(1)

The current economic situation is characterised by general high costs of living, which affect wine consumption and sales, and increased input costs for the agricultural production and wine processing, which affect wine prices. These circumstances threaten to disturb significantly the Union wine market as they affect several key producing Member States by increasing the available wine stocks to levels that risk becoming unsustainable in view of the forthcoming harvest and production season and by causing financial difficulties and cash-flow problems to wine producers.

(2)

The global inflation and the related reduction in purchase power of the consumers is further exacerbating the general declining trend observed in wine consumption in the last years. The apparent decline in consumption in the ongoing marketing year is estimated at 7 % in Italy, 10 % in Spain, 15 % in France, 22 % in Germany and 34 % in Portugal compared to the pre-COVID-19 market situation. This trend affects in particular certain wine market segments, namely red and rosé wines.

(3)

The figures available show a drop in wine sales in the current marketing year, consistent with the observed reduced domestic demand, e.g. a decline in sales amounting to 5,3 % in Spain and France, with some strongly affected areas where the sales dropped by 25 % to 35 % in comparison with the same period of the previous marketing year. In the meantime, Union wine exports for the period from January to April 2023 are 8,5 % lower than for the same period of 2022.

(4)

The general increase of key input costs for agricultural production such as costs for fertilisers, energy and bottles required for wine production, which is partially also due to the Russia’s war of aggression against Ukraine, has led to an exceptional increase of production costs reaching in some Member States up to an estimated average increase of 30 % to 40 %. These circumstances are putting further pressure on Union wine producers and reducing their capacity for marketing actions and investments. Furthermore, in spite of the increasing costs along the full cycle of wine production, available data suggest an abrupt drop in prices for certain wines in the most affected by the crisis regions, compared to the pre-COVID-19 situation, for example a price decline in the range of 10 % to 26 % for some regions in France.

(5)

Combined, these factors point to a general reduction in the demand and sales of Union wines, in a context where production in the Union increased by 4 % in comparison with the previous marketing year, adding to an already high level of initial stocks (+ 2 % compared to the last 5-year average). If no action is taken rapidly to reduce the growing oversupply, the situation threatens to severely disturb the market by causing a major and general market imbalance at the latest with the arrival of the new harvest when wine producers will be left with no storage capacity for the new production and forced to sale at even lower prices.

(6)

At this stage, the current market circumstances are generating disparate market disturbances to the wine sector in different production regions, due to the fact that the Union wine market is highly segmented. These are significant in certain regions of several Member States, and affect in particular the market segments of red and rosé wines. Examples that illustrate this fragmentation of the market are, for instance, 27 % higher stocks than the 5-year average in Extremadura in Spain, 24 % and 14 % higher stocks than in the previous year in the Lisbon and Alentejo regions in Portugal, respectively, and 26 % higher stocks for rosé wines at the beginning of the current marketing year than at the beginning of the previous one in Languedoc-Roussillon in France.

(7)

At the same time, the Union wine market has been already subject to aggravating conditions, in particular throughout years 2019, 2020 and 2021 as a consequence of past trade restrictions, a decrease in consumption during the COVID-19 pandemic and several extreme weather events. The current difficult circumstances are delivering a further blow to an already fragile sector and leading to significant losses of income for all actors therein. Wine growers in the most affected regions of Member States experience financial difficulties and cash-flow problems. Therefore, an immediate action is required also in this respect to efficiently respond to such heterogeneous market situation by allowing Member States to reorient part of the financial resources allocated to their national support programmes in the wine sector and to offer a more tailor-made support to the different actors in the sector.

(8)

Removing from the market of the most affected regions some of the quantities of wine that are not finding appropriate market outlets should help to address the market imbalances and prevent the current disturbances from turning into a more severe or prolonged disturbance of the entire Union wine sector. Where justified, the distillation of wine should be introduced temporarily as an eligible measure under the support programmes in the wine sector to help improve the market balance and the economic situation of wine producers in the most affected production regions. To avoid distortion of competition, the use of the obtained alcohol should not be permitted for the food and drink industry and should be limited to use for industrial purposes, including disinfection and pharmaceutical, and for energy purposes. To avoid any abuse or overcompensation following the implementation of this exceptional measure, it is pertinent to request Member States to target the measure to the regions with market imbalance, to base it on objective criteria and to limit to recent market prices the compensation that they will provide for.

(9)

The ‘green harvesting’ measure, as provided for in Article 47 of Regulation (EU) No 1308/2013, is used as a market management measure when an excessive production of grapes is expected. To help operators respond to the current market circumstances and to reduce the risk that the situation reproduces again in the upcoming marketing year, it is appropriate to allow certain flexibility in implementing this measure during the financial year 2023. In particular, it is necessary, as an exceptional measure, to provide for derogations from Article 47(1) and (3) of Regulation (EU) No 1308/2013 to allow the full destruction or removal of immature grape bunches on part of a holding, provided that this is carried out on entire parcels, and to provide for the temporary increase of the maximum Union contribution to this measure.

(10)

The addition of ‘crisis distillation’ to eligible measures as well as the flexibility introduced for ‘green harvesting’ represent a form of financial support, which, however, does not require additional Union financing since the budgetary limits for the national support programmes in the wine sector for the financial year 2023 laid down in Annex VII to Regulation (EU) 2021/2115 of the European Parliament and of the Council (2) continue to apply. Member States may thus decide to allocate higher amounts to the measures in question only within the yearly budget provided for in that Annex. The financial support to the two above mentioned crisis measures is aimed, therefore, at providing support to the sector in the given unstable market situation without having to mobilise additional funds in the first place.

(11)

In order to increase the effectiveness of Union financial resources that can be allocated to these crisis measures, Member States should be allowed to complement the Union financial assistance with national payments covering up to 50 % of the support granted for the two crisis measures provided for in this Regulation.

(12)

The negative market development, the increase of costs and the consequent cash-flow problems of the operators in the wine sector are making difficult to execute the measures of the wine national support programs at a time when the improvement of market orientation of the sector is mostly necessary. To ensure the effectiveness of the implementation of programmes in the prevailing market and economic context of the wine sector, it is pertinent to temporarily increase the maximum Union contribution to the measures ‘promotion’, ‘restructuring and conversion of vineyards’, ‘green harvesting’ and ‘investments’.

(13)

In addition, it is further important to provide beneficiaries with appropriate flexibilities for the implementation of their operations under the national support programmes so that they can react to the current market uncertainties and adapt the operations whenever needed. Such flexibilities represent a further market support measures to prevent the current economic disturbances from turning into a more severe or prolonged disturbance of the Union wine market and are ensuring that the other exceptional measures set out in this Regulation, once decided by a Member State, can be efficiently implemented also at the level of the beneficiaries. Therefore, as a further exceptional measure, it is necessary to derogate from Commission Delegated Regulation (EU) 2016/1149 (3) and allow Member States to provide some flexibilities to beneficiaries in order to adapt the planned operations following a simplified procedure and to allow their partial implementation in duly justified cases.

(14)

Provided that the reasons to apply increased Union financial rates for certain measures and to allow certain flexibilities in the management of the programmes relate to the current economic situation of the wine sector and because the measures are temporary, it is pertinent to limit their scope of application to operations that started to be implemented during the financial year 2023. By contrast, these measures should not apply, for instance, to operations implemented in previous financial years and only paid in financial year 2023.

(15)

For imperative grounds of urgency, considering the ongoing market disturbance as well as the short time available to Member States to implement the measures included in this Regulation within the current financial year, and to prevent further market deterioration, it is necessary to take immediate action. On the one hand, in the most affected regions, the excess of supply needs to be removed from the market as soon as possible and in any case before the start of the new harvest, by end of August or early September 2023, otherwise the market situation would further deteriorate and the current imbalance would be carried over into the new marketing year threatening to cause a prolonged crisis of the entire Union wine market. On the other hand, all the measures included in this Regulation, have to be implemented before the end of the current wine national support programmes, which apply only until 15 October 2023 as provided for in Article 5(7) of Regulation (EU) 2021/2117 of the European Parliament and of the Council (4). Pursuant to that provision, Articles 39 to 54 of Regulation (EU) No 1308/2013 continue to apply after 31 December 2022 as regards expenditure incurred and payments made for operations implemented before 16 October 2023. Therefore, delaying action would risk making difficult or even impossible for the affected Member States to implement the measures within the financial year 2023, which is the last implementation year of the current national support programmes in the wine sector.

(16)

In view of the above-referred imperative grounds of urgency, this Regulation should be adopted pursuant to the urgency procedure laid down in Article 228 of Regulation (EU) No 1308/2013.

(17)

In view of the necessity to take immediate action, this Regulation should enter into force on the day of its publication in the Official Journal of the European Union,