Too much red wine on the market: is crisis distillation coming?

Germany has moved forward with plans to remove up to 24 million liters of surplus red and rosé wine from the market using €14.16 million in EU funds, a decision that has sparked discussions in Austria. The measure, known as “Krisendestillation” or crisis distillation, was approved by the European Commission in late July to help clear existing stocks before the new harvest. This action affects the wine regions of Rhineland-Palatinate and Baden-Württemberg. In Austria, particularly in Burgenland, similar concerns have emerged, with red wine struggling to find buyers, older vintages still sitting in cellars, and prices for the current harvest remaining low. The situation is not unique to Austria. Across the globe, there is an oversupply of red wine, according to Andreas Liegenfeld, president of the Austrian Winegrowers' Association, and Herbert Oschep, managing director of Wein Burgenland. In Burgenland, the price per kilogram for red grape berries is currently around 30 cents, compared to approximately 80 to 90 cents for white grapes. This disparity highlights the challenges faced by red wine producers. In the Middle Burgenland region, some wineries have yet to sell wines from the 2021 to 2025 harvests, creating a backlog that complicates the sale of the new vintage. The proposed solution, crisis distillation, would see surplus wine removed from the market and converted into industrial alcohol with financial support. While both Liegenfeld and Oschep acknowledge the potential benefits of this approach, they also emphasize its limitations. Liegenfeld supports examining the measure but stresses the need for more aggressive marketing efforts and market expansion rather than simply distilling excess stock. He notes that Germany’s initiative has created a new dynamic, offering opportunities for Austria if it considers applying for similar EU funding. Oschep shares a cautious view, calling the measure “two-edged.” On one hand, it provides immediate relief by reducing supply through EU-funded means. However, he insists that national funding should not be used for such purposes. His skepticism stems partly from the perception that distillation does not address the root cause of the imbalance between production and consumption. If the issue persists, the industry could face the same challenges again in the future. Another concern is the impact on the image of Austrian wine. Over the years, the country has positioned itself as a producer of high-quality, terroir-driven wines. The idea of using public money to convert millions of liters of wine into industrial alcohol runs counter to these branding efforts. Oschep points out that marketing-wise, this approach creates a negative impression. Yet, both Liegenfeld and Oschep agree that utilizing EU funds during this market crisis is a reasonable option. Determining how much wine qualifies as surplus requires a detailed analysis of market conditions and inventory levels. According to Josef Glatt, director of the Austrian Wine Industry Association, Austria must provide a thorough assessment of its current stock and harvest data. This evaluation will rely on reports submitted by wineries as of July 31. Once completed, Statistics Austria will finalize the figures, which will inform whether Austria can submit a formal request to the European Commission for similar measures. The outcome of this process will shape the next steps for the Austrian wine sector.