Reports from Australia, Austria, British Columbia, European Union, France, Italy, New Zeland and South Africa.

Australia

Talks between Australia and the European Commission to renew a 1994 wine trade agreement have broken down, according to The New Zealand Herald. The dispute focused on the Australian practice of using oak chips to flavor wine rather than using more expensive oak barrels for aging. Europeans reject this technique, which is used by other New World countries including New Zealand, Chile and the United States.

In other news, Australian winemakers hoping for an extension of a tax rebate program for regional producers were disappointed, according to Biz.Tizwine.com. The national budget for 2003-04 did not extend the program.

“This has serious implications for 61 regional economies and will impact most significantly on regional jobs, investment, and wine tourism,” Ian Sutton, head of the Winemakers Federation of Australia, said.

Salinity is causing problems for winegrape growers in the Murray-Darlington basin, according to Industrysearch.com. Increasing salinity may cost the industry more than $20 million in lost production over the next 50 years. Some Australian wine has already been barred from Germany because of high sodium content.

Austria

A new appellation system is being phased in to develop a clearer image of Austrian wines abroad, according to Winespectator.com. The new system, Districtus Austria Controllatus, will replace its current, more complicated regime.

In other news, wine makers in the Vienna region fear losses of up to 70 percent due to a series of freak storms with egg-sized hailstones.

British Columbia

The British Columbia Wine Institute has approved screw cap closures for wines with the VQA label. The Institute surveyed its members and found overwhelming support for alternative closures, according to Canada NewsWire.

European Union

The EU Court of Justice confirmed a recent ruling by EU agricultural ministers that extended geographical indication protection to processing and packaging. The ruling in favor of Parma ham producers recognized pre-packaged prosciutto had to be sliced and packaged in its home region to be worthy of the name. The Court agreed that control over the whole process preserves its quality and authenticity. This decision will potentially affect rules on imported products.

France

French wine producers continue to disagree over the future of varietal wines. They are deeply divided over which category of wine (AOC or vin de pays) should be permitted to mention varieties on their labels, according to Harpers-wine.com.

In other news, the European Commission has told France to repay funds “misspent” in the form of aid to wineries engaging in ineligible distillation activities.

Italy

U.S. demand for Italian wine (both still and sparkling) increased by 16 percent by volume and 19 percent by value in 2002, according to AGI Online.

Italy is the top provider of imported wine, with Australia second and France third. Australian imports jumped by 51 percent in 2002.

New Zealand

New Zealand’s grape harvest is down by 45 percent over last year, due to a combination of spring frost, cool temperatures and lower yields. The yield for 2003 is estimated at 65,000 tons, reported the Marlborough Express.

The New Zealand Herald put the figure higher, at close to 90,000 tons. Whatever the actual yield, one likely result is that New Zealand will import more wine to use for blending to make up the shortfall. Higher production costs and the strengthening New Zealand dollar are expected to lead to higher wine prices, especially for exports.

In a move to raise revenues and reduce binge drinkers by teenagers, the Parliament raised the excise tax on beverages containing between 14 and 23 percent alcohol by volume.

South Africa

South Africa expects the 2003 grape harvest to yield one of the finest vintages in recent years, according to Cape Times. Total yield is predicted to rise by 7.5 percent for a total of about 1.2 million tons. The improved yield is due to a broad increase in bearing acres.

The Wine Industry Ethical Trade Association has chosen its first CEO. He is a prominent labor relations consultant named Nicky Taylor. The voluntary association plans to focus on improving human rights among wine industry workers and promoting ethical trade practices.

“This can only enhance our competitive advantage internationally,” Su Birch, CEO of Wines South Africa, said.

In other news, the wine and spirits industry is united in its opposition to a legislative proposal to abolish vertical integration in the industry in order to create more opportunities for new participants, according to Business Day.

The rapid appreciation of the rand against the dollar is threatening to shut down small South African wine exporters. “In the next six months I believe some smaller exporters will vanish from the scene if there is no relief (via rand depreciation),” Willem Barnard, managing director of a major wine producer, said.

Although sales remained strong, diminishing profits due to exchange rate changes are causing difficulties for even the larger producers.