Wine Vision Global Exporting

European Union

EU Wine Labeling Regulation Changes

(These negotiations have now been postponed, but please be aware these changes could still be implemented in the future.)

On February 1, 2004, the EU will begin to enforce wine labeling regulation No. 753/2002. We, and other countries, expect to be exempt from several provisions of this regulation as we have protested the concept of traditional expressions and reserved bottle shapes, for example.

However, the purpose of this notice is to alert you to a requirement that you will need to observe. That is the new form to describe country of origin, as follows:

The word “wine” must be placed in conjunction with the country of origin statement. Thus, Wine of the U.S, or Wine of U.S.A, or Wine Product of U.S.A. must be used instead of the previous “Product of USA or Produce of USA.
In addition, where a geographical indication is used on a label, it must be placed in the same field of vision as the country of origin statement.
We will attempt to keep you up-to-date on the changes required by this label regulation as our negotiations with the EU proceed.

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I. WHAT NOT TO INCLUDE ON LABELS

In recent years, EU customs has been cracking down on imported wines that have certain phrases on the label. The items listed below should not be included on labels as they run a high risk of being stopped by EU customs.

Geographic indications that the EU considers proprietary, such as “Champagne” and “Beaujolais.” An accurate list of these geographic indications (“appellation d’origine controlee”) is expected to be published by the European Union by mid-1996.
Quality terms, which do not have officially designated standards. For instance, “reserve” and “select” connote quality, but the BATF has never laid down guidelines for using these terms. The EU does not accept these terms.
“American” as a geographic indication – the EU considers this too vague. A geographic indication must be smaller than a country.
“Table Wine” – The EU has granted itself exclusive rights to use this term.

II. MANDATORY INFORMATION

Mandatory information must appear on the front of the bottle. The only exceptions are the lot mark, which may appear anywhere besides the cork, and the importer’s name and address, which may appear on the back label. All the mandatory information listed below must be in type that is clear, legible, indelible and, unless a specific type size is prescribed, sufficiently large enough to show up clearly against the background on which it is printed (recommended minimum size is 2 mm). It must also be easily distinguishable from all other information and designs on the label. Unless otherwise indicated in the guidelines below, the mandatory information must appear in the field of vision, which is considered to be the front label, or a sticker label of the container itself directly beneath or to the side of the front label.

Country of Origin
The country of origin of the wine must appear. “United States,” “United States of America,” or “USA” are all acceptable. “America” by itself is not acceptable.

The Word “Wine” or an Indication of Geographic Area

For Wines Not Bearing a Geographic Indication
If there is no geographic area (i.e. an EU-approved state, county or viticultural area appellation of origin) provided, the word “wine” must appear on the front label.

For Wines Bearing a Geographic Indication
A winery may provide a geographic area which allows the label to contain more information that could enhance the consumers’ and trade’s perception of the wine at hand. However, it is imperative that the geographic indications used be from the list officially approve by the EU and comply with the content requirements listed below. Geographic indications can be either political areas or viticultural areas. A geographic indication must be smaller than a country (for example, USA is not an acceptable geographic indication).

To list geographic indications, 100% of the grapes must come from the U.S. Additionally, U.S. wineries must meet the following content requirements:

For geographic indications of political areas, 75% of the grapes must come from the listed state. If a country is named, 75% of the grapes must come from that country.
For geographic indications of viticultural areas, 85% of the grapes must come from that viticultural area and 100% of the grapes must come from the State or States in which that viticultural area is located.
U.S. wineries may also list several geographic indications under the following circumstances:
- The geographic indications are the names of two or three counties, all in the same state, and 100% of the grapes come from those countries; or
- The geographic indications are the names of two or three immediately neighboring states and 100% of the grapes come from those states.

Aerated sparkling wine
When applicable, the sales description “aerated sparkling wine” must appear on the label bearing the compulsory information in characters of the same type with the smallest letters at least 3 mm high. The words “obtained by the addition of carbon dioxide” must be added. Those additional terms must appear on the same line or on the line immediately below the line where the sales description appears and in characters that are at least half the size of those characters indicating the sales descriptions.

Actual Alcoholic Strength
Information regarding actual strength must be indicated as a unit or a half-unit percentage by volume. In other words, this must be stated as either “X% vol.” Or “X.5% vol.”. This percentage can be preceded by “actual alcoholic strength," “actual alcohol,” or “alc.”. The most commonly used format is “Alc. X% Vol.” Do not use the terms “by vol.” – the EU has specifically forbidden the use of these terms. For table wines there is a tolerance of 0.5%, while sparkling, effervescent, and liqueur wines have a tolerance of 0.8%. (The “tolerance” is the amount by which the actual alcohol content can vary from the stated alcohol content.) For wines labeled with a geographic area that have been stored for more than three years, the EU may allow this tolerance to be increased by 0.3% volume.

The minimum type size for actual alcoholic content is:

For containers more than 1 liter: 5 mm
For containers more than 200 ml, but not more than 1 liter: 3 mm
For containers not more than 200 ml: 2 mm

Nominal Volume (Net Contents)

A statement of the nominal volume or net contents of the wine package is also required. This must be given in liters, centiliters, or milliliters (i.e. 1L, 75cl or 750 ml). The minimum type size for net contents, similar to the requirements in the U.S., are as follows:

For bottles larger than 100 cl: 6 mm
For bottles between 100 cl and 20 cl: 4 mm
For bottles between 20 cl and 5 cl: 3 mm
For bottles of less than 5 cl: 2 mm

Note: The 0.187-liter is only allowed for airlines, ships and tax-free business, not for regular retail.

Importer’s Information
The name of the importer and the local administrative area (the county/city and country) where the importer’s head offices are located must appear. This does not have to be on the front label – it may appear on the back instead. The importer’s address information should be preceded by an indication such as “importer,” “imported by,” etc. The type size must not be more than one half of the type style of the geographical area. If the importer and the consignee are not the same, the name and address of the consignee should also appear on the label.

Concerning sparkling and aerated sparkling wines, the Member State where the producer, vendor or importer has its head office shall be indicated either in full after the commune or part of commune or by a capital letter or letters indicating the country, where applicable, together with the postal code of the commune in question.

Bottler’s Information
U.S. wines that are later bottled in the EU must include the head office address information (i.e. city, state) of the bottler. This information must be preceded by the term “bottler” or “bottled by.” Bulk wines must read “bulk-filler” or “bulk-filled by.” Wine bottled under contract must read “bottled for…by…” or “bulk-filled for…by…” This information must appear in type size not more than one half the type size used for the geographic area, if mentioned, or the country of origin in the case that the geographic area is not mentioned.

Lot Mark
As of July 1, 1992, all wines must bear a “lot mark” for purposes of determining the lot or batch of wine to which the bottle belongs. There is great leeway as to what sort of coding system may be used to identify the lost – whether a winery wants to use a dating system, progressive numbers, and so forth. About the only system that is not acceptable is bar code because these are not legible to the consumer. To date, the only requirement for lot marking is that a clear and indelible uppercase “L” precede the mark. However, it may appear anywhere on the package except the cork. Wines bottled before July 1, 1992 do not need to bear a lot mark. Lastly, please note that bar coding and/or notch coding do not comply with the lot mark requirements because such coding is not considered legible to the consumer.

Recycling
Several European countries (Germany, Italy, Belgium) have implemented recycling laws, also pertaining to wine bottles, which means that specific logos or information are mandatory on the wine label. Please check with your importer as to the specifics of these regulations. It is not expected that there will be a common EU recycling logo/description.
Country: European Union
Currency Unit: European Current Unit (ECU)
Exchange Rate: 1 ECU = US$1.30 US$1 = ECU 0.77

Tariffs and Taxes
A. Tariffs
The EU began to implement its Uruguay Round tariff reduction commitments on July 1, 1995.

The tariff rate for sparkling wines is 37.3 ECU’s per hectoliter.

Still wines are charged a tariff rate according to actual alcoholic strength and size of containers:

In containers of 2 liters or less: Duty (ECU/hl)
Wine; alcohol < 13% 15.3
Wine; alcohol > 13% but < 15% 17.9
Marsala, port, madeira, sherry, today; alcohol > 15% but < 18% 17.3
Samos, other; alcohol > 15% but < 18% 21.8
Port, madeira, sherry, tokay; alcohol > 18% but < 22% 18.5
Other; alcohol > 18% but < 22% 24.4
Wine; alcohol above 22% 2.04*
*ECU/ % vol/hl

In containers over 2 liters: Duty (ECU/hl)
Wine; alcohol < 13% 11.6
Wine; alcohol > 13% but < 15% 14.1
Port, madeira, sherry; alcohol > 15% but < 18% 14.1
Tokay; alcohol > 15% but < 18% 15.3
Marsala, samos, other; alcohol > 15% but < 18% 17.9
Port, madeira, sherry; alcohol > 15% but < 18% 15.3
Tokay; alcohol > 18% but < 22% 16.6
Other; alcohol > 18% but < 22% 24.4
Wine; alcohol above 22% 2.04*
*ECU/ % vol/hl

B. Excise Tax and Value Added Tax
Each country imposes its own taxes on wines in the form of excise taxes and Valued Added Taxes (VAT’s).

C. Harmonization of excise and Vat taxesThe EU is attempting to harmonize its excise and Value Added Taxes.

D. Additional Taxes
Additional taxes and fees such as handling charges are assess by individual member countries.

E. Reference Prices
The reference price system was eliminated under the EU’s Uruguay Round obligations.

F. Tariff Preferences
Tariff preferences are granted to wine imports of certain countries, including Algeria, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Hungary, Israel, Macedonia, Morocco, Romania, Slovenia, Tunisia and Turkey. Tariff reductions vary by country and wine type.

Non-Tariff Measures

A. Labeling Requirements
Although labeling requirements are the same for all member countries, customs officials in different countries interpret and enforce them subjectively. The EU maintains very strict labeling requirements and has made little attempt to harmonize regulations with those of the U.S. or the rest of the world. The EU imposes marketing restrictions and keeping consumer preferences from shifting away from EU wines. For instance, by heavily legislating “quality” terms on labels, the EU legislation makes foreign wines less competitive in the quality market. Furthermore, by retaining exclusive rights to the term “table wine,” the EU prevents U.S. wine exporters from effectively marketing their wines as dinner wines (the single largest consumption market for wine).

B. Certification
The EU requires that wines meet the standards of the country of origin and conform to those of EU member countries unless there is a specific exception or derogation from the rule. The laboratory analysis, which may cost $80 - $100 for each type of wine, must show that the wine is within the compositional limits prescribed by the EU. The VI-1 form certificate can be completed in the U.S. through a special BATF procedure. This procedure is tedious and somewhat complicated.

C. Oenological Practices
In addition to monetary barriers the EU has created legal barriers to protect its wine industry. The EU commonly rejects any oenological practice, which is not explicitly provided for in EU regulation. In order for a foreign country to have an oenological practice approved, it must apply to the EU Commission and provide numerous technical studies, a process, which often takes years and may not be approved. Several winemaking techniques have yet to be recognized by the EU. The “Wine Accords” agreement, which was signed in 1983, provides for a simplified method of executing the VI-1 form and recognizes a number of U.S. wine varieties, viticultural areas and winemaking practices. Under the agreement the EU also temporarily recognized several U.S. wine making practices pending final approval of their safety. Although the EU had several years to consider the safety of the temporarily approved practices, several remain unrecognized. Because of disputes over practices and geographic indications, the Wine Accords have not become permanent, but have become subject to short, temporary extensions.

D. Geographic Indications
The EU has been vigorously enforcing the use of geographic indications (e.g., Champagne). Therefore, geographic indications have become a contentious issue in multilateral forums.

E. Subsidies
Another trade barrier is the EU program of subsidies provided for table wine exports, in addition to the extensive domestic subsidies available to wine makers. Total subsidies to the wine industry exceed $1.8 billion annually. Almost $85 million of this goes towards directly subsidizing the price of exports to undercut foreign competition on the international market.

Market
The EU consumed 127 million hectoliters of wine in 1994 (the most recent year for which complete data is available) with imports amounting to 2,738,000 hectoliters, an increase of 3 percent from the previous year. In the United Kingdom and Scandinavia the demand for American mid-range wines has threatened France’s hold on the market.

The EU Commission’s proposal to reform the wine regime and decrease production surpluses awaits finalization from the Council of Ministers.

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