With the globalisation of the markets, the debate on the freedom of production and denomination of wines is becoming increasingly heated. It sometimes takes the shape of a conflict between two concepts, that of the Old World which tends to favour restrictions, and that of the much more liberal New World. In actual fact things aren’t quite as clear-cut as they seem at first glance. In Europe there is a lot of action to reduce the weight of the law on the market, especially from industry, while on the other hand, countries such as the USA and Australia seem to want to try out the denomination of origin system for their most famous wines, linking the name of the wine to the production area with a control system that guarantees the authenticity of this origin. I am referring to the Australian Geographical Indications (GI) and the American AVA (American Viticultural Area).

The role of the “Government”                                                     

The public administration for European viticulture takes at least three different forms: the European Union, the national government and the region. Each of the three makes its own laws. To ensure consistency between these laws, the general directives come from the European Union. The role of the Union has grown in recent years and today EU legislation is the most important of the three. National and regional governments now have reduced autonomy and are able, for example, to choose the names of wines with denomination of origin and decide how to restrict the related territory, but the rules used to enforce this are established basically at European level for all high quality wines. 

The intervention of the European public administration is very strong and covers, amongst other aspects:

1. Market regulations:

The maximum expression is the blockage of new plantations which, with a few exceptions, has been in force in Europe for more than twenty years. In practical terms, this means that it isn’t possible to plant new vineyards, but only to replace old ones, to avoid problems due to excessive production. This isn’t new: the first regulation of this kind dates back to a document issued by the Roman emperor Domiziano in 92 AD, which remained in force for almost two centuries! Domiziano blocked new plantations in Italy and ordered the uprooting of half the vines in the transalpine provinces: it would however appear that this law wasn’t strictly observed.

2. Control and repression of fraud: as these regulations are very extensive, complicated and severe, this area uses considerable resources. 

3. Economic intervention on the market: help with preventive distillation, exceptional distillation interventions, help with enrichment using grape sugar (rectified concentrated must) to make this more convenient than enrichment with saccharose (permitted in Northern Europe but forbidden in Southern Europe). Public funds are used to withdraw excess product from the market: products which are often, but not always, of poor quality. This takes place much less often than in the past. The block on new plantations was imposed to prevent this but has only partially succeeded.

4. Financing of the research and training system: in Europe, especially Southern Europe, financing for this sector is almost all public.

5. Promotion and valorisation. Interventions which are not very consistent compared with other expense items highlighted earlier. In this case there is often private co-financing and greater freedom of action by national governments. 

The system of the denomination of origin (which I will refer to with the Italian DOC mark corresponding to the French AOC) fits into the following picture: that of a market strongly conditioned by public intervention, which is summarised in the following concept: the government helps the producers, but in exchange, the producers have to observe a mountain of rules. To understand this picture one has to consider, on one hand, the European concept of “welfare” and, on the other, the “political” value of the old world, which involves millions of people, many of whom operate within very small, family-run companies. A market recession in Europe’s intensive viticultural regions would cause a public outcry: politicians do everything they can to stop this turning into a loss of public support, or at least they try. As a consequence sometimes the companies take things easy, convinced that someone will get them out of any trouble they get into, instead of operating actively, through change and innovation, to help themselves. This fact, together with a strong link with tradition, makes the European productive structure much more static than that of the new world. The DOCs, for example, are sometimes used for these purposes, which are improper. In a given territory a wine is produced but no longer sells: instead of letting the producers reach the decision to change grape variety, cultivation or vinification technique, or to change crop altogether, they are led to believe that a new DOC, or a revision of the existing DOC, “will enhance the value” of that wine. Instead of changing the wine, they change the name. Obviously this doesn’t work. I have mentioned an extreme case of improper use of the denomination of origin, using a paradox to highlight its limits, but there are also some very strong advantages. And these can also be valid for the New World.

The weight of history and that of the law

 What, from a strictly economic point of view, poetry aside, is a DOC? It is the attempt to create a monopoly, albeit of collective nature, and consequently a shortage of offer compared with demand for the product: therefore an increase in its market value. At the basis of this lies the concept of the terroir: in Europe the agricultural land suitable for producing a particular wine, with special characteristics in terms of climate and soil, is available in a limited quantity and this makes it precious, and impossible to reproduce. The concept is antique: if it’s true that the first defensive law of an AOC is said to date back to 1855, when Napoleon III established the Grands Crus of Bordeaux, the use of the name of the territory of origin to indicate and enhance the value of a wine dates way back to Greek and Roman times. The shipwrecks in the Mediterranean Sea contain amphorae bearing the name of the island of origin, and all ancient authors seem almost to ignore the importance of the grape variety, privileging the origin, when classifying high quality wines.

During an interview last year in Adelaide with Peter Hayes from Southcorp and Jim Hardie, CEO of the Cooperative Research Centre for Viticulture in Adelaide, Jim told me about the protection of Australian wines from prestigious areas without imposing excessive restrictions which would be in complete contrast with the spirit of viticulture in the New World. But is it possible, and useful, to imagine protecting the geographic name with very few restrictions? 

Before answering this question, let’s take a look at the main rules that form the framework of a DOC:

• Delimitation of the territory, usually on a communal basis. Some Communes only enter partially into the DOC territory, in which case the law indicates other boundaries, such as rivers, ridges and roads. 

• Position (in areas with a temperate climate for example, valley floors and areas with northerly exposure are usually excluded)

• Ampelographic composition. The admissible percentages of the various grape varieties are established. There are more flexible disciplinary boards which leave the producer a certain amount of freedom of choice, while others are stricter. When the name of the DOC includes, in addition to the name of the territory, that of the grape variety (such as Barbera del Monferrato for example) a general rule states that the wine must include at least 85% of that particular grape variety. There are also cases in which just one grape variety can be used, even if the grape variety in question isn’t mentioned in the name of the DOC: examples of this are  Barolo and Barbaresco in Italy (100% Nebbiolo) and of the main AOCs in Burgundy  (Pinot Noir for red wines and Chardonnay for whites) in France.

• Maximum production per hectare. In general this goes from 8 tons/ha to twice this amount. As it isn’t easy to centre these targets, the Italian disciplinary boards allow 20% tolerance; but the “excess” cannot be marked with the DOC. If this 20% is exceeded the entire production is declassed and cannot be marked with the DOC. The law imposes restoration of production to the maximum limits by performing a selection, reserving the DOC for the best product. In actual fact, as one might imagine, this rarely happens, so DOC wine and the “excess” table wine is, to all intents and purposes, the same wine. 

• The maximum grape /wine yield is usually set at 70% in weight. 

• Vinification and bottling in the area. Often the wine must be made in the same territory in which the grapes are produced. In some cases it must be bottled in the area. These restrictions are supposed to better control the production process: unfortunately they create additional costs for the industry. 

• Some chemical parameters: minimum natural alcohol content, minimum effective alcoholic content (which can be higher: enrichment by up to 1% of alcohol is allowed), extract, minim total acidity.  

•  Some taste parameters: here the descriptions are very general and refer to the concept of “typicality”. Therefore the tasters called to evaluate the correspondence of the wine to the DOC must already have experience of the wine in question in order to assess compliance to a standard.   There is a risk that a wine obtained using an innovative technique, aimed at improving it, is not allowed to benefit from the DOC because it is “not typical”. This is logical, if one thinks that for a DOC wine “tradition” is a very important part of its image. However, if it is applied pedantically, this concept can turn into a boomerang from the marketing point of view, preventing adaptation of the product to suit market tastes. A paradoxical case of this involved one of my customers about 15 years ago: a tasting commission denied the DOC to a white wine vinified at a low temperature, admitting a wine made by the same producer without any temperature control, claiming that the first was too perfumed and therefore not typical. 

• Duration of ageing period in barrels and in the bottle where provided for.

• Containers, closures, etc.: the disciplinary board indicates the type of “packaging” admitted. The introduction of closures other than cork has led, in many cases, to the revision of the regulations, resulting in loss of time and opportunities. Another example of how the DOCs can prevent innovation. 

 Too many DOCs can cause confusion

 In conclusion, the main problem with the DOC system is that it restricts the production system.

On the positive side, the DOC’s aim to defend the value of production has, in part, succeeded. This is confirmed by the trend in wholesale prices of wines in Italy for the last five years. Many DOC wines have taken a considerable leap forward, in some cases by more than 100%, but this is countered by the fact that many table wines have remained static and in some cases have even suffered a decline.

But not all the DOCs work. Their defenders sustain that the name of the grape variety  (Cabernet for example) cannot be protected, because the grape variety can be cultivated anywhere, while the territory is unique and cannot be reproduced. This is undoubtedly true: but it is also true that the DOCs linked with small areas and unrestricted by the name of the grape variety are more difficult to understand for consumers all over the world, who can’t possibly have a detailed knowledge of European viticultural geography. Take Burgundy for example: 99 AOCs, split into 33 Grands Crus, 42 communal denominations and 22 regional denominations. But that’s not all: within the communal denominations there are 526 sub-denominations corresponding to the same number of  “premier crus”. France has 450 basic denominations, plus numerous top denominations. Those who operate in the international markets realise that an excessively complicated denomination system creates confusion. The Berthomeau report on the French winemaking system clearly highlighted this problem, naming it (correctly or incorrectly) as one of the causes of the decline in the French market in favour of the New World countries (we ought to remember that Australia has taken the French title of leading importer in Great Britain). And some French territories, especially those in the south, have changed their marketing policy and adopted simpler denominations, which include the name of the grape variety (vin de cépage) combined with names of vast areas which are easy to identify (e.g.: Cabernet de Pays d’Oc). These are still AOC, but in a more “Australian” version, if I’m allowed to use this term. This policy of vins de cépage is an attempt at reaching a compromise between the guarantees offered by the AOC to producers and clear information for consumers. In Italy the use of the name of the grape variety in the DOCs is traditional (e.g.: Barbera d’Asti, Montepulciano d’Abruzzo), but both the grape varieties and territories are still much less famous than their French counterparts on the international markets, although things are starting to change and there are increasing signs of boredom with the “usual” grape varieties and of interest in more unusual native grape varieties (Italian, Greek, Spanish, East European and French).

There’s no terroir unless we close the circle

Now we can go back to the initial question, which interests the winegrowers and industries in the New World: is it possible and is it worth creating a geographic defence system with few restrictions?

The strength of a DOC lies in the ability to control the wine offered. A vineyard of one hectare, registered in a roll, such as Chianti Classico, can produce a maximum of 7.5 tons of grapes, which can produce a maximum of 5250 litres of DOC wine, and therefore 7000 bottles. The most common irregularity is the sale of the “paper”. It sometimes happens that a vineyard registered in a roll produces less than the quantity provided for: either due to adverse weather conditions or because part of the grapes are sold cash in hand, or because, in some extreme cases, the vineyard is still registered but no longer exists (fortunately checks made using aerial photography are making this kind of fraud increasingly difficult). In this case, the dishonest producer declares that he has produced the maximum quantity and sells his product “on paper” at a bottler who has no wine. The bottler then buys table wine, at a lower price, and after blending it this can be transformed into a DOC wine thanks to the “paper” purchased. This is a quite common type of fraud but only affects a very marginal part of production. Just think what would happen if there were no maximum production restrictions, or if these were very high. This fraction could become enormous, perhaps even greater than the authentic DOC wine, and the offer would be uncontrollable, so the DOC would be worthless. Therefore maximum production restrictions seem to be of vital importance: but of even greater importance are the checks to be carried out on a few “figures”: the area covered by the vineyard, the grapes harvested, the wine made, the bottles produced. The maximums have to be consistent with reality and with quality requirements and this isn’t always the case in Europe. Sometimes they are too low, sometimes too high, but the aim is to discourage overcropping, while it might be possible to leave a little more freedom with regard to other parameters. AOC means “control of offer” to protect the revenue of producers. In actual fact it means that the creation of a law isn’t sufficient, there has to be someone out there counting: counting the vines, counting the rows, counting the bottles. And when the numbers don’t add up, the use of the DOC has to be blocked. All this costs money and things aren’t always carried out correctly in Europe. When they are, they usually work.

Once upon a time an Italian gentleman said something which adapts perfectly to the aims of geographic protection: we always have to make one piece less than the market would like. He made gorgeous cars: his name was Enzo Ferrari.

ACKNOWLEDGEMENTS
Thanks to Stefania Rosselli of the Vignaioli Piemontesi legal service

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