Galvão, Teles, Soares da Silva, & Associados. There are, in fact, a considerable number of different European Commission programmes dedicated to SMEs. Assuming the product being sold fits into the category incentivised by the given programme, it is always possible for a winemaker or distributor to apply for a grant. There are a large number of such programmes dedicated to emerging markets, and these are well worth exploring for wine industry businesses.

In 2008, the EC passed the Small Business Act for Europe, and this created a whole series of programmes to support SMEs in their exporting activities to emerging markets. The Act called for market-specific support, so it permits a business to target China or Brazil if it sees them as the best fit for its products. There are also funds for market access assistance.

And that’s still not all. The EU Commission also provides grants to support “projects or organisations which further the interests of the EU or contribute to the implementation of an EU programme or policy.” The EU calls for interested organisations to respond by submitting their proposals. There are currently none which relate directly to export but there is, for example, interest in helping rural growers which may be of interest to some wine producers. It should be noted that in September 2010 the Commission, following the request from member states, allowed an organisation whose export projects are already benefiting from CAP to extend the benefits for a further two years. In November 2011, the Commission published a report on the implementation of this measure in 2009 and 2010, its first two years. The conclusions were very positive, making it likely that these funds would remain available into the next period.

The Commission is considering improving the operation and efficiency of this programme by working to improve controls; defining the priority given to small- and medium-sized companies; broadening the use of collective trademarks; and reviewing the eligibility of certain expenses. There are currently limitations on various measures with regard to ‘varietal wines’ and non-GI wines. The Commission is planning to expand their application to a broader collection of wines, and to look at the synergies these measures may have with measures to promote organic products. 

In other words, if a winery or a wine business wants to export to countries outside the EU, there may be help available. It’s a matter of asking – and filling in the forms. 

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