(Praguepost) - Money hasn’t been used to expand new markets, auditors claim

The impact of EU investment and promotion support for the competitiveness of the wine sector not clearly demonstrated, EU auditors said.

A report published today by the European Court of Auditors (ECA) reveals that the need for an investment measure specific to the wine sector is not justified, as such support already exists under the EU rural development policy.

The report also questions the role of EU grants for the promotion of wines, since they were often used for consolidating markets, rather than winning new markets or recovering old markets.

“The coexistence of similar investment measures under two different schemes is a source of complexity, which in some Member States has resulted in implementing delays or in an excessively restrictive scope of the eligible investments” Jan Kinšt, the ECA Member responsible for the report, stated in a press release.

“Also, when the EU contribution incites enterprises to proportionally reduce their own funding for promotion actions, it becomes essentially a partial subsidy of these companies’ operational costs. This is not an efficient use of public money,” he added.

The EU auditors found that there is a lack of sufficient relevant information to show the direct results attributable to these measures. In the case of the investment measure, the effects cannot be easily separated from rural development investments.

In the case of the promotion actions, although wine exports to third countries have significantly increased in absolute terms, the audit revealed that EU wines have lost market shares in the main third countries targeted by promotion actions and that exports of EU wines not eligible for support also increased.

Member States spent €522 million in EU funds under the promotion measure between 2009 and 2013. For 2014-2018, there has been a large increase in funds allocated to the Member States for this measure (€1.16 billion to the EU-27).

Given the difficulties experienced by the Member States in spending the 2009-2013 budget initially earmarked for promotion actions, there is a risk that the 2014-2018 budget is set too high, endangering the application of sound financial management principles, an EU press release stated.

“We are trying to bridge the gap between the needs and expectations of the biggest in the wine industry, and the entrepreneurs who have good ideas but are on their own.”