Evaluation of the CAP Measures Applicable to the Wine Sector

Evaluation of the CAP measures applicable to the wine sector

Case study report: Spain – La Rioja

Written by Agrosynergie EEIG Agrosynergie November – 2018 Groupement Européen d’Intérêt Economique AGRICULTURE AND RURAL DEVELOPMENT

EUROPEAN COMMISSION Directorate-General for Agriculture and Rural Development Directorate C – Strategy, simplification and policy analysis Unit C.4 – Monitoring and Evaluation

E-mail: [email protected]

European Commission B-1049 Brussels

EUROPEAN COMMISSION

Evaluation of the CAP measures applicable to the wine sector Case study report: Spain – La Rioja

Directorate-General for Agriculture and Rural Development 2018 EN

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Luxembourg: Publications Office of the European Union, 2019

Catalogue number: KF-06-18-315-EN-N ISBN: 978-92-79-97414-4 doi: 10.2762/79678

Images © Agrosynergie, 2018

EEIG AGROSYNERGIE is formed by the following companies:

ORÉADE-BRÈCHE Sarl & COGEA S.r.l. 64 Chemin del prat Via Po 102 31320, Auzeville FRANCE 00198 Roma ITALIE Tel. : + 33 5 61 73 62 62 Tel. : + 39 6 853 73 518 Fax : + 33 5 61 73 62 90 Fax : + 39 6 855 78 65 Email: [email protected] Email: [email protected] Represented by: Represented by: Thierry CLEMENT Francesca ANTILICI

This case study was carried out by the following Oréade-Brèche experts: Pierre Milliard, Juliane Papuchon and Lyse Alexandre.

Table of contents

1. DESCRIPTION OF THE WINE SECTOR IN LA RIOJA ...... 1 1.1 INTRODUCTION TO THE CASE STUDY AREA ...... 1 1.2 MAIN WINE PRODUCTS IN THE REGION ...... 1 1.3 AREAS AND WINE PRODUCTION EVOLUTION, STRUCTURE OF THE PRODUCTION ...... 2 1.4 MAIN CHARACTERISTICS AND STAKEHOLDERS OF THE WINE SECTOR IN LA RIOJA ...... 5

2. THEME 1: NATIONAL SUPPORT PROGRAMMES ...... 8 2.1 DESCRIPTION OF THE IMPLEMENTATION ...... 8 2.2 EFFECTS ON THE NSP AT THE LEVEL OF GROWERS ...... 14 2.3 EFFECTS OF THE NSP AT THE LEVEL OF PRODUCERS AND PRODUCTS ...... 21 2.4 EFFECTS OF THE PROMOTION MEASURE ...... 26 2.5 EFFECTS OF THE INFORMATION MEASURE ...... 32 2.6 EFFICIENCY OF THE MANAGEMENT OF THE NSP ...... 33 2.7 COHERENCE OF THE NSP ...... 42 2.8 RELEVANCE OF THE NSP ...... 45 2.9 EU ADDED VALUE AND SUBSIDIARITY ...... 49

3. THEME 2: SCHEME OF AUTHORISATIONS OF VINE PLANTINGS ...... 51 3.1 SYNTHESIS OF THE LITERATURE ...... 51 3.2 SYNTHESIS OF THE INTERVIEWS ...... 51 3.3 CONCLUSION OF THE EXPERTS ...... 53

4. THEME 3: WINE PRODUCTS DEFINITION, RESTRICTIONS ON OENOLOGICAL PRACTICES AND AUTHORISED WINE GRAPE VARIETIES ...... 54 4.1 DETAILED DESCRIPTION OF THE IMPLEMENTATION AT MEMBER STATE AND REGIONAL LEVEL ...... 54 4.2 COMPETITIVENESS DISTORTIONS DUE TO SPECIFIC RULES ON OENOLOGICAL PRACTICES ...... 56 4.3 SYNTHESIS OF THE INTERVIEWS ...... 57 4.4 COMMENTS AND CONCLUSIONS OF THE EXPERT ...... 61

5. THEME 4: EU RULES ON LABELLING AND PRESENTATION ...... 62 5.1 DESCRIPTION OF THE LABELLING RULES APPLIED AT MEMBER STATE AND LOCAL LEVEL ...... 62 5.2 EXISTING NATIONAL DATA ON NON-COMPLIANCE WITH LABELLING RULES ...... 66 5.3 SYNTHESIS OF THE INTERVIEWS ...... 66 5.4 COMMENTS AND CONCLUSIONS OF THE EXPERT ...... 70

6. THEME 5: CERTIFICATION PROCEDURES, MONITORING AND CHECKS ...... 71 6.1 DESCRIPTION OF THE LOCAL IMPLEMENTATION OF THE RULES ...... 71 6.2 EXISTING NATIONAL DATA ON NON-COMPLIANCE AND WORKLOAD ...... 76 6.3 SYNTHESIS OF THE INTERVIEWS ...... 76

ANNEXES ...... 78 ANNEX 1 - SURFACE AREA PER WINEGRAPE VARIETY IN LA RIOJA ...... 78 ANNEX 2 – ELIGIBLE COSTS UNDER RESTRUCTURING AND RECONVERSION MEASURE ...... 79 ANNEX 3 – DESCRIPTION OF THE NSP MEASURES ...... 80

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector i

List of tables Table 1: Vineyard areas and production in La Rioja ...... 2 Table 2: Number of wine growers holding in La Rioja ...... 3 Table 3: Planting rights...... 5 Table 4: NSP annual financial allocation programmed and expenditure at national level (Millions of euro) ...... 8 Table 5:Output indicators cumulated on the 2014/2017 period ...... 9 Table 6: Implementation choices on the restructuration and reconversion measure ...... 9 Table 7: Implementation choices on the investments measure ...... 10 Table 8: Implementation choices on the Promotion measure ...... 12 Table 9: Implementation choices on the Innovation measure ...... 12 Table 10: grape varieties in vineyard affected by the restructuration and conversion measure ...... 18 Table 11: Rate of achievement of the foreseen expenditures per measures ...... 33 Table 12: Main criteria/procedure(s) ensuring the relevance of the selected applications ...... 33 Table 13: Measures with similar objectives opened to wine growers/producers ...... 43 Table 14: SWOT analysis of the wine sector at regional level (La Rioja) ...... 45 Table 15: Execution rate of the NSP budget in Spain ...... 47 Table 16: Prioritization criteria of the demands for new plantations ...... 51 Table 17: Rate of wine grape varieties authorised to produce wine under PDO "Rioja" ...... 55 Table 18: Wine grape varieties authorised to produce PDO "Rioja" ...... 55 Table 19: Description of main local specificities in oenological practices ...... 55 Table 20: Main differences in oenological practices between wine under PDO “”Rioja” and its main competitors ...... 57 Table 21: Number of controls performed in La Rioja in 2018 ...... 66 Table 22: controls performed in La Rioja in 2017 ...... 66 Table 23 : wine grape variety in La Rioja (in hectare) ...... 78 Table 24: Description of the measures eligible under the National Support Programmes ...... 80

List of figures Figure 1: La Rioja wine map ...... 1 Figure 2: Wine products distribution in volume in La Rioja (average 2014-2017) ...... 2 Figure 3: Evolution of the wine production by colour in La Rioja ...... 3 Figure 4: Distribution of La Rioja exports in volume and value ...... 3 Figure 6: Area distribution according to white grape varieties in 2015 ...... 4 Figure 7: Area distribution by red varieties in 2015 ...... 4 Figure 8: distribution of the PDO Rioja wine production between actors in la Rioja ...... 7 Figure 9: Distribution of expenditures from 2014 to 2017 per measures ...... 8 Figure 10. Restructuring and reconversion measure in Spain and per Autonomous Communities for the last programming periods (2001-2008; 2009-2013; 2013-2016, two years missing) ...... 14 Figure 11. Area under vines for wine production in 2017, in hectares ...... 14 Figure 12: NSP executed budget (.000€) 2014-2016 period ...... 16 Figure 13. List of the authorized grape varieties to be produced for winemaking in La Rioja ...... 19 Figure 14: Evolution of export wine in Value ...... 26 Figure 15: Position of La Rioja’s wine value compared to national wine value ...... 27 Figure 16: Part of PDO wine volume exported compared to total exported wine volume ...... 27 Figure 17: Position of La Rioja’s wine volume compared to national wine volume ...... 28 Figure 18: NSP executed budget (.000€) 2014-2016 period ...... 47 Figure 19. List of the authorized grape varieties to be produced for winemaking in La Rioja ...... 54

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector ii

Glossary

CAP Common Agricultural Policy COMTRADE United Nations International Trade Statistics Database CMEF Common Monitoring and Evaluation Framework CMO Common Market Organisation CN Combined Nomenclature CTR Criterion EAGF European Agricultural Guarantee Fund EAFRD European Agricultural Fund for Rural Development EAV European Union added value EC European Commission EEA European Environment Agency EEC European Economic Community EEIG European economic interest group EQ Evaluation question EU European Union EUROSTAT Statistical Office of the European Commission FADN Farm Accountancy Data Network FAO Food and Agriculture Organization of the United Nations FNVA Farm net value added GATT General Agreement on Tariffs and Trade MIO Million € MS Member State NGO Non-Governmental Organization NSP National Support Programmes OIV International Organisation of Vine and Wine PDO/PGI Protected Designations of Origin (PDO) and Protected Geographical Indications (PGI) PO Producer Organisation PPS Purchasing Power Standard RD Rural Development RDP Rural Development Program RDR Rural Development Regulation SDG Sustainable Development Goals SME Small and Medium Enterprises SO Standard Output SPS Single Payment Scheme SSG Special Agriculture Safeguard SWOT Strengths, Weaknesses, Opportunities, Threats TEU Treaty on the European Union TFEU Treaty on the Functioning of the European Union UAA Utilised Agricultural Area USA United States of America USDA United States Department of Agriculture VAT Value Added Taxes WTO World Trade Organisation

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector iii

0. LIST OF THE LITERATURE AND INTERVIEWS

List of interviewed organisations

Organisation Ministry of Agriculture, Fisheries, Food and Environment – General Directorate of Agricultural Production and Markets - General Sub-Directorate of Fruits and Vegetables and Viticulture Ministry of Agriculture, Fisheries, Food and Environment - General Directorate of the Food Industry - General Sub-directorate of Differentiated Quality and Ecological Production Ministry of Agriculture, Fisheries, Food and Environment - General Directorate of the Food Industry – General Sub-directorate of Industrial Development and Innovation Cooperativas Agroalimentarias España – Agri-food cooperatives of Spain - International and EU Department Cooperativas Agroalimentarias España – Agri-food cooperatives of Spain – Department of Wine Federación Española del Vino (FEV) - Spanish Federation of Wine – International Department Federación Española del Vino (FEV) - Spanish Federation of Wine – Communication Department Federación Española del Vino (FEV) - Spanish Federation of Wine – Legal Department The Regional Government of La Rioja – Agriculture, Livestock and Environment Department - Vineyard Registration Department The Regional Government of La Rioja - Agriculture, Livestock and Environment Department – Department of Rural Development Programs Monitoring The Regional Government of La Rioja - Agriculture, Livestock and Environment Department – Department for Rural Development Support The Regional Government of La Rioja - Agriculture, Livestock and Environment Department – Department of Food Quality Control The Regional Government of La Rioja - Agriculture, Livestock and Environment Department - Department of Agri-Food Quality and Promotion Systems Grupo Rioja – Group of Wine Companies from La Rioja Bodegas Familiares de Rioja – Family wineries from La Rioja Union de Agricultores y ganaderos de La Rioja (UAGR) - Union of Farmers and ranchers of La Rioja Consejo Regulador DOCa Rioja – PDO “Rioja” Managing Organization Bodegas Patrocinio – Wine Cooperative Bodegas Taron – Wine Cooperative Bodega La Rioja Alta – Winery Bodega Ramón Bilbao – Winery

Documents and reports collected [Author/institution, year, title, editor/type of documents, number of page, internet source if any]

- Eurostat, 2017, Structure of the vineyards in 2015, press release 57/2017, 4 p., internet source : http://ec.europa.eu/eurostat/documents/2995521/7964287/5-04042017-BP-FR.pdf/fc7b7cfb-2d34- 42ab-b27e-a51195098959 - Ministerio de Agricultura y Pesca, Alimentación y Medio Ambiente (MAPAMA), Datos de las denominaciones de origen protegidas de vinos (DOPs), campana 2016-2017, 2018, information report, 56 p. - MAPAMA, 2018, viñedo anuario 2017-2012, data base, excel files - MAPAMA, 2016,

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector iv

o a) Reporte : Información sobre autorizaciones para nuevas plantaciones de viñedo 2016, internet source : http://www.mapama.gob.es/es/agricultura/temas/producciones- agricolas/160706informacionnnpp2016_tcm7-426224_tcm30-58989.pdf o b) Reporte, Análisis de la superficie y de la producción vitivinicola, internet source : http://www.mapama.gob.es/es/agricultura/temas/producciones- agricolas/160412pto2reunion12abrilanalisissuperficieyproduccionvitivinicola_tcm30- 58984.pdf - Consejo regulador Cava, 2013, specifications, 14p., internet source: http://www.docava.es/wp- content/uploads/2015/05/PliegoCondicionesDOPCava_2013.pdf - Gobierno de La Rioja, 2018, reporte, 10p. - French Wine Institute (IFV), 2012, vins et vignobles d’Espagne, report, 26 p., internet source : https://www.vignevin-sudouest.com/publications/voyage-etude/documents/synthese-espagne.pdf - IVICAM Instituto de la Vid y del Vino Castilla La Mancha, 2013, El sector vitivinícola en Castilla La Mancha, 58 p. internet source : http://pagina.jccm.es/ivicam/formacion/documentacion/villarrubia.pdf - MAPAMA, Datos de las indicaciones geográficas protegidas (igps) de vinos - vinos de la tierra - campaña 2015/2016, 2017, report, 31 p. - ASAJA, Agricultural Association Young Farmers of Castilla-La Mancha, 2018, Presentation of the structure, website, internet source: http://www.asaja.com/asaja - UPA, Union of Small Farmers of Castilla-La Mancha, 2018, website, internet source: http://upaclm.es/accion-sindical/ - COAG, The Coordinator of Farmers and Livestock Organizations, 2018, website, internet source: http://www.coagclm.org/coa-clm/ - FEV, Spanish Federation of Wine, 2018, website, internet source: http://www.fev.es/v_portal/apartados/apartado.asp?te=6 - CECAM, 2018, website, internet source: http://www.cecam.es/organizaciones - FEVIN, Federación De Empresas Vitivinícolas De Castilla-La Mancha, 2018. - MAPAMA, Secretario de Estado de Comercio, database, 2018, internet source: http://datacomex.comercio.es/CabeceraPersonalizada.aspx?action=drilldown&eje=Columnas&valor= Total%20Fechas&unvalor=%5BFechas%5D.%5BTotal%20Fechas%5D&nivel=0&otroValor=total&otroNi vel=0&id=4 - OIV, 2017 World VitiViniculture Situation, Statistical report on World VitiViniculture, 2017, internet source: http://www.oiv.int/js/lib/pdfjs/web/viewer.html?file=/public/medias/5479/oiv-en-bilan- 2017.pdf - Vineyard media, 2018, Castilla la Mancha vineyard and wine regions map, map, internet source: https://vineyards.com/wine-map/spain/castilla-la-mancha - Ministry of Agriculture, Environment and Rural Development, El Gobierno de Castilla-La Mancha avanza en el Plan Estratégico del Sector Vitivinícola con la Asociación de Vinos de Castilla-La Mancha, article, 2018, internet source: http://www.castillalamancha.es/actualidad/notasdeprensa/el-gobierno- de-castilla-la-mancha-avanza-en-el-plan-estrat%C3%A9gico-del-sector-vitivin%C3%ADcola-con-la - ICEX, Espana, Exportaciones E inversiones, 2017, Informe Sectorial de Castilla-La Mancha, report, 12 p., internet source: https://www.icex.es/icex/GetDocumento?dDocName=DOC2017712367&urlNoAcceso=/icex/es/regist ro/iniciar-sesion/index.html?urlDestino=http://www.icex.es/icex/es/navegacion-principal/que-es- icex/donde-estamos/red-territorial-de-comercio/navegacion-principal/inform. - VÍCTOR DE LA SERNA, El Mundo Vino, El desafío de Castilla-La Mancha, 2013, article, Interent source: http://elmundovino.elmundo.es/elmundovino/noticia.html?vi_seccion=12&vs_fecha=201310&vs_not icia=1382963863 - Edgardo Díaz Araujo, María José Iuvaro, 2006, Vitivinicultura y derecho, p.336, internet source: https://books.google.fr/books?isbn=9870218113 - FAM, Circular relating to the setting up by FRANCEAGRIMER of an aid for wine producers, 2009, p. 22, internet source: http://www.franceagrimer.fr/fam/content/download/7104/41396/file/1269_CIRCULAIREGENERALE0 910_310709.pdfBoard of Castilla y Leon, obtención de derivados vínicos, p. 89, internet source: http://webcache.googleusercontent.com/search?q=cache:E56rg6ubP7kJ:cepamedinadelcampo.centro s.educa.jcyl.es/sitio/upload/manual_derivados.doc+&cd=2&hl=fr&ct=clnk&gl=fr - Agri food cooperative, WHAT'S AGRI-FOOD COOPERATIVES SPAIN?, 2018, website, internet source: http://www.agro-alimentarias.coop/5/uk/5_1_1.php

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector v

- Alimarket, 2012, Azumancha presenta su Plan Estratégico, internet source: https://www.alimarket.es/alimentacion/noticia/89813/azumancha-presenta-su-plan-estrategico - MAPAMA, 2016, POTENCIAL DE PRODUCCIÓN VITÍCOLA EN ESPAÑA, report, 16 p., internet source: http://www.mapama.gob.es/es/agricultura/temas/regulacion-de-los- mercados/informepotencialproduccionvitivinicolaes2016_tcm30-135339.pdf - OEMV, Spanish observatory of the wine market, 2016, Superficie de viñedo en España 2016 La superficie de viñedo en España se sitúa en las 955.717 hectáre as en 2016 (+0,1%), 5 p., internet source: http://www.lomejordelvinoderioja.com/noticias/201512/01/superficie-vinedo-crece-rioja- 20151201005854-v.html. - Consejo regulador DOCa Rioja, 2017, MEMORIA 2017, 80 p., internet source: https://es.riojawine.com/multimedia/files/publicaciones/MemoriaConsejo_2017.pdf - Agri-food cooperatives, 2015, Las bodegas cooperativasen Castilla-La Mancha:Protagonistas en la cadena de valor, 140 p. - MEDINA-ALBALADEJO, 2014, Crisis, Cooperativas y Estado En El Sector Vitivinícola Español Durante El Franquismo, internet source: http://portal.uc3m.es/portal/page/portal/instituto_figuerola/programas/pccmr/continuidadycambios /Medina_Albaladejo.pdf - Consejo regulador La Rioja, 2017, Estadísticas 2017, El Rioja en cifras, reporte, 14 p. internet source: https://es.riojawine.com/multimedia/files/publicaciones/ESTADISTICAS_Rioja_2017.pdf - Grupo Rioja, 2018, website, internet source: http://www.gruporioja.es/en/presentacion-2 - Bodegas familaires de Rioja, 2018, website, internet source : http://www.bodegasderioja.com/en/about-us/ - Consejo regulador Rioja, 2015, 2015 ANNUAL REPORT, report, 80 p. internet source: https://es.riojawine.com/multimedia/files/publicaciones/Annual_report_Rioja_2015.pdf - OEMV, Spanish Observatory of the Wine Market, 2017, Memoria de actividades realizadas por el Observatorio Español del Mercado del Vino, 62 p.

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector vi

1. DESCRIPTION OF THE WINE SECTOR IN LA RIOJA

1.1 Introduction to the case study area

With nearly one million hectares of vineyards (941 000 ha, or 30% of the total EU area), Spain is the Member State with the largest area dedicated to the production of wine grapes in 2015. The country represents 36 % of PGO/PGI wines in the UE.1 Spain has become the world's largest exporter of wine in volume. The country is one of the leading suppliers of bulk wine in major import markets such as France, Germany or the United-Kingdom. Nevertheless, to meet the expectations of domestic and international markets, Spain is moving towards a greater valuation of its wine by improving its quality.2

The region of La Rioja is clearly oriented toward red and rosé wines. Indeed, these wines represent 93% of the total marketed wine from La Rioja. The region represents 4.9% of the national area under vines. In the wine sector, La Rioja is the eleventh Autonomous Community regarding the sectoral economic growth, in absolute terms (+3.3 million euros) being the third most important exporter after Castilla La Mancha and Catalonia. As shown in the Figure 1 below, most of the territory of the Region is covered by the PDO Rioja. Figure 1: La Rioja wine map

Source: Source: Vineyard media, 2018

1.2 Main wine products in the region

The region is oriented towards the production of quality wine. Most of the regional wine is produced under PDO (93%), while only 0.04% is produced under PGI and 7% is produced without mention of a PDO/PGI as displayed in the Figure 2 below. The region also produces sparkling wine. La Rioja doesn’t produce any must.

1 Eurostat, 2017 2 CNIV, FAM, 2016

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector 1

Figure 2: Wine products distribution in volume in La Rioja (average 2014-2017)

PDO wines 93%

Wine without PDO/PGI PGI wines 7% 0.04%

Source: MAPAMA, anuarios de estadistica La Rioja has an historical tradition of quality wines even if it is only since the end of the 19th century that the region started to orientate its production towards great quality wine and develop its reputation. In 1926, a Regulatory Council was created in La Rioja. Then the year 1932 marks the beginning of the system of Denomination of Origin in La Rioja. This Spanish system has many similarities with the French one. The DO system started in La Rioja, and then, was extended to many other Spanish wine regions. The region produces one PDO called “Rioja”. It’s is mainly characterized by red wine obtained from Tempranillo, Garnacha, Graciano, Mazuelo and Maturana Tinta and white wine obtained from the following varieties: Viura, Malvasía, Garnacha Blanca, Tempranillo Blanco, Maturana Blanca, Turruntés, Chardonnay, Sauvignon Blanc and Verdejo. The PDO covers approximately 43,885 ha of the 52,076 hectares under vines in the region, representing around 84% of the regional area under vines. In La Rioja, there is one PGI called “Valles de Sadacia” covering over 185.2 ha in the region (0.36% of the regional vineyard area) producing only white wines.

1.3 Areas and wine production evolution, structure of the production

When analysing the area under vineyard in la Rioja – displayed in the Table 1- one can observe a steady increase. Table 1: Vineyard areas and production in La Rioja 2012 2013 2014 2015 2016 2017 PDO Vineyard area (ha) 42,232.21 44,736.00 45,991.00 46,613.00 46,561.00 44,034.15 Production (hl) 1,763,214 1,786,932 2,026,472 1,695,223 1 PGI Vineyard area (ha) 185.2 185.2 185.2 185.2 185.2 185.2 Production (hl) 1,150 2,600 895 1,559 800 300 Wine without PDO/PGI Vineyard area (ha) Production (hl) 78,313* 99,295* 159,645* 36,564* 1 Liqueur wine Production (hl) n.a. n.a. n.a. n.a. *without available data on varietal wines Sources: MAPAMA PGI report and Denominaciones de Origen Calificada, MAPAMA, 2018 1 La Rioja focuses its production on bottled wines with added value: PDO “Rioja” wine must be bottled before marketed as indicated in the PDO specifications. The Spanish sales have a much higher part of bulk wine sold compared to bottled wine sold. According to the Rioja Government, the differences of PGI wine production between 2012 and the following years may be due to their commercial strategies. The reduction of PGI production (in volume) may be explained

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector 2

by the fact that producers under the PGI used to produce mainly two types of wines: dry and semi-dry wines while now they only produce semi-dry wines. La Rioja mainly produces red wines, as shown in the Figure 3 below. The production of wine in the region is clearly oriented toward the red or rosé wines in terms of quantity however one can observe a significant increase in the production of white wine. Between 2012 and 2017 the white wine production increased by 64% whereas the red or rosé production is quite stable with slight decline of 10% during the same period. Still, the production of wine from La Rioja stays oriented toward the red and rosé wines. Figure 3: Evolution of the wine production by colour in La Rioja Evolution of the production by type of wine in La Rioja (in thousands of hectoliters) 2.200 170 2.100 160 2.000 150 1.900 140 1.800 130 1.700 120 1.600 110 1.500 100 1 2 3 4 5 2012 2013 2014 2015 2017 Red or Rosé wines White wines

Source: MAPAMA Bottled PDO wines remain the main exported product by the Autonomous Community with exports reaching in 2017 73.4 million liters worth 286 million euros out of 96 million liters exported by the region worth 324.8 million euros. It represents 88% of the exported value - as shown in the Figure 5 below - and 76.5 % of the total exported wine volume produced in La Rioja. The second most important category of wine exported is PGI wine, with an exported value that increased by 6.5 % in 2017 compared to 2016 (in volume +0.4%), reaching a total of 12.8 million euros (in volume:5.6 million liters), with an average price of 2.30 euros per liter (+ 6.1 % compared to 2016). In 2017, wines without PDO/PGI represent 3 % in value and 9% in volume of the total exported wine from La Rioja. Figure 4: Distribution of La Rioja exports in volume and value

Source: Rioja Government, 2018 Table 2: Number of wine growers holding in La Rioja 2012 2013 2014 2015 Total 13.207 12.921 12.668 12.365 Average size (ha) 3,35 3,42 3,63 3,77

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector 3

Sources: MAPAMA, 2016 The number of wine growing holdings in la Rioja is continuously decreasing between 2012 and 2015. On the other hand, their average size has significantly increased on the same period (+13%), showing an expansion of holdings. Figure 6: Area distribution according to white grape varieties in 20153

MACABEO 68%

TEMPRANILLO BLANCO 12% [CATEGORY NAME]* VERDEJO [PERCENTAGE] SAUVIGNON BLANCO 4% 4%

Source: MAPAMA’s survey, 2015 The white grape variety Viura, also known as Macabeo is the main white grape variety grown in Rioja: it represents 68% of the area planted with white grape varieties as displayed in the Figure 6. Then follows the Tempranillo Blanco with 12% of the area planted which represent a significant part of the area aswell. One explanation could be that the white grape variety Tempranillo Blanco have benefited from the notoriety of the famous red grape variety “Tempranillo”. Besides, it can be noticed that the region has planted a few white international varieties such as Chardonnay, Sauvignon Blanco and Verdejo which represent a limited area respectively: 3%, 4% and 4% of the vineyard in the region. Figure 7: Area distribution by red varieties in 20154

Tempranillo 85%

Other varieties < 3 % representativeness Garnacha 4% 11%

Source: MAPAMA’s survey, 2015 As highlighted in the Figure 7, the Tempranillo red grape variety is the main red grape variety planted covering 85% of the area dedicated to red grape varieties. It is important to precise that it is the region’s most typical

3 Other varieties <3% representativeness: GARNACHA BLANCA (144.66 ha), MOSCATEL DE ALEJANDRIA (133.20 ha), CHARDONNAY (127.27 ha), MALVASIA (104.19 ha) Maturana Blanca (35.55 ha), Cayetana Blanca (9.02 ha), Moscatel De Grano Menudo (4.62 ha), Albillo Mayor (3.84ha), Albariño (3.01 ha), Viognier (1.73 ha) 4 Other varieties < 3 % representativeness: Mazuela (917.3 ha) Graciano (794.98 ha) Cabernet Sauvignon (39.82 ha), Pinot Noir (3.95 ha), Merlot (3.23 ha), Syrah (2.56 ha) and Monastrell (1.19 ha)

AGROSYNERGIE – Case study report: Spain – La Rioja Evaluation of the impact of the CAP measures applicable to the wine sector 4

wine grape variety. There are 5 other red grape varieties planted in La Rioja covering less than 100 hectares. The diversity of grape varieties used for red wine is less important than varieties used for white wine.

The Annex 1 shows the area covered by wine grape varieties in La Rioja over the 2012-2017 period. There are very specific regional grape varieties which are not found in other Spanish regions. In 2015, according to official statistics from the Ministry of Agriculture, 98% and 81% of the total Spanish area planted respectively with Maturana Blanca and Tempranillo Blanco were located in La Rioja. The total area planted with these two- specific regional grape varieties do not even represent more than 1% of the national vineyard area. Once again, La Rioja really stands out from the rest of the country regarding wine grape variety planting strategy. Concerning red wine grape varieties, no significant change occurred during the period, except the planting of two new varieties in 2016 and 2017: Maturana Tinta and Pinot Noir. Concerning the white grape varieties, one should notice that from 2013 until 2016 only two white grape variety was planted (the Macabeo). Only since 2016, The region started to diversify its production of white grape varieties.

Table 3: Planting rights Admissible Demanded Attributed Rejected Regional contingent Regional limits Area Number Area Number Area Number Area Number PGO 387 5.030 3.857 5.512 4.122 387 2.792 5125 1 330 PGI ------Wine without GI ------Sources: MAPAMA, 2016 a) In Spain surface concession procedure in 2016 is performed through a scoring approach with priorization criteria: - Young new winegrowers - Good behaviour: no abandoned vineyard, with no illegal vineyard, As shown is the Table 4: Planting rights above the regionals limits have been reached and it concerns only new wine growers. Moreover, it can be noticed a lot of planting requests were rejected because of the very restrictive regional limits. Thanks to the table presented above, one could understand the regional strategy in the wine sector. Indeed, by setting a restrictive limit on new plantings in PDO areas, the region aims to hinder a significant increase of the surface area under vines in the PDO area in order to limit the offer of PDO “Rioja” wine that would lead to a fall of the PDO “Rioja” wine price. The new scheme of authorization allows the PDO managing organization to regulate the market. The weight of cooperatives in the wine sector of La Rioja remains rather marginal since the number of cooperative declarants in 2016 was 46 (i.e. only 11% of the total number of producers).

1.4 Main characteristics and stakeholders of the wine sector in La Rioja

1.4.1 Overview of the organisation of the wine sector of La Rioja

. Administration

At national level, Ministry of Agriculture, Fisheries, Food and Environment is in charge of the wine sector and the management of the National Support Program (NSP), planting rights, oenological practices rules and wine grape varieties.

At regional level, the Rioja government is composed by different Regional Directorates, among them the General Directorate for Rural Development which possess a department managing operations relating to the vineyard: planting rights, vineyard register; the Department of Food Quality Control is in charge of fraud control and the departments of Agri-Food Quality and Promotion Systems and Rural Department Support in charge of the management of the investment and promotion measures. Besides la Rioja government has a department dedicated to research in viticulture and oenology working on the preservation of genetic material with a large bank of clones, study of minority grape varieties , ground covers, microbiology and microorganisms, winemaking technology. The Section of Viticulture and Oenology is

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integrated in the Institute of Vine and Wine Sciences (ICVV), center in which the University of La Rioja and the Government of La Rioja participate.

. Wine grower’s organisation

At national level, In Spain there is no organization dedicated to wine growers. It is the farmers' organization that represents the interest and assesses wine growers. They are present at the regional level and are organized in network with their network head at the national level. There are three main organisations: In Spain, the Agricultural Association of Young Farmers (ASAJA) is an agricultural union in the wine sector. Its role is to represent, manage, defend and promote the professional interests of the agrarian sector in general. The Coordinator of Farmers and Ranchers Organizations (COAG) represents, manages, promotes and defends the specific interests of affiliated unions and agricultural professionals before any public or private institution. They participate in the elaboration, management, monitoring and control of the agrarian policy, in collaboration with the authorities. The Union of Small Farmers of Castilla-La Mancha (UPA) is a member of the Committee of Agricultural Professional Organizations of the European Union (COPA). The UPA is also a Professional Agricultural Organization that defends at regional, national and European level the interests of the agrarian family farm. it offers its members services - among others - processing CAP files, updating the vineyard register, and restructuring the vineyard5.

At regional level, the most important wine grower’s organisation, are : - the Federation of Agricultural Cooperatives of La Rioja (FECOAR) and the Union of Farmers and Breeders of La Rioja (UAGR-COAG) - The ARAG - ASAJA -Association of Farmers and Breeders - Agrarian Association of Young Farmers, is the largest agrarian organization in La Rioja, Both organisations have an important role in the wine sector in the region. Among other activities, they oversee the restructuring and reconversion of the vineyard, help the winegrowers to apply for grants, and advise them on cropping system management.

. Wineries organisation

At national level The Spanish Wine Federation (FEV) is the most representative private organization that brings together the downstream part of the spanish wine sector, both processors and marketers of all types of wine products. The objectives of the FEV is to enhance the competitiveness of the wine sector. It influences political decision, and acts as representatives of wine producers and marketers. The FEV is also involved in bringing together the wine companies. The federation works with national and regional administrations and therefore it has been recognised since 1987 as a Collaborating Entity. Agri-food Cooperatives Organization groups (Cooperativas Agroalimentarias de España) all the Spanish cooperatives including the wine sector. The Vine and Wine Department carries out studies, analysis, consultancies and interpretation and dissemination of all regulations. Market follow-ups are carried out and circular letters are prepared for associates.

At regional level, Association of Family Bodegas of Rioja is an organization gathering small family wineries: “Twenty wine growers and small wineries of Rioja constitute in 1991 the association to defend the interests of the family business model.” It also defends the prohibition of the coexistence of Rioja brands in other viticultural regions, they were protagonists in the investigation, recovery and authorization of minority native grape varieties. Grupo Rioja (Grupo de Empresas Vinícolas de Rioja) is a business association that joins more than fifty wineries of all sizes and characteristics and represents approximately two thirds of Rioja wine sales. It has different

5 UPA, 2018

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missions: the defence and representation of the associates’ interests, information services to the members, and promotional activities. “Grupo Rioja works in general trade promotion. Besides, as President of the Promotion Committee of the PDO managing organization, Grupo Rioja works actively coordinating and designing the promotional activities and programs of this Institution.”

. Interbranch organization

At national level, in Spain all the branches are grouped together by the Regulatory Councils. The main example of Regulatory Council in La Rioja is the one of the DO Rioja – since Rioja represents the only PDO of the region. It manages the PDO at all scales: wine growers, wineries, cooperatives, etc. its main objective is to ensure the quality of the products that are included in the denomination, so that producers and production processes adhere to a series of standards that maximize the quality of this.

At regional level, Interprofessional Organization of Rioja Wine and the Regulatory Council DOCa Rioja must represent, in their territorial scope and in their sector, at least 51% of the productions affected in each and every one of the professional branches. The interbranch has two different branches: the production of wine grapes and the elaboration of wine. They have an important role in promotional activities, the improvement of the wine in the value chain, studies and programs of research activities, development and technological innovation. In addition, the PDO “Rioja” managing organization is the control body of the PDO “Rioja” and is entrusted with the mission of delimiting the production area of Rioja, controlling the issuance of "guarantee seals" and recommend the legal measures to be adopted against usurpers and counterfeiters of the Rioja brand ». The PDO managing organization is also in charge of ensuring the smooth execution of the certification procedures.

As displayed in the Figure 8 below, the wine production is distributed among thefollowing stakeholders : wineries at 63%, then cooperatives with a share of the total production of 34%, then some wine growers are producing themselves the wine (2% of total production), finally the wholesalers with 1% of the total production. The wineries dominate the wine production the region. Figure 8: distribution of the PDO Rioja wine production between actors in la Rioja

Wineries Cooperatives 63% 34%

Wine growers 2% Wholesalers 1%

Source: Consejo regulador Rioja, 2017

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2. THEME 1: NATIONAL SUPPORT PROGRAMMES

2.1 Description of the implementation

2.1.1 Financial allocation

On the 2014-2020 programming period, Spain has implemented for measures at national level: Restructuration and reconversion, Investments in enterprises, Promotion and by-product distillation Figure 9: Distribution of expenditures from 2014 to 2017 per measures

Distribution of expenditures from 2014 to 2017 per measures By-product distillation 10% Promotion 15%

Investments in enterprises Restructuration 37% and reconversion 38%

Source: Financial monitoring data of the NSP, DG Agri In Spain, only the Innovation measure is implemented at national level. For the other measures, the competent authority is the competent body of the autonomous community, for the processing, resolution and payment of the aids referred to the Royal Decree 597/2016. A national basis is defined (criteria, eligibility) and each autonomous community can adapt the punctuation according to his local context. In addition, the total budget of Spain is a sum of the proposals of the autonomous communities and of an arbitration with national criteria.

As detailed in Table 6, Spain executed the previous expenditure in 2015 and 2016 and executed 91% on 2014 and 96% on 2017. The expenditure of promotion measure increase between 2014 and 2017, whereas the expenditure of restructuration and reconversion measure decrease. The expenditure of innovation measure concern only 2016 and 2017. Lastly, the By-product distillation measure have a quite stable expenditure and Investments measure, with a low start in 2014

Table 4: NSP annual financial allocation programmed and expenditure at national level (Millions of euro)

2017 2016 2015 2014

progr. exp. progr. exp. progr. exp. progr. exp.

Promotion 50.00 41.62 50.00 49.65 44.00 44.35 50.00 39.44

Restructuration reconv. 72.53 77.36 72.53 74.93 80.08 80.32 120.02 112.49

Investments in enterprises 55.88 51.15 56.97 55.29 56.00 57.96 8.51 9.37

By-product distillation 31.80 31.71 30.80 30.39 30.25 29.40 31.8 30.41

Innovation 0.12 0.04 0.03 0.01

Source ; Ministerio de Agricultura y Pesca, Alimentacion y Medioambiente,

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Table 5:Output indicators cumulated on the 2014/2017 period Number of Number of Total area Budget 2014- Execution 2014- Measure beneficiaries operations covered (ha) 2018 (in M€) 2017 (in M€) Promotion 1938 3177 171,045 164,5401311 Restructuration and 33719 56 95218,67 428,915 430,550101 reconversion Green harvesting 0 0 0 0 Investments in 0 0 411 401,7837573 enterprises By-product distillation 77 0 111 125,3033727 Innovation 5 5 0 0 Source ; Ministerio de Agricultura y Pesca, Alimentacion y Medioambiente,

2.1.2 Restructuration and reconversion measure

Restructuration and reconversion measure is implemented at regional level, with an annual call of proposal. The assignation of expenditure for each autonomous community is decided at national level annually: each autonomous community communicate to central administration his financial needs for the next year. This allocation will be made taking into account, in any case, the area of vineyard and the need to restructure certain vineyards as a result of the failure to adapt their productions to the market. In addition, a prioritization criterion for collective plan is defined at national level and additional criteria may be established by the autonomous community. Castilla-la-Mancha choose to establish some prioritization criteria concerning wine grower in the period 2014-2016 and additional one for the period 2017-2018, which are detailed in Table 7

Table 6: Implementation choices on the restructuration and reconversion measure

Type of operation n°1

Compensation for loss of incomes The compensation to the winegrowers for losses of income will be 25% of the average value of the grape of Type of aid and rate of the last three seasons of the region. support Contribution to the costs of restructuring and conversion: max 50% on the basis of actual costs or on standard costs detailed in Annex 2: Standards costs for eligible operations of Restructuration and reconversion measure

At national level: Aid may be granted for the restructuring and conversion of vineyards, vine-growers whose vineyards are intended for the production of grapes for wine-making. Beneficiaries Those who contravene the current regulations on vineyard plantations, for any of the vineyard areas of their farm, may not be beneficiaries.

Actions supported: - support for the varietal reconversion of the vineyard by grafting, i.e. the change of wine grape variety by grafting and therefore without the possibility of modifying the number of vines in the plot - support to the transformation from gobelet trained vines to trellis trained vines. - support for restructuring a vineyard. The restructuring of the vineyard shall be understood as the operations necessary to substitute one or more viticultural parcels for another vineyard parcel in equivalent areas and that incorporate a varietal improvement and / or an improvement in the cultivation system, in the driving system, in the location of the viticultural plot or in the reduction of the number of plots. In addition to the aid derived from the Eligibility realization of the plantation, grants may be requested for any of the following complementary actions to the plantation: Grubbing up of vines Protection of young vines The trellis system

Actions not supported: a. The normal renovation of the vineyards that have reached the end of their natural life, i.e. the replanting of the same plot with the same variety of vine and according to the same system of driving the vineyard. However, it will not be considered as a nominal renewal if what is intended is to move from a plantation framework without the possibility of mechanization to a plantation framework that allows the use of

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Type of operation n°1 machinery between the rows of vines. b. The areas that have benefited from the support in the last 10 years, except for the change of goblet trained vines to trellis trained vines. Therefore, those parcels that were planted or reconverted under the previous restructuring and reconversion programs will be expressly excluded c. The renewal of the vineyards that have been planted under a concession of new plantations until ten campaigns from that plantation. Therefore, these parcels can not be included, having been planted as a vineyard by a new plantation concession, they wish to be restructured by start-up and plantation, and they will be able, nevertheless, to avail themselves of the aid for the transformation of a glass to a trellis. d. The vineyards whose applicants or whose owners do not have registered all the plots of their farms. e. The operations of daily management of a vineyard.

Area per plot and per winegrower at least 0.5 hectares according to the criteria for editing the vineyard register. However, if the number of plots after the completion of the restructuring and conversion plan is less than 80% of the number of initial plots, the final area of the plot once restructured or reconverted will be at least 0.30 hectares. The maximum limit of the area to be restructured or reconverted by wine grower and year will be 25 hectares. Grapevine variety authorized See Figure 13

Source: Royal decree 597/2016 and Regional Order 2/2015 of January 19, of the Ministry of Agriculture, Livestock and Environment, by which rules are issued for the application and approval of plans for the restructuring and / or reconversion of the vineyard and for the application and processing of the aid in the framework of these plans in the Autonomous Community of La Rioja

2.1.3 Investments in enterprises

All approved applications concerning Investments measure are from the first and second call in 2014 and 2015 and all have been submitted to the competent authorities before January 31, 2015. Since they have covered all the provision for the measure from 2014 to 2018, no other call has been opened.

Table 7: Implementation choices on the investments measure

Type of operation n°1 Capital grant, maximum 50 % of eligible costs for micro and SME, 25% for companies with less than 750 employees and a turnover < 200 million euro; 19% for companies with more than 750 employees and a turnover > 200 million euro.

Type of aid and rate of Maximum expenditure eligible for support 1.500.000 by applicant and minimum 50.000 euro. In the case support of projects that involve also construction, modernization and / or improvement of the bottling line, the total amount of the project can be raised up to a maximum of € 2.500.000.00. Individuals and legal entities holding companies with less than 750 employees or whose turnover is less than 200 million euros, which meet the same production and marketing requirements mentioned in the previous paragraph. In the case of these intermediate companies, the maximum aid intensity will be reduced by half.

The companies that carry out activities of transformation or commercialization of wine products or both Beneficiaries activities simultaneously may be beneficiaries of the investment measure.

Maximum term of financing = 4 years (pluriannual project are eligible) In the case where the total area requested, or the estimated volume of wine exceeds the estimates set by the Ministry of Agriculture Food and Environment referred to in Article 80, priority will be given to applications that involve a greater potential withdrawal of wine, and within them to those that come from exploitations of shared ownership in accordance with Law 35/2011, of October 4.

Selection criteria 5 points Eligibility and selection Characteristics of the applicant: criteria 1.1 Small and medium enterprises : 2 points 1.2 Woman or young farmer: 3 points 1.3 SAT or Cooperative under 150 members: 4 points 1.4 Cooperativa greater than 150 partners: 5 points 1.5 Cooperativa de 1.o grado greater than 250 partners and resulting from a merger processing the last two years prior to the request: 6 points 1.6 Cooperativa host to the Order APA / 180/2008, of January 22: 25 points

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Type of operation n°1 1. Subtotal : 5 points 2. Quality and effectiveness of the project: 5 points 2.1 At least 50% of the cost of the investment is made with own funds 2.2 The applicant belongs to a PDO / PGI or other recognized quality figure 10 points 2.3 Investment project for the transformation and commercialization of the own production of the applicant 5 points 2.4 Creation of net employment with respect to the average of the previous 3 years 2 points 2.5 Level of training and professionalization (incorporation of oenologist or technician equivalent) 3 points 2.6 The applicant has a quality assurance certification (BRC, IFS, ISO 9000) or environmental 30 points 2. Subtotal

3. Characteristics of the projetc 5 points 3.1 The wine maker maintains a contractual link with wine growers. 3 points 3.2 The investment is made in insular territory 5 points 3.3 International implementation and export experience 5 points 3.4 Structure and own technical capacity for the execution of the project 7 points 3.5 The investment involves the transfer of facilities from urban to industrial areas 25 points 3. Subtotal

4. Commercial response capacity: 5 points 4.1 Availability of distribution in the destination market 5 points 4.2 Reach at least 10 percent of export over total billing of 10 points sales during the period of durability of the investment 20 points 4.3 Increase at least 10 percent of the volume of sales in bottled products during the period of durability of the investment 100 points 4. Subtotal Total Total × 1.10 5. Corrective indices (apply to the total): Total × 5.1 If the project includes production, transformation and commercialization 1.20 5.2 if the project is aimed at international marketing

Implementation period 2014-2018

Information regarding the management of the Regional Ministry of Agriculture and Rural Development measure Source: Royal Decree 548/2013, of 19 July, for the application of the 2014-2018 support program measures to the Spanish wine sector

2.1.4 Promotion

Spain hasn’t activated the information operation. Promotion projects on third countries may include the following operations: . Public relations, promotion and advertisement to highlight in particular the advantages of EU products in terms of quality, food safety and respect for the environment.  Activities: Commercial missions, advertising campaigns of diverse nature (TV, radio, press, events, etc.)., promotions at points of sale, web portals for outdoor promotion, reverse trade missions, information offices, press office, product presentations . Participation in fairs and exhibitions of international importance.  Activities: Fairs and international exhibitions, etc., Sectorial or general, for professional and consumers. . Information campaigns, in particular on the EU systems of designation of origin, geographical indications and organic production.

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 Activities: Business meetings.  Conferences, seminars, tastings, tastings, etc. . Studies of new markets, necessary for the search of new commercial outlets.  Activities: Studies and market reports. . Evaluation of the results of promotion and information measures  Activities: Evaluation studies of the results of the promotion measures, audits of execution of measures and expenses of operations Table 8: Implementation choices on the Promotion measure

Type of operation n°1

The financial participation of the Union in the selected programs may not exceed 50% of the eligible costs. Type of aid and rate of In two- or three-year programs, this maximum limit is considered for each year of execution. support The maximum support rate of 50% of the eligible costs will only be granted when the degree of execution of the budget reaches at least 70%.

For each programming period, the programs may have a maximum duration of three years for a specific beneficiary in a third country or region of a third country. However, if the effects of the program justify it, Duration of support it may be extended once for a maximum of two years, or twice for a maximum of one year each extension, upon request.

Wine companies Wine producer organisations, associations of wine producers - including temporary business ones that are Beneficiaries representative of the sector, wine inter-branch organisations Public bodies with legally established competence to develop actions to promote Spanish wines in markets of third countries.

Products eligible: Wine products under PDO or PGI and Varietal wine - The actions and programs will be clearly defined, specifying the third country or countries or regions of the third country or countries to which they are directed, the types of wines included, the actions and activities that are intended to be carried out and the estimated costs of each one of them. - The shares will be distributed in periods of twelve months, which will begin on June 1 of each Eligibility and selection year. criteria - The messages will be based on the intrinsic qualities of the product and must comply with the regulations applicable in the third countries where they are intended to be sold. - In the case of wines that have a geographical indication, the origin of the product should be specified as part of the information and promotion actions or programs. - References to trademarks, where appropriate, may form part of the message. - A collegiate body may establish annual guidelines to promote consistency and effectiveness of the measure on information and promotion campaigns, which shall be regulated by the provisions of this section. Implementation period 2014-2018, with one call a year Source : Royal Decree 597/2016

2.1.5 Innovation

Table 9: Implementation choices on the Innovation measure

In order to improve the commercialization and competitiveness of wine products, support will be given to tangible or Type of aid and intangible investments for the development of new products, procedures and technologies related to the products rate of support described in Annex VII Part II of Reg (EU) 1308/2013 and that have occurred in Spanish territory. - wine companies that, at the time of application, produce or market the products mentioned in Annex VII, Part II of Reg (EU) 1308/2013 organizations of wine producers, recognized in accordance with Article 152 of said Regulation, and the temporary or permanent associations of two or more producers of the products mentioned in Annex VII Part II of the said Regulation. - However, in the case of companies whose activity is only commercialization, at least 80% of their turnover for the last financial year must come from the commercialization of the products of mentioned in Annex VII Part II of the said Beneficiaries Regulation. - In the temporary or permanent associations of two or more producers, a representative of the group will be appointed. The representative of the group must have sufficient powers to be able to fulfill the obligations that correspond to the aforementioned group as beneficiary of the aid, as established in article 11.3 of Law 38/2003, of November 17. The projects may involve the participation of research and development centers.

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The interprofessional organizations may be associated with the projects. Applicants who are in any of the following circumstances may not be beneficiaries of the support:  When in a crisis, as defined in the Guidelines on State aid for rescuing and restructuring non-financial companies in crisis (Communication 2014 / C 249/01, of the Commission, of July 31, 2014).  When they are in the process of requesting the voluntary bankruptcy declaration, have been declared insolvent in any proceeding, be declared in bankruptcy, unless in it has acquired the effectiveness of an agreement, be subject to judicial intervention or have been disqualified under the Law 22/2003, of July 9, without having concluded the period of disqualification set in the sentence of qualification of the contest.  When they do not prove that you are up to date with your tax obligations and with Social Security, as well as your obligations for the reimbursement of subsidies.  When they have received subsidies for the same purpose and object, that could be established by other public administrations or other public or private entities, national or international. Eligible criteria: a) The projects and their underlying shares are clearly defined, investment actions described and the estimated cost are mentioned. b) Guarantees that the costs of the proposed operation do not exceed normal market prices. The expenses eligible for assistance presented with a request for assistance must meet the following criteria of cost moderation: in general, the applicant must provide at least three offers from different suppliers, prior to the provision of the service or delivery of the goods , when the amount of eligible expenditure, excluding VAT or IGIC equals or exceeds 18,000 euros except when, due to their special characteristics, there are not enough market offers on the market. The choice between the bids submitted, which must also be submitted together with the request for payment, will be made according to criteria of efficiency and economy, the election must be expressly justified when the most advantageous economic proposal is not chosen. c) Guarantees that the beneficiaries have access to sufficient technical and financial resources to guarantee the effective execution of the project. The projects for which support is requested will receive tangible or intangible investments, including the transfer of knowledge, for the development of: => New products related to the wine sector or by-products of wine. => New procedures and technologies necessary for the development of wine products. => Other investments in new procedures and technologies that add value at any stage of the supply chain.

Eligible costs will include pilot projects, preparatory actions in the form of development and testing of designs, Eligibility products, processes or technologies, as well as tangible or intangible investments related to them, before the commercial use of the new products, processes or technologies developed.

The following costs would be considered eligible: - Personnel costs, as long as they occur during the preparation, execution, evaluation or monitoring of the subsidized project. These include, among others, the costs of the personnel hired by the beneficiary specifically for the project as well as the costs corresponding to the proportion of the work hours invested in the project by the permanent staff of the beneficiary. - For justifying the personnel costs, the beneficiary must provide supporting documents that show the details of the work actually performed in relation to the project.

Characteristics of the projects The projects must demonstrate that a previously obtained discovery is applied through research and that this improves the products, procedures or technologies used by the applicant or that value is added at any stage of the supply chain. The projects must have clearly defined the final objective, which cannot be altered by modification as established in article 67 and must be fulfilled in order to be entitled to the aid as established in article 70. The innovation projects will be clearly defined, specifying the actions and detailing the expenditure concepts that make up each action and the estimated costs of each of them. Projects may be annual or multi-year, but the resolution of concession may only collect actions to be justified before the competent administration in the EAGGF 2018 exercise. Implementation 2016-2018, with one call a year period Source: Royal Decree 597/2016

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2.2 Effects on the NSP at the level of growers

2.2.1 Information on the implementation of the restructuring and conversion measure

Data on restructured and converted areas with and without PDO/PGI aren’t available in La Rioja. In La Rioja, more than 99% of winegrowers have their vineyard registered under the PDO “Rioja”. Only 0.45% of the vineyard (i.e. 185,2 ha) was registered under PGI “Valles de Sadacia” in 2017. No data is available on the area under vines outside PDO/PGI. It was mentioned by local stakeholders that the wine without PDO/PGI in La Rioja was produced from vineyards registered inside the PDO/PGI but with grapes that weren’t reaching the quality required to produce PDO wine.

According the national statistics of February 2017, almost 99% of the beneficiaries have participated in collective plans. They have also participated in individual plans in the autonomous communities of Andalucía, Baleares, Castilla y León, Madrid, País Vasco and Valencia. In La Rioja, they only participated in collective plan. The number of beneficiaries in La Rioja is 1,019 of winegrowers in 2016, representing 12.6% of the total number of beneficiaries for the same year.

In 2016, La Rioja represents the fourth autonomous Community to use the most budget under the restructuring and conversion measure. This measure worked pretty well in La Rioja, representing 7.7% of the total budget spent in Spain in 2016 under this measure.

Figure 10. Restructuring and reconversion measure in Spain and per Autonomous Communities for the last programming periods (2001-2008; 2009-2013; 2013-2016, two years missing)

Source: Gobierno de la Rioja and FEGA In terms of vineyard cultivated, the area under vines affected by the restructuring/conversion measure represents 1,105 hectares, i.e. 2.5% of the total area under vines dedicated to wine production. Figure 11. Area under vines for wine production in 2017, in hectares

Autonomous Total In production Community

Monocropping Mixed crops

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Autonomous Total In production Community

Dry Irrigated Total Dry Irrigated Total Dry Irrigated vineyards vineyards vineyards vineyards

LA RIOJA 32 768 14 108 46 876 30 810 13 356 44 166 – – Source: Ministry of Agriculture, Agro-industry and Environment (MAPAMA), 6

As highlighted in the table below, the first activity supported under the restructuring/conversion measure was replanting vineyards. The following operations can be supported under the replanting activity: . Grubbing-up old vines . Preparing the land: disinfecting, removing rocks from the soil, terrassing, land levelling . Vines planting . Trellising / Tying-up vines

As highlighted below, in La Rioja, 98.1% of the budget is allocated to replanting activity. To be more precise, 54.1% of the budget spent under the measure was allocated to planting, while 26.4% of the budget was allocated to Trellising/Tying up vines. In the end, 80.5% of the budget in La Rioja was used for planting and trellising.

Area under vines that benefited from restructuring support:

It was explicitly stated by regional authorities that it was impossible to determine the area under vines benefiting from the restructuring measure.

6 http://www.mapama.gob.es/es/estadistica/temas/estadisticas-agrarias/agricultura/superficies-producciones-anuales- cultivos/

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In La Rioja, almost all of the area under vines is eligible for PDO production and follow the PDO specifications. It is only once the grape production is entering the winery/cooperative, that the selection of grapes for PDO / PGI / varietal / non-varietal wine is performed. The restructuring measure is usually used to modernize the crop management system grubbing old gobelet trained vines and planting trellis trained vines.

2.2.2 Information from the literature

The table below shows the executed budget per measure under the National Support Programme, over the 2014-2016 period. Figure 12: NSP executed budget (.000€) 2014-2016 period

From the left to the right: Restructuring and reconversion; Promotion; Investment; By-product distillation; Innovation measures. Source: Annex III, Implementation Report of NSP

According to the NSP implementation report, the area and budget executed have been respectively reduced by 33.36% and 28.85% from 2014 to 2016. During these first three years of the period, the number of beneficiaries of the restructuring and reconversion of vineyards measure has been increasing from 2014 to 2015 and decreasing from 2015 to 2016. It was noted that the number of beneficiaries of restructuring measure per year is greater than for the previous five-year period (2010 and 2011), which had a level of funds executed equivalent to the years 2014 to 2016. Therefore, it was concluded that the objective of maintaining the interest of wine growers to continue in the sector has been met. Finally, it is considered that the objective of increasing the competitiveness and profitability of the vineyard has been fulfilled, since 99% of the surface area executed has been affected by the re-implantation activities (83.15%) or improvement of vineyard management (16.22%). Over the 2014-2016 period, an increase in plantations with varieties apparently more demanded by consumers has been observed: Tempranillo (+52,3), Macabeo (+ 37.17%), and Verdejo (286%) while the percentage of varieties cultivated for their productivity or better adaptation to the environment have been reduced, such as Bobal (-94.5 %) or Airén (-41%).

2.2.3 Synthesis of the interviews

IQ 1.1 To what extent did the restructuring and conversion operations supported by the NSP impact the production potential of vineyards, in terms of quantity? In terms of quality? at the level of the region / of the Member State?

. At regional level,

The Regional public Authority (Gobierno de la Rioja) stated that the restructuring and conversion measure has been almost exclusively used for replanting activities. The beneficiaries used the measure to grub-up old vines and replant new vines on trellis structure in order to mechanize the crop management system. In order to benefit from the measure, the winegrower had to reduce its surface area dedicated to vines in order to

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encourage winegrowers to group their fragmented parcels dedicated to vines. However, this last objective of grouping vineyards was considered as a mistake from the winegrowers’ union’s point of view and had a direct negative impact on the quality of wine produced. Indeed, Winegrowers/wineproducers Union specifically mentioned that the measure did not foster the improvement of the quality of wine produced. On the contrary most of the beneficiaries of the measure used the measure to replant vines in other locations less appropriate to produce good quality wine. For example, it was reported the tendency to grub up vines located on slopes where mechanization is complicated to replant in alluvial plains where modernization of the cropping system and use of irrigation are possible. However, it was stated that the best grapes to produce quality wine are cultivated on the hills / mountains slopes where the vine is subject to stress, and not on alluvial fertile plains. Thus, in a way, the restructuring measure encouraged winegrowers to relocate their parcels in zones of poorer quality for wine grape cultivation but with greater potential in term of quantity produced. According to the winegrowers union, 70% of the total area under vines were of old quality wine in 200 while now 70% of the area under vines are relocated in alluvial plains producing wine of lesser quality. This opinion was shared by the Union representing the small winegrowers/producers in the region. They specifically stated that no budget should be allocated to this kind of measure going against a production of quality and that the budget should on the contrary be allocated to projects to preserve these old grubbed-up vines producing wine grapes of great quality.

IQ 1.2 Did the NSP measures intend to support changes in the vineyard management practices or foster specific practices (i.e. organic agriculture, low mechanised systems, etc.)?

. At regional level

There was a clear intention of public authority to change the cropping management system from goblet trained vines to trellis trained vines in order to modernize the cropping system and be more competitive and foster mechanized activities. There was also an intention of grouping the parcels of vines in order to surface area used by winegrowers, i.e. improve efficiency. It was stated by winegrowers’ union that NSP measures during the programming period 2014-2020 did not encourage to produce organic wine or low mechanised systems. The NSP did not focus on eco-friendly practises. However, it was mentioned that a new Real decree (or regional law?) published this year, in 2018, indicate a change in the selection process of the beneficiaries of the restructuring and investment measure. The criteria of priorization have been changed and new criteria promoting traditional will be introduced in the new programming period 2019-2023. They added that organic agriculture and low mechanised systems are encouraged via the Rural Development Programme and not via the NSP.

IQ 1.3 To what extent did the NSP resulted in changes in the management practices of vineyards? Which practices were introduced/abandoned? Did those changes have an impact at national or regional level (e.g. acting as role model)?

. At regional level As described above, the measure resulted in changes in the management practices of vineyards. According to national statistics on restructuring measure, in La Rioja, 98% of the budget was allocated to replanting activity of and 26% was specifically allocated to structuring the vineyard with trellis system allowing a mechanization of the cropping system. Thus, mechanized harvest was introduced and other mechanized practises could have been performed such as application of phytosanitary product and fertilizers. The restructuring measure encouraged winegrowers to group their parcels with the compulsory requirement of reducing the total surface of vineyard per winegrowers. However, the winegrowers’ union specified that even if the surface area decreased, the production of wine increased due to the relocation of the production in zones where the yield could be easily increased without reaching the PDO threshold thanks to different climate and soil conditions and improvement of crop management system. Moreover, these zones, as stated above, are mainly alluvial lands, where it is possible to implement an irrigation system. Thus, one indirect effect of the measure was the implementation of irrigation system in vineyards leading to a greater use of water resource in vineyards.

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IQ.1.4 Have the NSP measures impacted the costs of production?

The costs of productions gather two types of costs: . Cost of production relating to crop management system

According to the winegrowers union, the costs of production have decreased thanks to the restructuring measure. They stated that all winegrowers benefiting from the measure had seen a reduction of their costs of production of about 2-3%. The mechanized parcels allowed a more effective phytosanitary treatment of the vines. The mechanized harvest allowed to save money.

. Cost of production relating to winemaking

According to the winery owners and cooperatives, the investment measure did not induce a reduction of the production costs. They took the measure as an opportunity to improve their production in term of quality. Expert’s point of view: The restructuring measure encouraged the mechanization of the cropping system, and thus allowed a mechanized harvest and other mechanized practises that led to a reduction in the cost of production.

IQ.1.5 Have the NSP measures resulted in a better adaptation of the vineyards structure and management practices to market demands? E.g. in terms of variety, quality

. At regional level

According to regional authorities, the restructuring measure has been a great success in La Rioja, allowing wine growers to regroup their areas under vine and improve their cropping system. The interviewees stated that a large range of grape variety was supported under the measure so that winegrowers could follow their own specific market strategy. As emphasized by the regional authorities (Regional Ministry of Agriculture), no allochthonous red wine grape variety is supported under the restructuring measure since it was estimated that there was enough potential with the autochthonous red Tempranillo in La Rioja and that Spanish wine growers couldn’t compete with other EU regions specialized in international wine grape varieties such as France.

Furthermore, it was pointed out by the interviewees, that for decades, the vineyards with Tempranillo grape variety have kept increasing; However, it was mentioned a current trend toward white wine grape variety such as Tempranillo Blanco. The interviewees stated that since recently, they prioritized applicants wiling to produce white grape variety.

In terms of grape variety Table 10: grape varieties in vineyard affected by the restructuration and conversion measure

2014 2015 2016 2017

tempranillo 34.4% tempranillo 49% tempranillo 69% tempranillo 80,34% Main varieties used in final viura 27.7% viura 25.8% viura 20% viura 6,22% plantings tempranillo blanco 14.4% tempranillo blanco 16.5% tempranillo blanco 7.4% garnacha 4,515 verdejo 6.7% verdejo 8.7% chardonnay 3.5% tempranillo blanco 3,45 Source: Gobierno de la Rioja

In la Rioja, the predominant grape variety planted is Tempranillo and this variety plays a major role in promoting the region and quality of the wine produced in La Rioja. The strategy implemented in this region is to continue to produce Tempranillo wine while improving the quality of the production. However, the Regional

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authority authorize to plant under the restructuration measure, all of the grape variety authorized in La Rioja7. According to the Decree 4/2017, Annex I, the varieties authorized in La Rioja are the following:

Figure 13. List of the authorized grape varieties to be produced for winemaking in La Rioja

Red White

- Chardonnay, B. - Macabeo, Viura, B. - Moscatel de Alejandría, B. - Moscatel de Grano Menudo, B. - Malvasía Riojana, B. - Albariño, B. - Graciano, T. - Albillo Mayor, Turruntés, B. - Mazuela, Mazuelo, T. - Garnacha Blanca, B. - Pinot Noir, T. - Gewürztraminer, B. - Tempranillo, T. - Hondarrabi Zuri, B. - Garnacha Tinta, T. - Maturana Blanca, B. - Maturana Tinta, T. - Parellada, B. - Monastrell, T. - Riesling, B.

- Sauvignon Blanc, B. - Tempranillo Blanco, B. - Verdejo, B. - Viognier, B. - Xarello, B

Source: Decree 4/2017, Boletin Oficial de la Rioja

Notwithstanding, because the winegrowers aim to produce PDO Rioja, they usually follow the specifications of the PDO Rioja that are more restrictive. Here are the PDO specifications to comply with in term of grape varieties and the condition of wine elaboration in order to be eligible under the PDO according to the type of wine produced8:

Red white Rosé

The list of authorized variety is presented below. One should notice that the grape variety called “Turruntés” (in red in the table), is a white grape variety that can be used to produce PDO Rioja, even if it is forbidden by

7 Orden AGR/21/2018, de 15 de marzo, Boletin Oficial La Rioja, por la que se dictan las bases reguladoras para la solicitud de ayudas de reestructuración y/o reconversión del viñedo del programa de apoyo al sector vitivinícola español 2019-2023 en la Comunidad Autónoma de la Rioja 8 https://es.riojawine.com/es/36-legislacion.html

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the regional law. Thus, it may be authorized in the other Autonomous Community producing PDO Rioja (Basque country, Navarre).

Red White

Viura Sauvignon Blanc Tempranillo Malvasia Garnacha Verdejo Graciano Garnacha Blancha Mazuelo Maturana blanca Maturana Tinta Chardonnay Tempranillo blanco Turruntés

As highlighted above in the table, the PDO list contains less grape varieties than the official regional list of authorized grape varieties to be planted for winemaking. In terms of evolution of wine grape variety planted in la Rioja, the restructuring measure was not a major factor of change in wine grape variety planted but the measure supported operations that led to modernization of the cropping system to increase the quantity of wine produced.

As already mentioned above, in terms of quality The regional authorities stated that the measure was a great success in terms of adapting to market demands. Wine growers union and representatives of independent winegrowers producing wine agree that the restructuration measure led to a decrease in quality of wine produce due to relocation of vineyards in area less interesting for wine grape cultivation.

IQ 1.6 Have the NSP measures had an impact on the income of wine growers? . At regional level

The regional authorities in charge of the NSP management stated that they perfomed a study in order to assess the effect of restructuring measure on the cost of production and the income of winegrowers. It was stated that measuring the effect on the income of winegrowers was very tricky and complicated considering the fact that the income earned by the beneficiaries mainly depend on the selling price of the wine grape production. This selling price is subject to great variation depending on the year, the evolution of market demand, and climate conditions. It was easier to state that the cost of production decreased. The same observation concerning the reduction of cost of production was made by the winegrowers’union

2.2.4 Conclusion of the expert

. Impact of the NSP on the production potential in terms of quantity and quality

The NSP programme and more specifically the restructuring measure helped to increase wine production in term of quantity. The measure encourages the grouping of vine plots and the mechanization of the cultivation system that directly impacts the quantity produced. The relocation was mainly made in fertile lands near water source, and allowed winegrowers to implement irrigation systems that can also increase the quantity of wine produced without reached the threshold imposed by the PDO Rioja. In terms of quality, a vine needs to be in a state of stress in order to produce good quality grapes. This state of stress is favoured by climate condition observed on the hills and mountain areas.

. Impact of the NSP on the vineyard management practices

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The increase in quantity produced is directly related to the change in management practices. As said earlier, the NSP measures indirectly helped to implement irrigation systems in vineyards and encourage mechanized practises by replanting trellis trained vines.

. Impact of the NSP on the competitiveness of wine growers

The NSP and more precisely the restructuring measure help to boost the competitiveness of wine growers via the reduction of costs of production and the possibility to plant grape varieties internationally renowned. Furthermore, the restructuring measure let the possibility to wine growers to plant other grape varieties that they may find more suitable in the location of their vineyards or according to their clients’ demands.

2.3 Effects of the NSP at the level of producers and products

2.3.1 Effects on the competitiveness key factors of wine producers

2.3.1.1 Synthesis of the interviews IQ 1.7 Could you please explain what are the current issues encountered by the wine sector in your Member States /region and describe the strategies implemented by the wine producers to address them?

. At regional level

It was mentioned by a Group of Wine Companies of Rioja that one of the main challenge faced by wine producers in La Rioja was to better promote their wine in third countries even if the wine from La Rioja was considered the most famous Spanish wine in the world. Indeed, the main challenge is to compete with the famous European wines such as French wines but also wines from the “new world”. A study performed by the Inter-profession of wine of La Rioja highlighted the fact that people that do know La Rioja wines tend to buy and appreciate the wine. Thus, the Companies’group stated that once a consumer know their wine, he buys it. They stated that there is still room for improvement in making better known their products across the world. The promotion measure was considered of great importance to help achieve this goal. Most of the wineries and cooperatives mentioned the need to increase their sales in third countries but also inside the EU. They reported that the support for commercialization between Member States was missing in the NSP.

From some winegrowers/wine producers’ point of view, the goal was to keep a quality of wine that tends to disappear with the relocation of the parcels and the restrictive list of grape varieties eligible for restructuring measure. Indeed, some winegrowers mentioned the importance of keeping some very old vines that aren’t registered in the list of authorized grape variety because of their unknown genetic pool not registered at national level. These old vines are producing great quality of wine.

IQ 1.8 Did the actions undertaken by the wine producers with the support of the NSP contribute to improve the competitiveness key factors of EU wine products? Please explain how.  At regional level

Better management of the costs At the level of wine producer, according to wineries and cooperatives, the NSP did not have a significant impact on the costs of production, but had an impact on the turnover of the company. In terms of marketing costs, the NSP contributed to the increase their promotion activities across the world. Thus, the NSP was estimated essential in the increase of the company’s turnover. One winery mentioned the investment measure as a tool to improve efficiency in the use of energy. They decided to invest in solar panels and innovative practices in order to reduce the costs relating to energy use.

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Organisational structure of the supply chain: . At national level According to national authorities and national representatives of cooperatives, the structure of the sector has been slightly influenced by the NSP measures. The better structuring of cooperatives is a challenge in Spain and is supported at national level9. In Spain the RDP prioritizes cooperatives (collective projects) but there is a lack of coherence between Article 50 of the CMO regulation and the rules of the EAFRD in collective projects when dealing with cooperatives: - CMO: the support rate for large companies, (among them are the cooperatives) equals half of the support rate for small and medium size companies. In Spain, these large companies are often large grouping of cooperatives not only specialized in the wine sector. These large companies shouldn’t be considered as one company but a gathering of several smaller companies. - While in the EAFDR, the support rate for collective projects remains the same regardless of the size of the applicant’s structure: cooperative or wineries.

Thus, it slows down the structuring of the sector.

The NSP allowed some cooperatives and wineries to increase their surface dedicated for stock, areas for maturing the wine in wooden barrels and to invest in bottling chain. These different investments allowed the wineries and cooperatives to become more important in the production chain, concentrating more of the added value of the production. The importance of their role in the supply chain increased and it allowed them to have greater bargaining power with the distributors.

Technical know-how and innovation capacity/ promotional strategy The NSP measures, and more precisely the investment measure allowed the companies and cooperatives to improve wine making techniques and ageing practises. They invested in thermoregulated machineries, wooden barrels, machineries for selecting the best wine grapes at the entrance of the winery/cooperative. One winery mentioned the investment in solar panels to produce green energy powering the winery. The use of green energy and innovative practices support the brand image of the winery and helped boost tourist activity. The NSP also contributed to increase the production of wine in bottles supporting the image of a winery. It is widely agreed by the wineries and cooperatives that wine in bottle benefit from a better image than bulk wine or bag in box wine (even if nowadays, the quality of wine in bag In box is being duly recognised).

IQ 1.9 What were the impact of the NSP measures on your supplies, in terms of quality, volume and origin? . Wine industries/wine growers cooperatives/wineries

All cooperatives and wineries reported that the NSP plays an essential role on the quality of their supplies. The quantity of their supply hasn’t changed much. They stated that the quantity depended mainly of the area under vines producing wine grapes for their company. The investment measure allowed the companies to improve the quality of the wine produced allowing investments in wooden barrels and area to age wine. It allowed companies to increase their production of bottled wine compared to their production sold as bulk wine. The origin of the wine grapes used for the production of their wines remained unchanged. Thanks to the investment made under the NSP, the companies could however, improve the selection the wine grape at the entrance of the winery/ cooperative by better differentiating the grapes quality via a specialised machine.

9 Law 13-2013 establishes promotion policies of integration of cooperatives. It aims at the expansion and integration of agri-food cooperatives to have a greater weight in exports.

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IQ 1.10 Did the actions undertaken by the wine producers with the support of the NSP contribute to changes as regard the organisation and coordination of the operators in the supply chain? Please explain how.

The NSP had little impact on the coordination and organisation of the operators in the supply chain in La Rioja. As stated by the regional authorities, the wine sector in La Rioja is very well organized since before the 21st century. As stated in the IQ 1.8, the NSP has strengthen the power of winemakers (wineries and cooperatives) thanks to the investment and promotion measure. The winegrowers usually follow the advises of the cooperatives and wineries they work for.

2.3.2 Effects on the capacity of operators to adapt to customers’ expectations

2.3.2.1 Synthesis of the interviews IQ 1.11 Did the NSP measures contribute to the capacity of operators to adapt to customers’ expectations, using innovative integrated approach?

The regional authorities explicitly stated that All the companies interviewed (wineries and cooperatives) stated that the NSP and especially the investment measure has greatly helped them to adapt to customers’ expectation. Indeed, the investment measure allowed them to diversify more their production, increase the range of their products developing more aged wines of better quality and bottled wines instead of bulk wine. No specific innovative integrated approach was specifically mentioned during the interviews. One winery mentioned the investment in solar panels to use green energy to power the winery. While developing eco- friendly practises, they also improve their brand image. They hope the practises will help to develop tourism in the region.

IQ 1.12 What types of supported investment were made to adapt to the evolving demand?

According to the Ministry, the micro-companies, little and medium size companies represented 83.00% of the beneficiaries of the investment measure in 2017, while large companies represented 17% of the beneficiaries. The operations supported under the investment measure were divided into four categories: - Elaboration of wine products: operations relating to the elaboration process, from the reception of the grape until the storage of the final product, including the computer systems for the control of the productive processes. - Control of the quality: any operation carried out in the process of quality control of the products, from the sampling in the reception of the grapes in the winery, the controls carried out during the process of the elaboration, the assurance of the traceability, the quality systems or the implementation of food quality standards. - Marketing: any operation carried out in the countries of the EU, including Spain: o direct points of sale in the winery, including exhibition and tasting rooms, but physically separated from the processing facilities. o points of sale outside the warehouse, warehouses, logistics centers and commercial offices o equipment necessary for the exhibition and / or sale o development of marketing networks o hardware, software, web platforms / e-commerce, for the adoption of information and communication technologies (ICT) and electronic commerce. - General operations : the operations that improve the operational structure of the administrative management systems, the organization and control of the company, as well as the development of the information and communication networks. In La Rioja, 96.65% of the budget was spent on elaboration of wine products. More precisely, 78% of the budget was spent on the extension of existing buildings and 21% on improvement of the elaboration process such as new modern machineries.

According to the cooperatives and winegrowers, the operations performed in order to adapt to market demand are the following :

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- Investment in building to stock wine barrels in order to develop the production of aged wines, - investment in air conditioning, - investment in barrels. - Investment In modern machines, to improve the selection of wine grapes for winemaking - Investment in thermoregulated machinery to better control the quality of wine along the production chain - Investment in bottling chain to improve the quantity of bottle wine available - Investment in new waterproof tank

IQ 1.13 Did the promotion measure was used to support studies of new markets to identify consumers’ preferences? . At national level According to national representatives of wine sector, the promotion measure was not much used to support studies of new markets to identify consumers’ preferences. They have been marginally financed, and mainly the first year of implementation the programming period 2014-2018.

. At regional level

According to cooperatives and wine producers, the promotion measure was not much used to support studies of new markets to identify consumers’ preferences. According to wine producers’ most important (in terms of regional representativeness of wine producers) in la Rioja mentioned a study financed by the wine interbranch from La Rioja in order to analyse the reputation of La Rioja’s wine in terms of consumers’ awareness of the region’s production of wine, and the willingness of consumers to buy wine from the region. According to all wineries and cooperatives interviewed, the promotion measure was mainly used to perform: - Trade missions - Exhibitions - Networking with importers

None of the interviewees mentioned studies supported via the promotion measure to help identify consumers’ preferences.

2.3.3 Effects of other factors on the competiveness and overall performance of wine producers

2.3.3.1 Synthesis of the interviews IQ 1.14 How did the market shares evolved for your major wine products? on intra and extra EU markets? What are the main factors explaining these changes?

The major wine products from la Rioja is almost exclusively the Tempranillo red still wine. According to regional authorities, the exports of wine from La Rioja to intra and extra EU markets increased by 1.4% in term of value but decreased by 3% in terms of volume. The average price raised by 4.5% to reach 3.38€ per liter. The decrease in volume of exported wine from La Rioja, is mainly explained by the observed decreased of conditioned wine without any mention of indication, even if the wines with a mention of grape variety and bulk wine without any mention contributed to the decrease of exported volume as well. Conditioned PDO wines represent the first type of product exported from La Rioja, reaching 73.4 million of liters in 2017 and 286 million of euros, i.e. 88% of total exported value and 76.5% of total exported volume. La Rioja exported in absolute terms 2.9 million of liters less and 4.3 million of euros more compared to 2016, with an increase in average price of 14 cents. Inside this category, red wines and rosé wines are the leader of the exports in terms of value, gathering 93% of the total traded wine from La Rioja, with an increase of 0.7% in value and 0.2% in volume, leading to a decrease of the average price by 0.5%. Exported white wine remains behind even if it was observed a much higher increase in terms of value compared to red wines, with an increase of 17.4% in value and 0.5% in volume, which increases the average price to 3.77€ per liter.

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After conditioned PDO wines, conditioned PGI wines that increased in value by 6.5% reaching 12.8 million of euros and by 0.4% in volume reaching 5.6 million of liters, with an average price of 2.30€/liter (+6.1%) After PDO and PGI conditioned wines, the third most important type of wine exported is conditioned wine without any mention, with a decrease in exports in 2017 by 15.6% in value totalling 8 million of euros and 20.5% in volume totalling 7.7 million of liters leading to 6.2% increase of the average price, reaching 1.03€ per liter.

Follows the conditioned wine with mention of grape varieties, with a considerable decreased in volume exported (-37.7%) totalling 1.2 million of liters and in value as well (-25.1%) totalling 2.4 million of euros.

In million of € In million of Average price Market Ranking in (evolution Market share liters (evolution €/l (evolution Type of wine share in exports compared to in value compared to compared to volume 2016) 2016) 2016)

Conditioned PDO 1 286 92.5% 73.4 83.5% wine

Conditioned PGI 2 12.8 (+6.5%) 4.1% 5.6 (+0.4%) 6.4% 2.30 (+6.1%) wine

Conditioned wine 3 without any 8 (-15.6%) 2.6% 7.7 (-20.5%) 8.8% 1.03 (+6.2%) mention

Conditioned wine 4 with mention of 2.4 (-25.1%) 0.8% 1.2 (-37.7%) 1.4% 2.016 (+20.2%) grape varieties

TOTAL (+1.4%) (-3%) 3.38 (+4.5%)

According to local interbranch organization, the increase in wine exports from La Rioja comes mainly from the fact that they enter new markets with PDO wines with greater added value. As mentioned by regional authorities, La Rioja focus on selling PDO wines with high added value, while the other regions of Spain export much more bulk wine with little added value. The average price of the wine from La Rioja exported is three time more than the national average price of exported wine. Considering the fact that national consumption is very low in Spain, all stakeholders put the emphasis on the need to export wine in intra and extra EU markets. To do so, it is compulsory to advertise on their quality wine products. The main objective of the interbranch organization is to promote the best quality wine abroad in order to consolidate markets and to enter in new markets.

IQ 1.15 What are the other factors that could have had an impact on the competitiveness. product quality and market orientation of the EU wine sector (e.g. evolving demand, increased competition, climate change, etc.)?

The interbranch organization together with the PDO Managing organization mentioned a national study self- financed by the PDO managing organization, highlighting the fact that wine consumers who know La Rioja’s wine tend to buy it. Thus, other factors that may have influenced the increase in wine exports and the entrance of wine from La Rioja in new market is promotion campaigns in Member States and third countries to advertise on their products. The promotion measure was considered by all interviewees of importance in the evolution of exports of wines. Thanks to advertisements, the demand for this kind of wine increase. The selling price of the wine is one of the most important factor of trades. Indeed, the wine from La Rioja is less expensive than some French and Italian famous wines. Thus, once the quality of the product has been demonstrated, the consumer is very much interested in the wine from La Rioja which is of good quality with a much affordable price compared to other famous EU wines.

2.3.4 Conclusion of the expert on the effects of NSP measures on the competitiveness and overall performance of wine producers

The NSP measures had a great impact on the competitiveness and overall performance of wine producers. When the effect of each measure is analysed, we realize that the restructuration measure allowed

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winegrowers to level-up in terms of internationally acknowledge wine grape varieties planted and modernization of their cropping system. The investment measure allowed wine-producers to improve the wine elaboration chain, and to increase the total area dedicated to wine production and to age wine. All these investments allow stakeholders to better control the characteristics and the aging of the wine produced. All these factors are as much arguments to sell the wines and lead to greater competition with international acknowledge quality wines sold around the world. All the stakeholders stated that the cost of production has not been reduced and it was not the objective of applying for support. They mentioned that the added value of their wine increased. The promotion measure helped the wine producers/ wholesalers to promote their wine in third countries. The effect of promotion missions is not easy to determine knowing that to start trading with third countries takes several years. However, the promotion measure, when utilized adequately by the beneficiaries can only help/support advertisement of their wines and help to increase trades and turnover. To resume, the NSP measures helped stakeholders to adapt to consumers demand, improve the elaboration of wine and its quality and increase advertisements around their products. These factors are major ones to boost competitiveness and overall performance of wine producers.

2.4 Effects of the promotion measure

2.4.1 Effects of the promotion measure on the recovery/capture of foreign markets

2.4.1.1 Evolution of the market shares of national wines on the main foreign markets

The Spanish Observatory of the Wine Market performed a study on the evolution of wine consumption in the world and the positioning of “Rioja” PDO wine on international markets. The evolution of export of total Spanish wines PDO wines, and “Rioja” PDO wine has been studied. The following figure highlights the evolution of total exports value over the 2010-2017 period, and the export value of PDO wines. Figure 14: Evolution of export wine in Value

Source: Observatorio Español del Mercado del Vino (OeMV) DOP envasado = conditioned PDO

One can observe that the exports of Spanish wine has been steadily increasing since 2010, for all wine categories and for PDO conditioned wine as well. One can notice that PDO conditioned wine represent a considerable part of the exported value of Spanish wine, totaling 44.8% in 2017.

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The Figure 15 below shows the part of “Rioja” PDO wine in the total PDO wine exported from Spain, in value. As highlighted in the graph, “Rioja” PDO wine represents a considerable part of the total exported PDO Spanish wine in value, totaling 40% of exported PDO wine value in 2017. Thus, one can deduce from the Figure 14 and Figure 15 that the “Rioja” PDO wine plays a major role in the increase of export value and is one of the most important region in Spain. However, it is important to notice that since 2010, the share of “Rioja” PDO wine in the global value of exported PDO wine has slightly decreased. Indeed, the export value of total PDO wines from Spain has increased faster than export value of “Rioja” PDO wines.

Figure 15: Position of La Rioja’s wine value compared to national wine value

Source: Observatorio Español del Mercado del Vino (OeMV)

The following Figure 16 shows total volume of exported wine from Spain varying according to the years while the exported volume of PDO wine in general is experiencing slow, but steady increase.

Figure 16: Part of PDO wine volume exported compared to total exported wine volume

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Source: Observatorio Español del Mercado del Vino (OeMV)

One could deduce from the results of the Figure 16 that clients of PDO wine are regular and loyal clients. Moreover, One can also observe from the following Figure 17 that exported volume of “Rioja” PDO wine is increasing slowlier than the total exported volume of PDO wine from Spain. The part of “Rioja” PDO wine in the total exported volume as slightly decreased (by 0.8%) since 2010. When comparing this figure with the Figure 15, it is observed a faster increase in volume and value of exports of PDO wines in Spain compared to only “Rioja” PDO wines. One could conclude that the competition within Spain has become greater in the last years with more PDO wines from other regions than La Rioja, being exported on international markets.

Figure 17: Position of La Rioja’s wine volume compared to national wine volume

Source: Observatorio Español del Mercado del Vino (OeMV)

2.4.1.2 Information collected in the implementation reports

The promotion measure in third countries is very appreciated and is considered essential. The measure has been used at a particularly important moment of necessary internationalization of Spanish wine. Operators showed high interest in the measure. Within this measure, different actions have been performed to a different extent according to the type of beneficiaries, the size of the company, their experience, their presence in the market and their objectives.

Generally speaking, for collective beneficiaries, the predominant actions have been those related to communication and product presentations. To a lesser extent, reverse missions have also been considered as important operations to support private brands and small-size companies with less experience.

For companies, the most frequent operations performed under the measure have been trade missions and product presentations, both in small-exhibitions and in outlets, i.e. operations involving distributors / importers, followed by participation in exhibitions/shows, trade missions and, to a much lesser extent, general communication and advertisement. A small part of the budget was used for acquisition of relevant market information and for support for evaluating the effect of the measure itself.

The analysis showed that the most used operation depends on the type of company, its level of marketing experience, its relationship with the distributor and its size. All these factors greatly influence the choice of the consumer segment aimed by a company. Companies with high volumes generally focused on distribution operations and on popular segments while the niche companies focus on segments of consumers interested in high quality products.

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The following trends have been identified: . Participation in exhibitions is extremely important in the initial phases of exports, i.e. when the exporter is willing to communicate on its wine products for the first time. However, the more experience the exporter gets, the less sense there is in participating in exhibitions. Thus, the exhibitions are slowly replaced by more direct actions with the importers. . In almost all cases, great importance is given to reverse trade missions which bring people to know you, to see the winery, to understand what is behind a brand, to understand the seriousness of the export effort that is being made and, most especially, to understand the culture of wine in a given area. Clients tend to buy the wine for its intrinsic quality as a product and also for the history that surrounds it. These supported business trips allow exporters to teach professionals, importers and consumers, the value of the wine culture in their geographical zone and the origin of the product. It is considered an essential task that will eventually pay in the long run. Sometimes these reverse missions can be associated with awards or incentives. In the end, in addition to the trip and the visit itself, the reverse mission could become an extraordinary brand recognition formula. . In markets such as the United States and Canada, for its very special characteristics, promotion operations in outlets are essential. This way, the promotion operations reach the final customer and that is why the brand becomes relevant, improves the producer’s turnover and allow its brand to stand out from the other brands in the importer's portfolio. . In Asian countries it is perhaps where more innovative operations are performed, with actions also aimed at reaching the final consumer, both popular and with very high standings, for which imaginative actions are required, including strong activity in social networks, contests or massive presentations.

Evaluation of effectiveness of the Promotion measure: As stated in the National Support Program Implementation report, the evaluation of the measure is more complex than usual. Quantitative and objective criteria are sought to define whether the support meets its objectives and, among them, the evolution of sales in the markets where it is applied. But the sales and the corresponding market share do not react immediately or directly to the promotional activities that are carried out. In addition, sales and market share may be affected by many other factors different from such activities, such as the evolution of exchange rates, consumption in destination, the conditions of competition, changes in legislation and particularly in taxation or barriers to entry. It is commonly agreed that promotional activities are an essential element to boost marketing and that it has clear effects in the medium term that benefit the whole sector, but it is not easy to assess the immediate effects of it.

2.4.2 Effects of the promotion measure on the reputation of EU wines

2.4.2.1 Synthesis of the interviews IQ 3.1 What are the EU wine products benefiting from the best reputation abroad? Please specify: o Their origin (France/Italy/Spain/etc.) o Their category (red/white/sparkling/etc.) o Their quality (PDO/PGI/wine variety)

. At regional level, The most important group of wine companies mentioned that the EU wine products benefiting from a reputation abroad were mainly the wines coming from France and Italy. More specifically, when analysing the competitiveness of the wine from La Rioja, the following regions were mentioned: - Burgundy (France) - Bordeaux (France) - Loire Valley (France) - Tuscany (Italy) - Veneto (Italy) - Piemonte (Italy)

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The wine coming from the above-mentioned regions are famous for their PDO red wines. However, their maybe more EU regions benefiting from a great reputation abroad and that were not mentioned during interviews. One should keep in mind that in la Rioja the “flagship” product is the PDO red wine produced with Tempranillo. Thus, they tend to compare the wine from La Rioja to other still red wines and may forget to talk about other category of wine well known such as sparkling wines / white wines etc.

IQ 3.2 Did the promotion measure contribute to strengthen the reputation of the national wines?  At national level,

The Spanish Wine Federation stated that it is complicated to measure the effect of the promotion measure on the reputation of the national wines since multi factors can have a considerable impact on a wine reputation. The national federation of agri-food cooperatives. stated that the promotion measure was very important to boost reputation of Spanish wine and especially for intermediate wine cooperatives that wouldn’t have been able to enter a market without this measure.

. At regional level,

While it is stated at EU level, that promotion measure can be used for promoting PDO/PGI wines and wines with mention of grape variety and/or vintage year, the promotion measure benefited exclusively to PDO “Rioja” wine in the Autonomous Community of La Rioja. According to the regional authorities, (Gobierno de la Rioja), the number of beneficiaries and the budget allocated to the measure kept increasing since the beginning of the programming of the promotion measure reaching an average number of 78 applicants per year during the last programming period 2014-2018 with an average budget allocated of 6,311,388.48 € per year. Hence, one could infer that the beneficiaries see an advantage to apply for the promotion measure. While all operations supported under the promotion measure aim to strengthen the reputation of the wine in third countries, the beneficiaries see the opportunity to strengthen the reputation of their wine abroad. However, it was mentioned by regional authorities the administrative burden relating to the management of support under the promotion measure. This statement was supported in Castilla La Mancha, where regional authorities do not want the stakeholders to apply under the measure. However, they are not aiming at influencing their choices. According to wineries and cooperatives, the promotion measure has contributed to strengthen the reputation of their wines even if it very much time consuming to work on the reputation of wine products in third countries.

IQ 3.3 Apart from the NSP, were there any other factors that could have impacted the reputation of national wine products abroad? Generally speaking, the history of regions and their production of wine product have great impact on the current reputation of a wine. In Castilla La Mancha, the stakeholders struggle to make people understand that the quality of the wine produced in the region has evolved and is of better quality now. Same observation was reported in Languedoc Roussillon in south of France. Hence, the importance of promotion missions to change the image of the region.

 At national level, The Spanish Wine Federation stated that the multilateral trade agreements have great impact on the level of wine sold in the import market, and thus can play a role in the reputation of the wine exported. The importance of comercial agreements was also mentioned at regional level by a notorious group of wine companies. Thanks to the current trade agreements Spain has with China and Chile, higher amounts of Spanish wine is being sold in these countries benefiting to the Spanish wine sector.

. At regional level The biggest group of wine companies from La Rioja mentioned that the price of the wine product has great impact on the trades and the sales. It was mentioned by other stakeholders that some countries, such as China,

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do not pay attention to cheap wine and only purchase expensive wine. For many clients from China, the price is very closely related to the quality of the product. An expensive wine is of good quality. It is hard to make them understand that some wines less expensive could be as good as expensive renowned wine.

It was mentioned by all interviewees that the restrictive specifications related to the PDO Rioja specifications are restrictive in order to stand out from other wines. Thus, the way the wine is elaborated was mentioned as a main factor impacting the reputation of wine products. If as much stakeholders are producing under the PDO Rioja, it is because they are willing to follow the restrictive requirements and understand that they will sell better with the PDO than without it.

2.4.3 Effects of the promotion measure on wine companies’ income

2.4.3.1 Synthesis of the interviews IQ 3.4 Are there spill-over effects of the promotion support on wine producers’ income? . At regional level According to the regional authorities, as mentioned before, the exports of wine products in La Rioja increased in value over the years. Same observation was made for Spanish wine in general. Many wineries and cooperatives stated that they were beneficiating from the promotion measure and that the exports have been increasing in value over the years. That’s why many of the stakeholders interviewed stated that the promotion support may have had an indirect impact on the turnover of the company but no evidence of direct effect on the measure.

An indirect effect mentioned by some wineries and cooperatives was the increase of oeno-tourism is the region thanks to promotion activities that supported reverse trade missions. These reverse trade missions consist of clients coming to the producing region to visit / taste / conclude contracts with wineries / cooperatives. These reverse trade missions may have had an impact on the increase of oeno-tourism in the region and may have an indirect impact on the wine producers’ income. IQ 3.5 Were there any other factors that could have impacted the wine producers’ income? Some wineries and cooperatives mentioned an increase of oeno-tourism in the last years. The promotion measure may have played a role in this increase via the reverse trade missions supported. This increase of oeno-tourism may directly impact the wine producers’ income. Interviewees, from regional authorities to beneficiaries from the NSP stated that the investments in the elaboration of wine via the investment measure may have positively impacted the quality of the wine produced and the added value of products sold. Moreover, multilateral/bilateral partnership with third countries were mentioned by the local group of wine companies as a direct factor influencing the level of trades and thus impacting the wine producers’ income. The fluctuation in the value of foreign currency has also an influence on the quantity of wine traded and may impact the wine producers’ income.

2.4.4 Additional benefits or negative effects in third countries generated by the support for promotion

2.4.4.1 Synthesis of the interviews IQ 3.6 Are there any additional benefits or negative effects arising from the promotion operations implemented in third countries?

. At regional level,

The administrative workload relating to supporting documents to prove the eligibility of the operations performed under the measure was considered excessive by the beneficiaries and by regional authorities. The negative effect is that only large size companies with a large task force could dedicate the necessary time to apply and justify the operations under this measure while little companies will give-up. This observation has

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been made by winegrowers/wine producers union and by the Association representing little wineries and defending the interests of the family business model. The negative effect would be that only large companies size benefit from the measure and the promotion measure would boost exports from these companies already benefiting from a network of importers in third countries while little companies struggle to export their products and make a living out of the wine activity. No additional benefits or negative effects arising from the promotion operations implemented in third countries were mentioned during the interviews.

2.4.5 Conclusion of the expert on the effects of the promotion measure

There is more and more demand from local stakeholders from La Rioja for subvention under the promotion measure. The measure allowed wineries and cooperatives to start business in foreign countries. The measure helped to promote the regional wine and the promotion measure allowed people to be aware of the region. It is important to specify that some wineries stated that, because of high requirements in terms of justifying documents for operations approval, the wineries orientated the trades toward markets where these documents where easier to collect and some wineries decided not to use the promotion measure for some markets such as Norway and the Russian Federation where it was complicated to gather all the necessary supporting documents.

The promotion measure is considered as of importance to the regional economy. Currently, the promotion measure is benefiting to large wine companies and cooperatives while the support could have greater effect on little wineries. This observation is based on two observations related to the design of the measure: - Administrative burden All the wineries and cooperatives that benefited from the measure stated that it helped to boost their exports in third countries. However, from their point of view, the promotion measure represented too much burden in terms of administrative work. In these wineries there is, generally, at least one person dedicating his time on the measure, gathering all the necessary supporting documents and writing activity reports to receive the support from the measure. The little wineries cannot afford to spend too much time on the paperwork. - System implemented for distribution of the support under the measure The system of distribution of the support under the promotion measure is a pro-rata based system: the applicants receive support proportionally to the amount requested. However, it was pointed out that the pro- rata based system is not adequate: some wineries and cooperatives will receive much more than others and as a result, the budget is allocated to few beneficiaries compared to the number of applicants.

The promotion measure had great effects but the design of the measure could be improved, via better targeting the beneficiaries and better selecting the operations eligible for support.

Limits: The maximum amount of aid per beneficiary may not exceed 5% of the budget allocated to the measure in the financial statement of the support program for the corresponding year.

2.5 Effects of the information measure

The information measure has not been opened in Spain for the following reasons: . The Information Measure does not allow the participation of private companies as beneficiaries of the measure. . The actions can not be oriented to commercial brands and have limitations regarding the mentions to the origin of the product. Programs can only deal with responsible consumption and information on PDOs / PGIs. . Its inclusion would mean a reduction of funds from the Promotion Measure in third countries, of greater interest to the sector. . This type of action can be supported through the horizontal promotion regulation (R (EU) 1144/2014) or through the Rural Development Programs.

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. There are other types of organizations such as the Spanish Wine Interprofessional Organization and the Spanish Wine Federation, among others, that carry out this information work.

2.6 Efficiency of the management of the NSP

2.6.1 Achievement of the technical targets of the NSP

Table 11: Rate of achievement of the foreseen expenditures per measures total cumulated 2014- 2014 2015 2016 2017 2017 compared to programmed 2014-2018

Promotion 78.8% 100.8% 99.3% 83.2% 98.2%

Restructuring & 93.7% 100.3% 103.3% 106.7% 100,5% conversion Investment 110.1% 103.5% 97.1% 91.5% 97.8%

By product 95.6% 97.2% 98.7% 99.7% 112.6% distillation Innovation 29.9% 35.6% 34.3% Source: DG Agri, March 2018

The overall budget executed was very close to the expenditure, on each year of the implementation of the programme. The flexibility in the allocation of the expenditure between the measures help the management authorities to achieve the planned expenditure and to reach these rates of achievements. Only the Innovation measure present low rate of achievement. Only 5 beneficiaries have benefited from the support, approved in 2015 and executed in 2016 and 2017. In 2016 and 2017, none of the project presented were eligible.

According to the authorities in charge of the NSP management, what are the reasons of the achievement rates displayed in this table (Answers to IT n°2.1)? - if the rate of achievement is equal or close to the objective, how did the national authorities manage to reach the target?

Regarding the restructuration and conversion measure: The national managing authorities mentioned that possible reallocation of the budget between Autonomous Communities was possible. Thus, Autonomous Communities that did not spend the previsionnal budget they received under the measure is redistributed to Autonomous Communities in need. Many Autonomous Communities decided to choose a pro-rata system to grant beneficiaries a part of the budget allocated to the Autonomous Community. For these Autonomous Communities, it is thus possible to grant more support to applicants. Regarding the investment measure: the programmed budget is distributed based on a pro-rata system as well (The selection of applicants according to prioritizing criteria resulted in the fact that very few applicants were rejected. The selection wasn’t restrictive enough).

2.6.2 Selectiveness of the management procedures

Table 12: Main criteria/procedure(s) ensuring the relevance of the selected applications

Priority criteria: a) Programmes submitted by new beneficiaries that have not previously received any support: 25 points. b) Programmes submitted by beneficiaries that have previously been given support and are targeting a new third country or new third-country markets: 20 points Promotion c) Priority of access to markets identified as priorities: up to a maximum of 15 points d) Scope and coverage of the programmes: up to a maximum of 15 points e) Enhancing the presence of those beneficiaries that are producers (wineries) compared to those that are merely sellers: 10 points f) Cross-sector policies: 5 points g) Regional priorities: up to a maximum of 10 points

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Selection procedure10: - When the total cost of the selected applications does not exceed the budget limit initially assigned to this measure: 1. A list of programmes will be selected containing only those that exceed a minimum threshold score (which will first have been established) for the financial.

- When the total cost of the selected applications exceeds the budget limit initially assigned to this measure, there are a number of available options: 1. The list of programmes can be selected in score order until the maximum financial limit for the measure is reached, or

2. The list of programmes can be selected by choosing all those that reach a minimum budget threshold for each financial year, until the financial limit for the measure is reached, or

3. The list of programmes is selected by choosing all those that exceed the minimum score proposed for each financial year (this threshold will also need to be proposed), with a prorata system being applied until the financing budget for the measure is used up.

In the case of a deadlock, priority will be given in the first instance to programmes from new beneficiaries. If this deadlock situation continues, priority will then be given to programmes targeting new countries or new third-country markets, and if the situation persists at that point, priority will be given to those programmes with the highest score in terms of scope.

According to the NSP The plans must be collective and they must be implemented within the context of an agreement concluded by the participating vine-growers. The Autonomous Communities may accept individual plans where the specific circumstances require this. Minimum area to be covered: The total area restructured or converted under the vineyard restructuring and conversion plan must be at least 10 hectares for collective plans and 0.5 hectares for individual plans. The Autonomous Communities may establish greater areas. Nevertheless, the Autonomous Communities may set lower limits where the average vineyard parcel size in a given Autonomous Community is less than 0.2 hectares. The minimum size of a parcel, once restructured or converted, will be 0.5 hectares. The CC.AA may set a lower limit. The maximum area that can be approved will be 25 hectares per wine-grower and per year. Beneficiaries may request modifications to the operations initially approved, provided that the pre-payment on-the-spot checks have not yet taken place. All modifications must be authorised by the Autonomous Community. Requests for modification must be duly justified At regional level: According to regional law in force since 2015 (programming period 2014-2018)11 When establishing priorities in the approval of the plans, the following order will be followed: Restructuring 1) Elimination of individual plans & conversion 2) Elimination of the complementary action of protecting young plants in all approved plans. 3) Removal of the trellis transformation measure in all approved plans 4) Elimination of the varietal reconversion measure by reinjection in all approved plans. 5) Removal of the complementary action of espalier in all approved plans. 6) Adjustment of the percentages of payment of the rest of actions or modules. 7) Elimination of farmers not included as young people or professional farmers.

Selection procedure: Where the total value of the applications and eligible operations exceeds the available budget for new applications for the financial year concerned, the Autonomous Communities may, on the basis of Article 23(3) of Commission Implementing Regulation (EU) 2016/1150, select the applications by decreasing order of ranking until the available budget has been exhausted.

Alternatively, they may set a threshold with a minimum score and select all the applications achieving that score. In this case, if the total value of the eligible applications exceeds the available budget, the Autonomous Communities may apply proportional payments to those applications.

10 Real Decreto 597/2016, de 5 de diciembre, para la aplicación de las medidas del programa de apoyo 2014-2018 al sector vitivinícola. 11 Boletín Oficial de La Rioja, Orden 2/2015

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Eligible costs: The aid for these eligible actions will be paid on the basis of supporting documents submitted by the beneficiaries and the establishment of the maximum eligible amounts for actions, and thus the aid granted will be based on the lower of the two amounts - the amount submitted by the beneficiary or the maximum eligible amount.

Pro rate-based system of distribution of support: - The more you ask, the more you receive, with consideration of the reasonable cost system implemented (support threshold per activity etc.) - All the beneficiaries receive a part of the support?

A demarcation is established between the Rural Development Programme (RDP)and the NSP. The demarcation is based on the date of commitment, so that all investment commitments approved as of January 1, 2015 will be financed exclusively by the NSP. Consequently, and in order to avoid any possibility of double financing, the Rural Development Programs should clearly reflect this aspect.

Characteristics of the maximum types of aid: (Legal basis: Article 103Regulation (EC) 1234/2007) The following maximum rates of support in relation to the eligible investment costs shall apply to the Community Investment contribution: or 50% in regions classified as regions of convergence according to Regulation (EC) 1083/2006; or 40% in regions other than the regions of convergence; or 75% in outermost regions according to Regulation (EC) 247/2006;

The maximum rate of support will be limited to micro-enterprises, and to small and medium-sized enterprises as defined in Commission Recommendation 2003/361 / EC. For companies with less than 750 employees or whose turnover is less than 200 million euros, the intensity of the aid will be reduced by half. No aid will be granted to companies in difficulty as defined in the Community guidelines.

Prioritising criteria Priority will be given to projects that include investments in marketing and that therefore imply improvements in commercialization activities.

Wine-growers must provide the following minimum information along with their aid applications: a) The location and parcel where green harvesting is to take place. b) The average yield of the parcel where green harvesting is to take place (average for the last three marketing years). c) The grape variety and the type of wine produced. d) The form (own resources or contracted) and method to be used for green harvesting.

Application requirements Applications must state the total area of the parcel. National legislation will set the minimum area of the parcel for which the aid may be requested A given area may not be granted aid for green harvesting in two consecutive marketing years, and neither may By product vineyard parcels planted in the three marketing years before the year in which the aid for green harvesting is distillation requested.

No priority criteria Selection procedure : Once the above requirements and criteria have been verified, the corresponding aid will be calculated, and payment may be made of 80 % of that aid, following verification that the maximum alcohol volume permitted for payment of the aid has not been exceeded. No aid will be paid for the volume of alcohol contained in the by-products to be distilled which exceeds 10 % in relation to the volume of alcohol contained in the wine produced in Spain. (Legal basis: Second subparagraph of Article 52(1) of Regulation (EU) No 1308/2013 of the European Parliament and of the Council). Maximum support rate: The following maximum EU contribution rates will be applied to the eligible investment costs: o 50 % in less-developed regions12 Innovation o 40 % in regions other than less-developed regions. o 75 % in the Canary Islands (as an ‘outermost region’) Support will not be granted to operators in financial difficulty. In general, the applicant must provide at least three estimates from different suppliers, before the service has been

12 Commission Implementing Decision of 18 February 2014 (Official Journal of the European Union, L50, 20 February 2014)

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performed or the good delivered in the case of investments in machinery, installations, supplies and services with an eligible cost. The eligible costs include pilot projects, preparatory actions in the form of design, product, process or technology development and tests and any tangible or intangible investments related to them, before the use of the newly developed products, processes and technologies for commercial purposes. personnel costs; costs of instruments and equipment; costs for adaptation of installations; administrative costs associated (must not exceed 4% of total eligible cost) Priority criteria: Characteristic of the project: - The aim of the project is to develop new product presentations or packaging processes.10 points - The aim of the project is to develop strategies to improve the production process (excluding the aspects described in criteria 2.1, 2.3 and 2.5).10 points - The aim of the project is to develop new transport, storage and preservation systems.10 points - The aim of the project is to make gainful use of by-products in the form of derivative products. 10 points - The aim of the project is to develop technology to improve energy efficiency, reduce water consumption or improve waste treatment and/or management.20 points - The project includes an element of knowledge transfer.: 15 points - The project guarantees the participation of a research and development centre.: 15 points - The project will be implemented in its entirety on island territory: 3 points Source: Annex I, National Support Programme, dataset from central team

2.6.3 Description of the management procedures of application files

Restructuring measure: Legal references for La Rioja: Order 2/2015 and Order AGR/21/2018, The Department of Agriculture, Livestock and Environment of the Autonomous Community from La Rioja, as a paying agency in La Rioja will be the competent body for the processing, resolution and payment of support in respect of areas located in the territorial area of the Autonomous Community of La Rioja. 13 The operations have been properly implemented. Individual procedures were not allowed in La Rioja. At national level, priority was given to collective plan. La Rioja followed this criterion. Individual application was allowed, but almost all applications were under collective plan designed with the wine-growers union. According to the National Support Programme, the execution period of each operations will be a maximum of five years, and in no case will the end of the measure be after July 31, 2018.

Investment measure: For the investment measure, the application forms are sent to the regional authorities that make a first analysis of the eligibility of the applicants. Once the first analysis performed, the eligible application forms are transmitted to the central team at national level (Ministry of Agriculture, Environment and Rural Development). The central team at national level will then, select the application forms based on the pro-rata distribution of the budget in order to maximize the number of beneficiaries. The monitoring of the projects supported are performed by the regional authorities. Two types of controls are performed: - administrative controls of all the document supporting the expenditures related to the supported operations - on-the-spot controls: in order to check operations when finalized before giving the subvention

The amount of subvention will be given to the beneficiary only once all the operations described in the application form have been carried out and checked on the ground. After the completion of all operations, the beneficiary must submit a request for payment. The Regional authorities must issue a payment resolution once it has been certified that all the operations have been executed. The regional authorities must make the payment to the beneficiary within a maximum period of 6 months from the date of payment resolution.

Up-front payment:

13 Orden AGR/21/2018, de 15 de marzo,

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As established in Article 19 of European Commission Regulation (EC) 555/2008, beneficiaries may request an up-front payments that may not exceed 20% of the public investment support, as long as a they provide a bank guarantee or corresponding to 110% of the up-front payment. The guarantee will be given back when the amount of the actual expenses exceeds the amount of the up-front payment.

Promotion measure Application procedure: Promotion programmes can have a maximum duration of three years for a specific beneficiary and country, and they may be extended once for up to two years. Application forms are submitted to the Autonomous Community. National public bodies are, required to submit their applications to the Ministry of Agriculture

For selection procedure, see the table above

2.6.4 Data on workload linked to the NSP implementation

To be provided by the questionnaire survey sent to competent authorities

2.6.5 Synthesis of the interviews

2.6.5.1 Questions related to the effects of the financial parameters

IT 2.5 Compared to a budget that would have been manage on a 5-year period, have the yearly management of the NSP’s budget fostered an orderly implementation of the measures on all the duration of the programme?

Concerning the investment measure, The investment measure is a managed at national level. National authorities mentioned that the budget allocated to the investment measure for the programming period 2014-2018 has been entirely distributed in approximately 2 years and no more budget was available for new applications since 2016. Thus, a yearly budget has not fostered an orderly implementation of the measure investment on all the duration of the programme. The national authorities stated that they are lacking budget under the investment measure since 2016 because they have chosen to approve most of the eligible projects in the calls of 2014 and 2015.

Concerning the restructuring and reconversion measure, The regional authorities (Regional Ministry of Agriculture) reported an important issue relating to the budget management. The interviewees stated that, in La Rioja, there are more demands than offers under the measure, and all applicants cannot benefit from the support. Thus, some application forms are refused. However, some approved applicants won’t carry out their projects (for various reasons) during the year and thus, won’t spend the budget allocated to the project. As a result, some of the allocated budget under this measure won’t be executed while there were other applicants that were eligible but weren’t approved because of too much demand at the beginning of the campaign. In Spain, not executed funds due to resignations or uncomplete executions of budget granted cannot be redistributed among Autonomous Communities. The budget that hasn’t been spent can be absorbed by Autonomous Communities only if they choose to fund projects based on a pro rata/minimum payments system and not if they have chosen to select projects based on a ranking system.

Concerning the promotion measure, The yearly budget is well managed. The regional authorities (Regional Ministry of Agriculture) will analyse the eligibility of an applicant and then will prioritize the application forms according to determined criteria (see table in previous section). The regional authorities will, then, send the application forms to the Ministry of Agriculture that will analyse and process the applications. A National Committee for Selecting projects is established in Spain in order to better select the application forms that will be supported, when total expenditure foreseen exceeds the budget assigned to the measure.

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The budget allocated between 2014 and 2016 varied between 6 015 253 € and 6 844 412 € per year with an average execution rate of 80.76% between 2014 and 2018. It seems that the yearly budget management fostered an orderly implementation of the promotion measure on the duration of the programme 2014-2018.

IT 2.7 Have the yearly management of the NSP’s budget fostered/hindered the selection of the more relevant applications? Have it been an obstacle to the support of multiannual projects or structuring projects?

The analysis is different per measure. For the restructuring measure, under the NSP programme, the Autonomous Community of La Rioja decided to authorize only annual and biannual project to be supported. Thus, many of the winegrowers decided not to apply to the measure because it was not coherent with the cropping management system. At regional level, the winegrowers/producers union mentioned the fact that the design in terms of time granted to beneficiaries to perform supported activities was inappropriate. The imposed short time laps to perform the activities may be due to the yearly budget management. Indeed, to benefit from the restructuration measure, applicants must plan annual or biannual projects only while the National Support Programme propose 5-years projects under this measure. The decision of support annual and bi-annual projects was decided at regional level only. However, the winegrowers explicitly stated that more time is needed in order to prepare the soil before replanting for example. They stated that the soil must rest for several years in order to be appropriate for vineyard cultivations. Indeed, the winegrowers union and the winegrowers themselves mentioned that it takes more than 2 years to grub-up, to let the soil regenerate, buy the plants and then replant some vines.

Under the investment measure, beneficiaries can apply for pluri-annual projects, even if there is an yearly managed budget. Thus, there was no negative effect of the yearly budget anagement on the type of applications approved.

IT 2.9 Have the yearly budgetary limits created a specific workload, related in particular to the need to close the budget each year? . At regional level, The wine-growers’ union reported that it was very important for public authorities to close the budget each year in order to maintain the level of subvention they receive from the European Commission. Thus, the regional authorities may spend more time and effort to analyse and to accompany the applicant in drafting the application forms.

IT 2.6 Have the absence of obligatory co-financing facilitated the access to support for beneficiaries? Please give details per measure

 At regional level, The regional authorities (Regional Directorate for Agriculture) stated that the yearly budget management system was impeding an appropriate management of the budget. The interviewees explained that, once the applicants were selected by the Autonomous Community, the other non-selected applicants couldn’t be called back when selected ones decided to withdraw their application for some reason. As a consequence, the budget for the given year is not entirely spent and is given back to the European Commission while demand has always been higher than the offer. Because the budget allocated per Autonomous Community is calculated based on previous executed budgets, the regional authorities feared a decrease in the budget under the restructuring measure. The stated observation mentioned above was seen as a consequence of a budget managed annually and coming entirely from the European Commission.

IT 2.10 Have the absence of obligatory national co-financing facilitated the management of the funds at the level of the managing authorities?

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. National and regional authorities

. At regional level,

It was mentioned by regional authorities that the absence of national co-financing did not facilitated the management of the funds. The budget cannot be reallocated to projects that were refused in the first place. The fact that it is entirely EU budget lead to the obligation of giving back the money they did not spent instead of keeping it for potential need the next years. With exclusively EU budget, the budget not spent must automatically return to the European Commission. Thus, authorities try to find some ways to reallocate the budget under other measures in order to maintain the current level of budget allocated.

2.6.5.2 Questions related to the overall effectiveness of the programme IT 8.1 Have the traceability of the expenses been improved compared to the previous programming period? If so, how?

The degree of traceability of the expenses wasn’t compared to the previous programming period. However, it was stated by regional authorities that there are administrative and on-the-spot controls for every project benefiting from NSP support. Thus, there is an efficient control of traceability of the expenses.

IT 8.2 How do beneficiaries demonstrate their actual need of EU support, and that normal operating costs are not financed by the EU budget? Please detail per measure if needed.

. At regional level

Regional authorities mentioned that they design the NSP measures in their region according to Royal Decree, i.e. following national prescription. They also design the measures according to the previous programme and its results. From the expert’s point of view, beneficiaries only check if the operations they would like to perform are in the list of eligible operations under the measures. The beneficiaries don’t have to demonstrate their actual need of EU support but have to prove that the operations performed are among the eligible operations under NSP measures. Administrative and on-the-spot controls are performed by paying agency (in La Rioja, it is the Autonomous Community) in order to check conformity of the operation with the NSP requirements.

Furthermore, for the promotion measure, the complexity of the support limited deadweight effects.

IT 8.3 Do you think that the measures have supported actions that would have been carried out anyway (without the EU support)? Please detail per measure if needed.

. At regional level,

The restructuring measure allowed a modernization of cropping system putting trellis trained vines instead of gobelet trained vines and allowing the mechanization of the cropping management system. These operations would have probably been carried out anyway by winegrowers that have the economic resource to perform the restructuration. However, the restructuring measure has been an incentive for many winegrowers. In La Rioja, the main grape variety planted in “Tempranillo” while regional authorities allowed a large panel of grape varieties to be planted. Thus, the restructuring measure had little effect on the grape variety planted. According to wineries and cooperatives beneficiating from the investment measure, they would have indeed carried out anyway some operations supported, but it would have taken much more time to reach the same level as the current one. Indeed, the strategy of many wineries and cooperatives in La Rioja, is to improve the quality of the wine products, buying more moderns machineries to regulate the temperature, to better select wine grapes, to age the wine in wooden barrels. These operations would have been carried out with or without

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support from the NSP programme. However, the NSP programme allowed them to perform these operations in a shorter time-laps, which is essential in a wine sector evolving so fast.

IT 8.4 How do you make sure that the costs of the supported operations correspond to the market prices for similar operations ? Please detail per measure if relevant.

. At national level,

Restructuring measure: The national decree 548/2013, details the eligible operations and the maximum threshold for support per operations.

Investment measure: According to the national decree 548/201314, Eligible expenses are those set out in Article 17 of Commission Regulation (EC) No. 555/2008, of June 27, 2008, in sections a) and b) (that concern building construction and acquisition and machineries), and up to 8% of expenses general linked to said sections. The investment projects will be clearly defined specifying the actions / operations and detailing the expenditure concepts for each operation and the estimated costs of each of them, respecting the reasonableness of the costs as established in article 24.2.d) of the Regulation (EU) No 65/2011 of the Commission of 27 January 2011 Beneficiaries will have to provide receipts or accounting documents of equivalent probative value, for expenditures and crediting of payments. In the case of the building construction/acquisition, a certificate must be provided from an independent appraiser duly accredited, or from an authorized body or public body, attesting that the purchase price does not exceed the market value, breaking down the value of the land at market prices.

Promotion measure: The payment will be subject to the presentation of the audited accounts and audit reports of accounts carried out by a legally recognized auditor or audit firm. The payment can also be subject to the verification by the Autonomous Community of the invoices and the documents mentioned in section 6 of this article.

Likewise, in view of the technical justification of the actions, the beneficiary may be requested to provide the evidence that proves the performance of the promotional actions. To be considered admissible, payment requests will be accompanied, at least, by: - A summary report of the actions broken down into activities with the corresponding budget amount and the final cost of each of them, and an evaluation of the results obtained that can be verified on the date of the report. - The invoices and other supporting documents of the payments made. In the case of actions whose execution is subcontracted to service providers, an invoice must be provided from said provider and proof of actual payment. - Bank statement of the account in which the payment justified can be verified by the invoices

. At regional level

For restructuring measure: In order to receive grant, the applicant will have to present the invoice and the corresponding justification of payment of the materials. Likewise, an invoice and the corresponding payment justification must be submitted for the work carried out for the transformation, except in cases in which said work has been carried out by the

14 Real Decreto 548/2013, de 19 de julio, para la aplicación de las medidas del programa de apoyo 2014-2018 al sector vitivinícola español.

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vine grower himself, in which case, the labor will be paid in accordance with the calculation of cost obtained by the Ministry in its corresponding service and that will be published together with the call for the presentation of plans. The grant shall be paid taking into consideration the maximum ceilings set out in Annex I (see above), however, in the event that the invoiced amount, or that the invoiced amount plus the amount stipulated for the cost of labor, is less than the maximum amount set out in Annex I, the grant shall be settled on the basis of the justified amount.

For the investment measure: According to regional order15 In general, the applicant for support must provide at least three offers from different providers. In the case of expenses of purchase of machinery, facilities, supplies and services, when the amount of eligible expenditure, excluding VAT, equals or exceeds 18,000 euros, the choice between the offers submitted, which must also be submitted together with the request for payment, will be made according to criteria of efficiency and economy,

Promotion measure16: Copie of the invoices and other documents proving the of expense of the payments made. When the amount of the eligible expenditure exceeds the amount established in the regulations of public sector contracts for the minor contract, the beneficiary must request three offers from three different suppliers in order to prove that it has been awarded in favor of the most economically advantageous proposal. that the reasons that justified the order in favor of another more convenient offer from the point of view of efficiency are duly accredited. The maximum eligible limits of some eligible costs are set out in Annex XIV of the Regional order 3/2015.

2.6.6 Opinion of the expert

. Effects of the financial parameters

POSITIVE EFFECTS NEGATIVE EFFECTS

Restructuration measure Restructuration measure / Regional decision of allowing only annual and biannual project to be supported making the measure less interesting for Investment measure winegrowers Yearly / Investment measure budgetary Promotion measure limits National management led to the total consumption of the Well managed at regional level in La Rioja, previsionnal budget in only 2 years after the beginning of the Compelling the beneficiaries to gather the invoices, programming period 2014-2018 the supporting documents and writing down the Promotion measure activity report every year to receive the subvention. /

. Relevance of the selected application and risk of deadweight

Selected applications: Under the restructuring measure, no priority criteria were imposed, except the priority put on collective plans compared to individual plans. Under the investment measures, the selection of applications is performed at national level. Priority criteria were designed at national level but did not served to select the projects. Indeed, all the projects were above

15 Resolution No. 131, of February 2, 2015, of the Regional Ministry of Agriculture, Livestock and Environment, approving the public call for granting aid for investments to improve the production and / or marketing of wine products within of the support program for the wine sector 2014-2018 16 Regional Order 3/2015, of January 19, of the Ministry of Agriculture, Livestock and Environment which establishes the regulatory bases of aid for the promotion in third-country markets of the support program for the Spanish wine sector in the Community Autonomous Region of La Rioja and call for grants for the 2016 annuity

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the minimum threshold, and thus received grants. As a consequence, no subvention was made available for new projects after two years of implementation. Under the promotion measure, it was reported at regional level that few stakeholders benefited from the promotion measure compared to the number of wineries and cooperatives in the region and most of the beneficiaries were already major players on international markets, while the measure would have greater effects on little wineries cooperatives.

Risk of deadweight effect: The operations performed with subvention from the investment measure would have very much probably been carried out anyway. However, it would have taken much more time to the wine producers to reach his current level thanks to the measure. This observation is very important considering the fact the wine sector is a perpetual evolving sector in which the capacity to quickly change and adapt to market demand is essential to keep being competitive at international level.

. Good practices set at Member State and/or regional level ensuring the justifiability of the expenditures:

. At regional level - Maximum threshold per operation under restructuring measure - Three different price quotes under NSP to justify the expenditures. - Annual obligation of reporting the activities subvention under promotion measures

2.7 Coherence of the NSP

2.7.1 Coherence of the objectives of the NSP with other EU/CAP objectives

2.7.1.1 Synthesis of the interviews IQ 12.1 According to you, are the objectives of the NSP coherent with: - the EU overall objective of environmental sustainability? - the EU overall objective as regards public health and prevention of harmful alcoholic use? - the EU overall objective of balanced territorial development?

. At regional level, Concerning coherence of NSP measures with environmental sustainability and balanced territorial development The winegrowers’ union explicitly reported the lack of coherence between NSP and environmental sustainability comparing the restructuring measure from the NSP with the agro-environment measure under the Rural Development Programme (RDP). While the RDP encourage eco-friendly practices, practises in vineyards to preserve and enhance biodiversity, water and soil quality, carbon sequestration etc. The restructuring measure goes, as a consequence of its design, against these aspects. The interviewee stated that the use of pesticide in order to “clean” a surface area dedicated to vines was supported under the restructuring measure while this kind of operation is harmful for the environment and goes against operations supported under the Agro-environment measure.

It was reported by the winegrowers’ union and the union of family wineries that the budget was a great incentive for farmers to perform actions and that NSP programme benefited of much more budget than the RDP programme. As a consequence, the farmers would rather grub-up old vines (even if supported by the RDP) and apply pesticides on the field and benefit from the NSP measure instead of taking care of these old vines and benefiting from RDP support.

It was also mentioned by the winegrowers’ union and the union of family wineries, that because of the restructuring measure, the old vines located on hills and slopes were grubbed-up and new trellis trained vines were planted on alluvial plains. The restructuring measure led to a reconfiguration of the vineyards in the

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region, with a move of the vines from the hills to alluvial plains. This observed movement can have negative effect on environmental sustainability and balanced territorial development. Indeed, keeping an agricultural activity on hills and on remoted lands allows to maintain an agro-economic activity in these areas where other type of agricultural production may be complicated to implement. As stated by a cooperative, The viticulture allows to fix population in rural areas and maintain an economic activity in these areas. Today, the cooperative reported a depopulation of rural areas.

Furthermore, the cropping system management of these vines was an eco-friendly system management since mechanization of these areas is complicated.

Concerning coherence of NSP measure with EU public health and prevention of harmful alcoholic use There is no synergy or complementarity between NSP objectives and NSP implementation on field, and health and prevention of harmful alcoholic use. According to the National Federation of Spanish wine, the NSP programme does not address public health, prevention of harmful alcoholic use. At regional level, the regional authorities from La Rioja, mentioned that other public health programme were implemented to address the issues related to these topics. Regional authorities also mentioned that the wine shouldn’t be subject to health and hygiene controls such as any other food products. The interviewees stated that restriction on oenological practices were sufficient to ensure health safety of wine products. Louis Pasteur stated many years ago that the wine is a safe product because stable.

2.7.2 Coherence and complementarity of the NSP measures with corresponding measures

2.7.2.1 Identification of measures with similar objectives

Table 13: Measures with similar objectives opened to wine growers/producers

Policy Measure Similar objectives Demarcation criteria concerned

4.1: Investments in agricultural holdings”

4.2“Investment in When the Investments measure processing/marketing of Enhancing farm viability and EAFRD - RDP was opened, the wine sector agricultural products” competitiveness of all types of agriculture wasn’t eligible to this RDP measure. 4.3.: Investments in agricultural, livestock and forestry infrastructures

Improvement of research and innovation infrastructures (R + i) and of the capacity to develop excellence in R + i and Priority axis 1, Thematic promotion of competence centers, in Objective 1, "Strengthening special European interests.

research, technological Promotion of investment in innovation development and innovation" and research, development of links and ERDF synergies between companies, research and development centers and the higher education sector.

Support to SMEs to support Priority axis 3, Thematic economic growth in regional, Objective 3, "Improve the "Improve the competitiveness of SMEs national and international markets competitiveness of SMEs", and in innovation processes. Source: based on interviews, Operational Program FEDER La Rioja 2014-2020 and larioja.org

Similar objectives were found in the following measures: - Measure 4. Investments in physical assets from the Rural Development Programme

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Under the measure 4.2, investments in machineries for improving the production chain of the wineries could be supported. Under the measure 4.3.1, investment in irrigation system could be supported, while it is forbidden under the restructuring measure of the NSP).

It is important to mention that risks of double financing have been addressed when writing the national decree and the NSP and RDP programmes. Indeed, one beneficiary of the investment measure under the RDP cannot benefit from the RDP support under the measure 4. In the wine sector, when the investment measure is opened, the wine producer cannot benefit from support under measure 4 of the RDP and vice versa. Concerning the implementation of an irrigation system, there is a complementarity between the restructuring measure from the NSP and the measure 4.1 of the RDP. The implementation of an irrigation system is only possible under the RDP measure number 4, while it is not part of the operations eligible for support under the NSP.

- Measure 10. Agri-environmental measure from the Rural Development Programme The measure 10 can be considered as a measure with similar objectives since the new national decree for the application of the NSP programme 2019-202317 allowing the Autonomous community to add some priority criteria to select the projects that will benefit from the measures. It was mentioned by the winegrowers’ union, that these priority criteria in La Rioja gather some environmental criteria that could be in coherence with the measure 10 from the RDP.

- Quality and promotion policy under horizontal regulation While the quality and promotion policy under horizontal regulation aim at encouraging the consumption of PDOs and PGIs products putting the emphasis of specificities of regional’ productions, the promotion measure under the NSP programming aims at promoting PDOs PGis in third countries. One can notice same objectives between these instruments.

2.7.2.2 Synthesis of the interviews IQ 13.1 According to you, are there synergies/complementarities between the NSP measures and: - the corresponding measures in the RDP? Please explain. - the corresponding measures contained in the horizontal regulation on promotion measures of agricultural products? - the corresponding measures contained in other EU policies? Please explain. Based on interviews at regional level, there are both complementarities and contradictions observed between NSP and RDP measures. For example, there is complementarity between the restructuring measure and the measure 4 concerning the implementation of an irrigation system. While the restructuring measure does not support irrigation system, the measure 4 does. Contradictions however can be observed between restructuring measure and Measure 10. Agri- envrionemental measure as stated by the winegrower’s union. Over the last programming period 2014-2018, no priority criteria were given to winegrowers performing eco-friendly practises and applicants received payments to grub-up old vines to plant in alluvial plains to use water resource and to mechanize the system. These old vines, however, are supported via two operations under the RDP Measure 10: - One dealing with vineyards on a slope between 5% and 15%. Support amount: 150 to 250€ / ha. - One dealing with old vineyards and contributing to biodiversity. Support amount: 600€ / ha

IQ 13.2 Is the risk of overlapping avoided? . At regional level ,

17 Real Decreto 5/2018,

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The regional authorities explicitly mentioned that there was no risk of overlapping between the programmes. Both programmes were designed taking into consideration the possible risk of overlapping. A wine producer cannot benefit from grants for operations under the measure 4 that could be supported within the NSP under the investment measure. One applicant cannot benefit from two programmes for similar operations. It is strictly forbidden, and they made the management of these programmes in a way that the overlapping was not possible.

No other risk of overlapping was identified considering the differences in the operations supported under the restructuration measures and the measure 10.

IQ 13.3 Did you benefit from Rural Development Programme measures? If yes, which one(s)? Generally speaking, the interviewees benefited from the Investment and Promotion measures. The interviewees usually benefited from both measures and are specialised in wine production. Thus, not much if none RDP measures could interest the beneficiaries apart from the Measure 4 of the RDP that is not opened when the investment measure from the NSP is opened.

2.7.3 Conclusion of the experts on the coherence of the NSP

From the expert’s point of view, the NSP doesn’t seem much coherent with the Rural Development Programme, while it may be coherent with Horizontal regulation, and more precisely the promotion and quality policy.

As regards the coherence between NSP and RDP, in Spain the NSP and RDP do not follow the same goals. While the RDP support more the adoption of eco-friendly practices, the protection of the environment and natural resources, the NSP won’t prioritize these kinds of operations to achieve its specific objectives of improving production quality and boosting the economy of the regional wine sector. Over the 2014-2018 programming period, there were not much (if ever) incentives under the NSP to encourage eco-friendly practices supported by the Rural Development Programmes. For example, no operations supported under the restructuring measure took into account the biodiversity or the environmental impacts of the operations. Now for the new programming period 2019-2023, the regional authorities together with the winegrower’s union mentioned that some environmental priority criteria to select the projects under the restructuring and investment measures. Under the investment measure, some criteria are given to some actions supporting the environment or eco-friendly practises, however, these priority criteria had no impact at all, given that all the applicants benefited from the support under the measure.

There is some coherence between the promotion measure of the NSP and the promotion policy and quality policy under the Horizontal regulation. Indeed, the promotion and quality policy under the horizontal regulation aim at encouraging the production and marketing of local products of good quality, putting forward the characteristics of regions’ products. That’s why the promotion measure under the NSP programme could be coherent with these policies, promoting PDO and PGI wines from the EU abroad.

2.8 Relevance of the NSP

2.8.1 Analysis of the needs of the sector

Table 14: SWOT analysis of the wine sector at regional level (La Rioja) STRENGHS WEAKNESSES

. Only one specific type of wine is really famous compared to the others: the Tempranillo red still wine . Most famous Spanish wine, with a good reputation in the . Wealth gap between large wineries, wine companies and national market and external markets small family wineries . Very-well-structured wine sector . Little domestic consumption of wine . Modern machineries to produce quality wine . Little vertical integration: winegrowers cultivating wine grapes for wine producers

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OPPORTUNITIES THREATS

. Improve the consumers knowledge on La Rioja’s wine to . Loss of quality due to relocation of the vineyards in alluvial improve the sales. Once the consumer know the wine, he plains (more fertile lands, with possibility of irrigation) frequently appreciates it, and buys it . Focus on Tempranillo and international wine grape varieties . Build on the fact that La Rioja is the most notorious region in . Loss of biodiversity due to modernization of cropping terms of wine production to develop tourism management system . Promotion measure boosting trade missions with operators . Fluctuation of currency value in important markets, such as in third countries supporting export of wine products Russia

Source: own elaboration, based on the interviews

The main needs in the wine sector at national and regional level are: 1. Increasing exports via a. Entering new markets with consumption potential b. Consolidating traditional ones 2. Improving the quality of the wine produced via a. Modernizing the production chain b. Better select the wine grapes from the supply side

Of course, improving the quality of wine produced in Spain will support the reputation of wine and help to boost exports.

2.8.2 Synthesis of the interviews

IQ 15.2. From your point of view, are the NSP measures suited/well designed to address the need of the wine sector at the EU level? national level? At regional level? . At national level Regarding the Investments measure, the support rate for larger companies is lower than for smaller companies. For some national representative and public authorities, the difference in the support rate according to the size of the company represents an issue since larger agri-food cooperatives in Spain are groupings of several smaller companies. While one of the major objectives in Spain, is to better structure the wine sector by integrating more the supply chain, the current CMO regulation does not distinguish grouping of companies and large companies when calculating the support rate. Thus, the support rate remains low and limits the restructuration of wine sector. Furthermore, according to national authorities, the Innovation measure is too restrictive because it concerns only a part of the R + i + D, while many projects also include a research component, which is not eligible for the Innovation measure.

. At regional level Regional authorities stated that the NSP measures considerably helped the wine sector in La Rioja. There is more and more applicants and an increasing budget spent under the promotion measure. The measure, among other factors contributed to find new markets to export wine from La Rioja. However, winegrowers’ union and the union of family wineries mentioned that the promotion measure wasn’t well designed, benefitting only to large size companies. Because of too much administrative work, and the need of a full-time employment working on the monitoring of grant forms, many little wineries gave up and the few courageous wineries could not follow all the requirements. For these last ones, the promotion measure makes them lose money instead of making them earn some more. On the other side, according to the wineries and cooperatives that benefited from support under the promotion measure, the measure helped to address their need, however, it is very poorly designed. Indeed, the promotion measure requires too much administrative workload for the beneficiaries. Moreover, it was automatically mentioned that the limit of the 5 years support for the same market was a barrier to the development of the trades. The beneficiaries argued that in 5 years is not enough, and little can be done in this time period. It usually requires more time to properly enter an international market, i.e. to find an importer and that local consumers start to buy your wine. The limit of 5 years support was mentioned several times at national and regional level as constraining improvement of trades.

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IQ 15.3. How did the increase of the NSP budget in 2014 impact the management of the NSP?

Data on the execution of the NSP budget: According to national authorities, in the first two years of the 2014-2018 programming period the budget allocated to the investment measure was planned to be completely executed. The national and regional authorities stated that they wish they could have more budget allocated to the measure. Concerning the restructuring measure, it was first observed an increase of the executed budget from 2009 to 2013, and then a decrease of the executed budget since 2014. Thus, one could conclude that the increase of NSP budget had little impact on the management of restructuring and reconversion measure.

As highlighted in the table below, the NSP budget in 2015 and 2016 have been completely executed. As shown in the figure below, the executed budget increased for the promotion and investment measure while it decreased for the restructuring and reconversion measure (even if the number of beneficiaries was higher than for the previous programming period). Thus, one could deduce that the increase in the NSP budget was welcomed by the beneficiaries and operators of the wine sector. Table 15: Execution rate of the NSP budget in Spain

Years 2014 2015 2016 2017

Rate of execution of NSP budget 91% 101% 100% 96% Source: Dataset provided by the central team

Figure 18: NSP executed budget (.000€) 2014-2016 period

From the left to the right: Restructuring and reconversion; Promotion; Investment; By-product distillation; Innovation measures. Source: Annex III, Implementation Report of NSP

. At regional level, In 2014, the NSP budget allocated to the promotion measure increased of 0.5 million of euros compared to 2013 and the executed budget increased by 0.3 million of euros in the same period.

IQ 15.4. Are the budgets on each measure appropriate to address the needs of the sector? . At national level, The national budget allocated to the investment measure for the 4 years programming period 2014-2018 has entirely been planned to be spent in the two first years 2014 and 2015. National authorities wish they could have more budget to support all the applicants. For the moment, they can only benefit from part of the budget of the restructuring measure that hasn’t been spent.

. At regional level

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In La Rioja, it was observed an increasing demand for support promotion measure. As a result, regional authorities allocated more budget under this measure. It was reported by regional authorities, that the budget allocated to the restructuring and reconversion measure does not reach the appropriate amount to support all eligible applicants. As regards the investment measure, more budget would be welcomed by beneficiaries and regional authorities.

Expert’s point of view: When analysing the executed budget under the restructuring measure, we observe a constant decrease since the year 2014 that may reflect the decreasing needs of restructuring and reconverting the vineyards.

IQ 15.5. From your point of view, can the NSP and the scheme of authorisation allow for the development of the wine production and consumption? . At regional level, Concerning the wine production Winegrowers union was the only organization to explicitly state that the restructuring measure had an impact on the wine production. According to the union, the restructuring measure led to an increase of the wine production in the region. The regional authorities mentioned that to benefit from the restructuring measure, the total surface of the vineyard need to be reduced. The idea was to regroup the areas under vines to reduce the total surface of vineyard in La Rioja. However, the winegrowers ‘union stated that, even if there was a reduction of the vineyards, the volume of wine grapes produced increased, without reaching the PDO’s threshold. According to winegrowers’ union the increase of the production occurred because of the relocation of vineyards in areas where implementation of an irrigation system is possible and where the land is fertile. As a consequence, the volume of wine grape produce increased at the expense of the quality. The idea was shared by the family wineries of Rioja association. According to regional authorities and winegrowers’ union, the new scheme of authorisation only allow a control of the growth of the area under vines in the region, but is not well designed for several reasons (cf. Theme 2).

Concerning the wine consumption The interviewees did not mention an effect on the NSP and scheme of authorisation on the development of consumption.

IQ 15.6. From your point of view, are those schemes needed to maintain the supply/demand balance? . At national level National authority stated that the limit of 0,5% of increase is necessary to maintain the supply/demand balance. However, more time is needed to assess the relevance of the scheme.

. At regional level, It was explicitly mentioned by the regional authorities that the new scheme of authorization for planting is a disaster. The old scheme of planting rights were well managed. The new scheme of authorization is not adapted to the region, especially because it is designed at national level, while each region has its particularity. However, at national level, it was mentioned that for the new programming period 2019-2023, the new scheme of authorisation will take into account some regional indicators to determine the priority criteria.

The regional authorities mentioned that winegrowers are now buying lands that are distant from their vineyards in order to increase their surface under vines, either because they aren’t eligible for authorisation of plantings or because the authorisation granted by public authorities is too little.

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2.8.3 Opinion of the expert

Uncovered needs While the restructuring measure supports the modernization of the cropping management system, planting trellis trained vines and allowing the use of machineries, there is no NSP support to maintain old vines producing the best quality of wine grapes. Nevertheless, the improvement of wine quality is among the main needs of the sector in La Rioja. Because the winegrowers are focusing on the potential grant they could receive for performing a specific operation, they tend to slowly put aside the quality of the wine grapes produced which is not mentioned in the criteria of the measure and that aren’t enough valued by the wineries and cooperatives compared to other wine grapes.

In La Rioja, the emphasis is put on improving the quality of wine produced once the grape is produced and discharged in the winery/cooperative. Even if it is essential to improve the wine elaboration chain, it is also essential to maintain a quality of the wine grapes produced on the field. There are currently not enough support/incentives to maintain old vines producing high quality grapes.

Coherence between budget spent and actual needs. From the experts’ point of view, the top priority in the wine sector in La Rioja is to increase trades with third countries to increase exports. It was stated by the regional authorities that the budget of the promotion measure is continuously increasing and the number of applicants as well. Thus, the budget spent meets the current needs. Same observation for the investment measure: there is continuously more budget allocated to the measure answering the need to improve the wine quality.

2.9 EU added value and subsidiarity

2.9.1 Synthesis of the interviewes

IQ 17.1. In your opinion, what would have been done (/how would have the wine sector been supported) at national or local level, in the absence of the EU NSP? . At regional level, Regional authorities couldn’t say much about what would have been done in the absence of the EU NSP, since it has been implemented for a long time now. It was stated that it is vital to maintain National Support Programmes, in order to regulate the best way possible, the market and avoid market distortion.

IQ 17.2. From your point of view, did the fact that the support was provided to the wine sector in the framework of EU regulation create an added value? i.e. - it results in more effectiveness than if actions would have been carried out at national level only? - it is more efficient than actions that would have been carried out at national level only? - it creates more synergies between instruments and policies than actions that would have been carried out at national level only? . At national level, The Spanish Wine Federation stated that a national management only of the wine sector and subventions would have been less effective than a management at EU level with the wine CMO. The EU regulation allowed to perform much more operations than if subventions would have been only at national level. According to the representative, the UE and the CMO allowed some Member States, like Spain, to benefit for more subventions than a national policy only. At last, the representative highlights the benefits of a EU harmonization of rules between the different Member States, allowing a better equity in the trades.

. At regional level,

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As stated by the winegrowers’ union, there aren’t synergies observed between the NSP and the RDP. However, the interviewees declared that an EU framework is valuable. The regional authorities stated that the framework of EU regulation created a great added value. In their opinion it is essential to maintain the National Support Programmes in order to avoid market distortion. If stakeholders didn’t explicitly state that the EU framework created an added value, almost all stakeholders recognized that it would be worse without an EU framework even if many stakeholders reported that there was still room for improvement.

IQ 17.3. Do you know of any specific cases in which a lack of flexibility in the EU framework has hindered the added value of the programme? . At regional level, Generally speaking there were few cases in which a lack of flexibility in the EU framework has hindered the added value of the programme. Under the restructuring measure, beneficiaries have reported an inadequate time period to perform eligible operations (annual or biannual). However, it is was regional decision.

Under the promotion measure, It was stated by winegrowers union, family wineries union and many beneficiaries that they had to justify too much operations, procedures and that public authorities were asking some documents such as invoices that some service provider would not give. For example, public authorities may ask for the boarding pass when travelling abroad for trade missions and the invoice of the plane ticket wasn’t enough. Similar observation was reported by the regional authorities. They have to check too many requirements and documents before paying the beneficiaries. As a consequence, many of stakeholders do not apply for the promotion measure anymore while promoting the regional wine is still a topical issue.

The regional authorities and many other stakeholders interviewed, reported the need for more flexibility in the management of the authorisation of plantings. (cf. Theme 2)

2.9.2 Conclusion of the expert

From the expert’s point of view, more flexibility was asked by stakeholders when some measures or scheme weren’t well designed. Because they found it poorly designed and not addressing the specific needs of the region, they asked for more flexibility. The absence of EU framework, would have created market distortion with a domination of large size companies over little family companies. Less stakeholders would have been able to adapt to market demand via improving the wine elaboration chain and a greater wealth gap would have been observed between large and small companies. The liberalization of the “market of vineyards” would lead to domination of the surface under vines by very few rich wineries that would be able to buy the best land to plant vines. In order to maintain a market equilibrium, the EU framework is vital.

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3. THEME 2: SCHEME OF AUTHORISATIONS OF VINE PLANTINGS

3.1 Synthesis of the literature

In 2016-2018, 2 criteria were applied at national level, allowing to classify the demands into 4 groups (see Table 16). Since 2018, a new criterion has been added, to prioritize small or medium holdings. In addition, some requirements concerning the applicant’s professional skills have been included. Table 16: Prioritization criteria of the demands for new plantations

Scheme of plantation 2016-2018 Scheme of plantation 2018

 New young winegrower  Good behavior

 New young wine grower Group of priorization:  Good behavior  Group 1: "young new winegrower" + also meets the criterion of "good behavior" = 20 points.  Small or medium holding  Group 2: "good behavior"+ not "young new wine growers” = 10 points.  Group 3: They have abandoned vineyard area = 9 points.  Group 4: They own an illegal vineyard and does not meet any criteria = 0 points Source: Guidelines for the application of the regime of authorizations of vineyard, January 2018, Ministry of agriculture, food, fisheries and environment Report of the new scheme of authorization, 2017, Ministry of agriculture, food, fisheries and environment.

On the 30th of June, the Ministry informed the Autonomous Communities of the surface area that can be granted for each request based on the score obtained in the national ranking, so that they can resolve requests for authorizations for new plantings before the 1st of August, as established in the regulations of Autonomous Communities. As of that moment, the beneficiary shall have 3 years from the moment of notification to carry out the plantings, which should be communicated in the according Autonomous Community. If the surface granted is less than 50% of the total requested by the applicant, the latter is allowed to refuse to plant the surface granted as long as he notified within the month following the notification by the Autonomous Community.

In many Autonomous Communities, a pro-rata management system has been implemented by the regional authorities to allocate the authorizations. It has been repeatedly mentioned that the pro-rata allocation encouraged wine growers to demand more area than they needed to be sure they will be granted the total area requested.

Since being a new winegrowers is a priorization criterion, in was reported in La Rioja, that many fake new winegrowers (sometimes, not even living in La Rioja) requested authorizations for new plantings and once the requested area were granted, they waited some time before giving the area to a family member.

3.2 Synthesis of the interviews

IT 11.1 Do you assume that the new scheme of authorisations will impact the structure of the vineyard (in terms of distribution of varieties, type of wine, size of holdings, age structure of the vineyard), at regional level? at national level? Are there already evidences of such effects?

. At regional level,

The regional authorities are against the new scheme of authorisation because the old system of planting rights was well established and controlled. They also stated that more than 99% of the vineyard in La Rioja was under the PDO Rioja. Thus, in order to avoid too much increase of the area under vines under PDO, the managing organization of the PDO Rioja decided to set a maximum threshold of new hectares to enter the PDO. Thus, in

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La Rioja, in order to better control the growth of the surface dedicated to vines, the PDO set a threshold, instead of being too much affected by the consequences of the national management of new scheme.

One winery reported that the new scheme of authorisation discriminates the wineries and cooperatives already implemented. Because wineries and cooperatives already implemented aren’t prioritized and because there is a very little number of hectares available for new plantings, the wineries will not be allowed to extend their vineyards. Currently, if a winery wishes to increase his surface under vines, he will have to buy vineyards to third person. Thus, wineries and cooperatives cannot grow.

The winegrowers’ union explicitly stated that the new scheme of authorization has no impact on the structure of the vineyard (age of the vineyards, distribution of varieties, type of wine, etc.). The scheme of authorization only allows a control of the global area under vines in the region. Indeed, the union stated that a stakeholder wishes to increase his surface under vines, he won’t have to need an authorization for plantings as long as his possess enough available surface area for his increase. Indeed, according to the winegrowers’ union and the union of family wineries, one stakeholder (stakeholder “A”) that wishes to plant vines and that doesn’t possess an authorization for plantings will make a deal with another stakeholder (stakeholder “B”) willing to give-up his vine plots. The stakeholder “A” will sign a contract with stakeholder “B” to cultivate his vine plots for a short period of time in order to state in the vineyard register that stakeholder “A” is cultivating the area in question. Then, stakeholder “A” will grub-up the vineyard and plant new vines on his own land benefitting in the meantime from the restructuring measure. Moreover, according to priority criteria, new stakeholders willing to start cultivating vineyards will be prioritized over other stakeholders. Thus

IT 11.2 If so, do you assume that the new scheme of authorisations will result in a vineyard structure that will be better adapted to the markets expectations? Are there already evidences of such an effect?

. At regional level,

According to a cooperative from La Rioja, the new scheme of authorization does not valorise the quality of a land for vine plantings. If one person has lands that could produce excellent quality of wine grapes for wine production, this person won’t be allowed to plant vines and will have to ask authorization for plantings to regional authorities that they may not give because that do not comply with the priority criteria given at national level. Instead, some persons complying with priority criteria, having lands in an area that is not interesting at all in terms of wine grapes cultivations, will be allowed to plant vines and to produce under the PDO Rioja. According to a notorious winery, a liberalized land market will lead to a vineyard structure better adapted to market expectations. Indeed, the liberalization of the land market will lead to an increase of area under vines in the region and will allow the wine producers to better select the wine grapes that fit the quality required for their production of wine. There will be a stricter process of selection of wine grapes unloading the harvest, with a better differentiation of wine grape quality, thanks to increased offer from winegrowers. As a result, the quality of the wine produced would be improved and a policy of valorisation of wine grape quality will be implemented. The owner reported that currently, there was no much difference in the price paid to a wine grower according to the quality of the grapes. Moreover, if a winegrower does not accept the price of one winery, he will find another winery or cooperative that will buy his production at a more interesting price. According to the winegrowers’ union, the new scheme of authorization for plantings has no effect on the vineyard structure.

IT 11.3 Do you assume that the new scheme of authorisations will impact the economic value of vineyards? Are there already evidences of such an effect?

. At regional level,

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It was stated by the winegrowers’ union, that the scheme of authorization allows a control of the surface dedicated to vineyards in the region which is compulsory for a sustainable development of the wine sector in the region. According to the winegrowers’ union, the new scheme of authorisation allows to stabilize the land price in the region. However, even if the winegrowers’ union mentioned the need of a control system for new plantings, it was explicitly mentioned that the priority criteria weren’t adapted to support the wine sector, and would benefit to stakeholders that do not know the cropping management system, to whom the wine production does not represent his main economic activity. The interviewees stated that stakeholders making the wine production their main economic activity should be prioritized over the new persons entering the wine sector. The winegrowers’ union stated that the liberalization of the “market of vineyards” would lead to a cataclysm in the land market. The price of the interesting lands for vineyards will rise sharply and only few wealthy wineries will afford to pay the price leading to the supremacy of few wealthy wineries over winegrowers and little wine producers. Therefore, very few wineries will detain almost all the vineyards in the region.

3.3 Conclusion of the experts

Competitiveness of winegrowers The new scheme of authorization benefited more for young new stakeholders that decided to produce wine grapes. However, concretely, it was observed, that these new stakeholders that decided to have a vineyard were related to winegrowers and wineproducers already working in the wine sector. In the end, the new stakeholders gave the land to these persons related to them already working in the wine sector. In that case, no changes resulted from the implementation of the new scheme. Moreover, when authorization is given to real new young farmers, the production of wine grapes does not represent the main economic activity. Thus, the new scheme does not support the wine sector and the stakeholders on whom the wine sector is relying. Furthermore, very often the new young farmer does not know very well how to run a vineyard. Thus, the quality of winegrape produced is impacted and might in the end give up their vines for the benefit of large wineries.

Increase of the production potential while keeping balance between demand and supply The new scheme of authorization has major impact on the global growth of the regional area under vines. Thus it allowed to control the production potential in the region (even if the surface area is not the only factor to take into account when dealing with production potential). In La Rioja, all the area under vines are producing PDO wines. Thus, the quota, implemented by the Managing organization of the DO, is the main criterion to take into account when analysing production potential.

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4. THEME 3: WINE PRODUCTS DEFINITION, RESTRICTIONS ON OENOLOGICAL PRACTICES AND AUTHORISED WINE GRAPE VARIETIES

4.1 Detailed description of the implementation at Member State and regional level

Specificities regarding wine grape varieties restrictions in Spain Wine grape varieties will respect the following characteristics: . Belong to “Vitis vinifera” L only . To be a cross between “Vitis vinifera” L and other “Viti”.

Specificities regarding wine grape varieties restrictions in the region of La Rioja

In La Rioja, the PDO “Rioja” which total more than 93% of the wine production in the region forbids the use of wood chips during the elaboration of the wine to provide a woody flavour to the wine. The use of wood chips is widely used in other third countries and in some EU Member States. In the Autonomous Community of La Rioja, the only addition degrees of restrictions come from the PDO ‘Rioja” managing organisation. For the other category of wine, the Autonomous Community follow national rules and has not more restrictive requirements except for the authorised grape varieties to be cultivated and indicated on the label of a wine product, (see Theme 4). In la Rioja, According to the Decree 4/2017, Annex I, the varieties authorized in La Rioja are the following:

Figure 19. List of the authorized grape varieties to be produced for winemaking in La Rioja

Red varieties White varietes

- Chardonnay, B. - Macabeo, Viura, B. - Moscatel de Alejandría, B. - Moscatel de Grano Menudo, B. - Malvasía Riojana, B. - Graciano, T. - Albariño, B. - Mazuela, Mazuelo, T. - Albillo Mayor, Turruntés, B. - Pinot Noir, T. - Garnacha Blanca, B. - Tempranillo, T. - Gewürztraminer, B. - Garnacha Tinta, T. - Hondarrabi Zuri, B. - Maturana Tinta, T. - Maturana Blanca, B. - Monastrell, T. - Parellada, B. - Riesling, B. - Sauvignon Blanc, B. - Tempranillo Blanco, B. - Verdejo, B. - Viognier, B. - Xarello, B Source: Decree 4/2017, Boletin Oficial de la Rioja

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Table 17: Rate of wine grape varieties authorised to produce wine under PDO "Rioja"

Red wines White wines Rosé wines

In the production of white wines will be In red wines made from shucked grapes, at used exclusively grapes of the varieties: A minimum of 25% of: least 95% of the: - Viura, - Tempranillo, - Tempranillo, - Garnacha Blanca, - Garnacha Tinta, - Garnacha Tinta, - Malvasia, - Graciano, - Graciano, - Maturana white, - Mazuelo - Mazuelo - Tempranillo white, - Maturana Tinta - Maturana Tinta - Turruntés, will be used. The optional mixture for the In red wines made from whole grapes, this - Chardonnay, assumption of rosé wines must be made percentage will be at least 85%. - Sauvignon Blanc after delivery or weighed. - Verdejo. Source: PDO “Rioja” Managing Organization The list of authorized variety is presented below. One should notice that the grape variety called “Turruntés” (in red in the table), is a white grape variety that can be used to produce PDO Rioja, even if it is forbidden by the regional law. Thus, one should conclude that it may be authorized in the other Autonomous Community producing PDO Rioja (Basque country, Navarre). Table 18: Wine grape varieties authorised to produce PDO "Rioja"

Red varieties White varieties

Viura Sauvignon Blanc Tempranillo Malvasia Garnacha Verdejo Graciano Garnacha Blancha Mazuelo Maturana blanca Maturana Tinta Chardonnay Tempranillo blanco Turruntés Source: PDO “Rioja” Managing Organization As highlighted above in the table, the PDO list contains less grape varieties than the official regional list of authorized grape varieties to be planted for winemaking. Table 19: Description of main local specificities in oenological practices Type of Geographical wine level for the rule Description of the specific rule (compared to EU standards defined in the regulation) product (MS or region) concerned Alcoholic content:

- Minimum alcoholic strength of 11.5% Vol. for reds and 10.5% Vol. for whites and rosés. PDO Rioja - Once the first fermentation is finished, the alcoholic strength of the wine destined for quality sparkling wine should be between 9.5% vol. and 11.5% vol. - The quality sparkling wines covered for consumption are white and rosé, with a minimum alcoholic strength of 11% vol. and maximum of 13% vol. The use of presses known as continuous, in which the pressure is exerted by an Archimedean screw PDO “Rioja” in its advance on a counterweight, is prohibited in the preparation. delimited area The use of centrifugal machines with a vertical axis is also prohibited. In the elaboration of protected wines, it will not be possible to use practices of preheating the grapes or heating musts or wines in the presence of pomace tending to force the extraction of the coloring matter.

You can not use wood chips in the production and aging of wines, including the fermentation of fresh grapes and grape must, as well as in the storage, of the wines protected by the denomination

Fermented in barrels: Only for white and rosé wines on condition of a minimum stay of one month in barrel19, Carbonic maceration: The maximum percentage of admissible white grapes in the production of red

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Type of Geographical wine level for the rule Description of the specific rule (compared to EU standards defined in the regulation) product (MS or region) concerned wines is 5% in the case of destemmed grapes and 15% in the whole. It consists of an elaboration process with whole grapes in sealed tanks saturated with CO2, in which an intracellular fermentation takes place (without O2) in each berry, following the usual process of destemming, crushing and maceration or direct pressing Quality sparkling wine is the product obtained by a second alcoholic fermentation in bottle, according to the traditional method, of a white or rosé wine qualified for quality sparkling wine Sparkling wine The wine must remain continuously for at least 15 months in the same bottle from the bottling to the of quality (“vino disgorging. During this time the 2nd fermentation will take place, the wine remaining in contact with espumoso de its lees. Calidad”) from In the production of quality sparkling wines, the grape harvest must be manual, and mechanical PDO “Rioja” harvesting is prohibited. The whole process of making quality sparkling wine, in addition to the labeling, must be done in the same winery.

4.2 Competitiveness distortions due to specific rules on oenological practices

. At national level No specific competitor has been identified by the interviewees. Nevertheless, some national stakeholders have identified competitive distortion due to different oenological rules or other factors that could impact competitiveness of wine products:

 In some countries, it is allowed to add other products to wine, while it is not permitted in EU (water in Chile for instance).  Wine grape varieties: a national representative of the sector mentioned a distortion due to the EU restriction of wine grape varieties: in Brazil for instance, some very productive varieties are planted while there are not authorized in EU. It induces an unfair competition.  Low requirement regarding the traceability of the products and the minimum alcohol strength of wines products (for instance in Chile).  Competition on the price: a national representative of the sector states that the main competition is on the price: Spanish wines do not compete with USA or Australian wines because there are more expensive.  Technical and administrative barriers: there is a need of a better coordination of regulations between countries. The barriers are much more technical and bureaucratic than oenological. It would be better to have clear and homogeneous international standards. Indeed, there is competition with countries that have trade agreement with other countries while it is not the case for Spanish or EU wines. Indeed, today the operators have to do the research individually. Each country must perform analyses for each additive demonstrate that there is no risk for health. In that way, national representative stated that it would be important that EU helps operators to eliminate these technical barriers and support analyses to be able to export to countries like Japan.

In addition, a national representative of the sector stated that there is no particular competition due to the EU restrictions on oenological practices. Spanish wines compete with third countries thanks to the denomination of origin and the reference of quality. In addition, a national representative of the sector specify that strict oenological practices do not have any effect on the consumer.

. At regional level As a reminder, the PDO Rioja represent more than 98% of the regional production and the great majority of the wine produced is Tempranillo red still wine. Thus, the analysis of competitors focuses on competitors of this wine. The most representative group of wine companies in the regional interbranch organization mentioned some EU competitors and extra-EU competitors (see Table 18) of the PDO Rioja. During the interviews, it was not mentioned specific international market on which some specific wine competes with the PDO wine from La Rioja. However, the group identified the competitors of La Rioja on the 12 most important markets of La Rioja.

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No distinctions were made between PDO, PGI, varietal wines and wines without any mention of the vintage year and grape variety. However, when speaking of EU wine competing with La Rioja’s wine, regions producing famous PDO wines were mentioned. In extra EU wine regions, Protected Designation of Origin is less commonly used, so there’s more probability the interviewees were talking about varietal wine, which is usually the type of wine the most sold from the extra-EU countries mentioned. However, they stated, as many other interviewees, that there were no competitiveness distortions due to specific rules on oenological practices. The reason other wines compete with the wine from la Rioja is because of the reputation and the price of these wines on international markets.

4.2.1 Description of competing wines

The main competitors of PDO Rioja’s wine on the most important market of PDO Rioja are mentioned in the following table.

As shown below, the main EU competitors are the French and Italian regions producing famous PDO red still wine: Bordeaux, Burgundy and Tuscany, while the “abroad competitor” are Australia and Chile mainly producing varietal wines. The interviewees didn’t know much about the specific oenological practises in these Member States and Countries, however, they all stated that specific oenological practises were not a factor of competition. Indeed, they stated that the difference in these practises between region will reflect on the quality of the marketed wine and thus will not be a factor of competition distortion between regions. It was stated that producing under the PDO Rioja is on a voluntary basis of the wine producer. The wine producer decides to adopt the restrictive PDO specifications because he is aware that he will sell better under the PDO and that the PDO reputation is based on these restrictive specifications.

Concerning the abroad competitors, one can observe that they are countries from the “new world”. In these new countries, it was stated that wine producers use wood chips while it is forbidden under the PDO Rioja. However, the interviewees stated that the result on the wine is different from a wine aged in wooden barrels. The wine taste differently according to the practises performed. It was declared that the consumer may be fooled the first time he decides to buy the wine because of the labelling of key words such as: “wood”, but the consumer will be only fooled once. Indeed, once, he tasted the wine, the consumer will notice the difference between the use of wood barrel and wood chips. That’s why the group of wine companies stated that the oenological practises do not represent a barrier in trades at international level. Table 20: Main differences in oenological practices between wine under PDO “”Rioja” and its main competitors

Competitor Main differences in oenological practices EU competitor 1: Wines from Bordeaux, France EU competitor 2: Wines from Burgundy, France No significant differences have been identified Use of wood chips Abroad competitor 1: Wines from Australia Addition of water to dilute high sugar extracts to improve fermentation performance Abroad competitor 2: Wines from Chile Use of wood chips Source: based on interviews, Australian Food Standard code and PDO specifications

4.3 Synthesis of the interviews

4.3.1 Effects of oenological practices on marketing conditions for producers and traders

5.10 Did oenological practices as applied in your Member State/region/PDO-PGI territory help to improve the marketing conditions of concerned wines?

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. At national level According to a national representative of the sector, the reputation of the wine is closely linked to the quality of the wine, brought in part by oenological practices. Oenological practices therefore have an impact on the quality of the wine and could help to improve their marketing conditions. In addition, the main specificities on oenological practices are decided at PDO/PGI level and are part of their marketing strategy (selling the quality).

. At regional level, The PDO managing organization, the wineries and cooperatives interviewed and the group of wine companies from the region all stated that the restrictive oenological practises imposed for the production of PDO wine from La Rioja help to improve the marketing conditions of the wine. Not only did the practises improve the marketing conditions, but it is also one of the main information they are advertising on to improve sales. The same feeling was shared by regional authorities stating that wine products from other countries that do not have the same oenological practices than Rioja’s are not competitors because they make different wines and will be on different market sector.

IQ 5.11 Were oenological practices as applied in your Member State/region/PDO-PGI area more or less constraining than for main competing wines?

Competing wines inside the EU At national level, it was mentioned several times the EU rules on enrichment of the wine, and the possibility to enrich the wine from different manner according to EU regions. Some organisations consider that the use of concentrated grape must instead of sugar (chaptalisation) would permit to better regulate wine market and stabilize prices, using thus the production surpluses of the years of great harvest. In addition, they stated that chaptalisation in regions where it is an historic practice is not problematic but the development of this practice in new regions is. Indeed, it modifies the characteristics of wines, which loses its natural characteristics.

At regional level, compared to EU wines, the interviewees couldn’t state if the oenological practises from PDO Rija were more or less restrictive than the oenological practises applied inside EU regions. It was mentioned several times the EU rules on enrichment of the wine, and the possibility to enrich the wine from different manner according to EU regions.

Competing wines of third countries At national level, according to a representative of the sector, the barriers are administrative but also technical because of different regulations depending on the third country (the addition of additives etc.). There are different oenological practices between Spain and third countries, but it is difficult to say if they are more restrictive or not because they are different. The real problem comes from countries that do not want to join the OIV and have different regulations that causes problems to the entry of wines in these countries (eg the United States, China, Brazil, Japan). It is important to standardize the oenological practices at the world level and essential to facilitate exports. Therefore, following the practices of the OIV is essential, otherwise too much trade barriers will prevent the marketing of Spanish wines.

At regional level, the group of wine companies and the PDO organization mentioned that the oenological practises of the PDO Rioja are more restrictive than the oenological practises from abroad competitors. They stated that it was a marketing choice. Because there are new countries that have started to produce wine, the objective is to stand out from these new producing countries by advertising on the expertise of the countries from the “old world” in producing wine. The idea is to put the emphasis on the fact that these “old countries” better manage the production and elaboration of the wine and have restrictive requirements from the field to the bottling of a wine to produce the best quality of wine in the world.

Hence, when compared to Australia and Chile for example, it was common to hear that these new countries have less restrictive rules in terms of oenological practices. Some abroad competitors are allowed to add some water during the elaboration of the wine or add some wood chips so that the wine could have a woody flavour.

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Some wineries and cooperatives couldn’t say much about the level of restriction of oenological practices in other countries. They only knew that the cost of production of wines were cheaper in some third countries and this had an impact on the selling price of wine products. One head manager of a winery that possess 4 production sites stated that third countries had more flexibility on the elaboration of wine and that wine producers from la Rioja could benefit from more flexibility on oenological practises. Indeed, the director of the winery stated that he would be more competitive if he was sometimes allowed to increase the alcohol content and to modify the color of the wine, or to reduce the alcohol content and reduce the level of acidity such as in other third countries. However, he also stated that the competition between wines comes mainly due to taxes and the cost of production, that in the indeed are reflected in the final price of wine products.

IQ 5.12 Are the decisions of the EC concerning the changes in marketing standards taken in a timely manner? Can you provide examples? . At national level National representative (FEV) stated that some lack of flexibility and changes limits the adaptation to the market. Indeed, some countries like New Zealand are testing the production of wine without alcohol, while in EU, it is impossible to call it a wine product. It is a real limit to adapt to the consumers expectations. The decisions must be made more quickly, at OIV and EU level, in particular new oenological practices that do not have effects on the taste and the quality of wine.

4.3.2 Effect of oenological practices on the safety and quality of the products

IQ 5.1 How do EU rules on oenological practices contribute to the safety of EU wine products? . At regional level Regional authorities mentioned that the wine shouldn’t be subject to health and hygiene controls such as any other food products. The interviewees stated that restriction on oenological practices were sufficient to ensure health safety of wine products. Louis Pasteur stated many years ago that the wine is a safe product because stable.

4.3.3 Relevance and added value of specific oenological practices and restrictions on varieties

IQ 14.2 For what reasons were restrictions regarding varieties initially set up? . At national level According to national authority and representative of the sector, the 6 varieties not allowed in EU have been forbidden because of their sensitivity of phylloxera.

IQ 14.3 Are the initial justifications for restrictions still relevant today? . At national level According to national representative of the sector, this restriction is not relevant today because there is no anymore phylloxera.

. At regional level, The stakeholders interviewed didn’t have an opinion on the relevance of the initial restrictions on varieties. The issue at stake concerns new grape varieties that should be added to the list of authorized varieties and old grape varieties producing great quality of wine grape that should be better investigated in order to be authorized for plantings. In La Rioja, because winegrowers produce under the PDO Rioja, it is the restrictions of the PDO managing organization that should be analysed.

IQ 14.4 Today, what are the issues at stake regarding the use of varieties in wine production? . At national level Competitiveness / adaptation to climatic conditions

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According to the authorities and national representative, varieties used, wine quality and competitiveness are slightly linked to the specificities of each vineyard. The issue is to adapt the variety to the local conditions (sometimes, it is possible to change the vineyard orientation or to add irrigation or reduce isolation for instance but sometimes no) The adaptation to climatic conditions is a great issue. Varieties with tolerance to the drought are studied. The interviewees mentioned such an incompatibility between winegrowing conditions and the variety expected by the consumers: for example, some varieties demanded by the consumer like Syrah are not well adapted to the climatic condition of Castilla-La-Mancha

. At regional level, Genetic biodiversity The union of family wineries mentioned the need to preserve old vines, and the need to give the possibility to wine growers to replant old vines. However, the interviewee stated that the genetic pool of these old vines hasn’t been analysed and the grape varieties of these old vines aren’t registered in the official national catalogue of grape varieties authorized for winemaking. Consequently, wine growers aren’t allowed to replant this type of vine and replant clonal planting material that keeps producing volume of wine grapes and that are supported under the restructuring measure. As a result, these old varieties are threatened with genetic erosion. The idea of preserving and fostering the cultivation of old traditional varieties was shared by some cooperatives and wineries. The union of family wineries and the winegrowers’ union shared the same feeling on the support of old vines. They both stated that even if the old vines already planted are supported via the Rural Development Programme, there aren’t enough economic incentive for the winegrower to keep them compared to the grant they could receive from the NSP restructuring measure.

Pest and fungi resistance They also mentioned the need to find new grape varieties resistant to pests and fungi that come along with climate change. The interviewee mentioned that there were some debates at regional and national level around the potential benefits of cross breeding “vitis” species with other “vitis” from America or China. This type of crossbreeding could create some hybrids much more resistant to fungi and pests. They called it “hybrids from direct production”. However, these hybrids possess diglucoside know as “malvina” that could have potential negative impacts on human health. There are still on-going researches on the matter.

IQ 16.4 What would be the consequences of applying strictly OIV definitions, rules on oenological practices and rules concerning authorised wine grape varieties in the EU? . In terms of oenological practices At national level, there are slight differences between EU rules and OIV recommendation: there is some lack of harmonisation. However, they are particular cases, because the EU generally takes with reference the enological practices of the OIV. Thus, there would be no significant consequences if applying strictly OIV definitions.

At regional level, authorities stated that same rules on oenological practises around the world would have a positive impact on trades and will remove all technical barriers relating to wine trades. However, the interviewees also stated that the EU restrictions in terms of oenological practises aren’t too much restrictive and that it is important to avoid a deregularisation of the market that would be caused by the removal of the regulation 606/2009 fixing the rules on oenological practises. Currently, traders selling EU wine products are promoting EU specificities when selling an EU wine. These EU specificities wouldn’t be promoted anymore if the specific EU rules aren’t maintained and it would have a great impact on trades. The final word on the topic, was that specific EU rules should be maintained in order to promote

One cooperative stated that it is necessary to have different restrictions for winemaking, according to geographical localization, to take into account regional climate specificities. Another winery mentioned that applying same definitions and rules in the EU and in third countries would allow to increase trades and become more competitive at international markets.

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4.4 Comments and conclusions of the expert

4.4.1 On the effectiveness of EU rules on competitiveness and quality

From the expert’s point of view, the EU rules set the basic rules for wine product elaboration. These EU rules are close to the OIV rules with some added specifications and restrictions. However, in La Rioja, the great majority of wine produced is under the PDO Rioja. As in many other renowned EU regions, PDO wines are subject to much stricter rules than the ones provided by the EU regulation. Indeed, in the EU, many regions such as La Rioja promote their traditional expertise as they have been producing wine for decades. Therefore, their products are sold on a specific market segment that shouldn’t be competing with third countries’ wine production. The competitiveness and quality of the wine products from La Rioja, rely on the PDO Rioja specifications.

4.4.2 On the relevance of EU rules and their added value compared to OIV rules

From the expert’s point of view, the implementation of EU rules that differed from the OIV rules may have caused some competition distortion between EU Member States and third countries because of the possibility to perform some practises abroad that are prohibited inside the EU. However, oenological practises restrictions under the PDO Rioja has been voluntarily implemented in order to produce a higher quality of wine. The specifications of the PDO Rioja are more restrictive than the EU requirements. The interviewed stakeholders from La Rioja have put the emphasis on the fact that oenological practises have a direct impact on the taste of the wine and different practises will lead to different taste of wines. In their opinion, they perform more restrictive oenological practices leading to a higher quality of wine produced compared to third countries. Here, the matter is not the relevance of EU rules compared to OIV rules but the willingness of operators to follow even more restrictive rules than the ones applied in the EU.

The EU rules were considered essential for regional authorities in order to be able to promote EU specificities abroad. However, some wine producers stated that the issue was not the difference in oenological practises but mainly tariff barriers. Many stakeholders declared that the selling price of a bottle is a major incentive in trades, and that the selling price depended greatly on the cost of production and the tariff barriers when entering a new market.

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5. THEME 4: EU RULES ON LABELLING AND PRESENTATION

5.1 Description of the labelling rules applied at Member State and local level

5.1.1 Description of specific labelling rules applied in your Member State, region or main PDO/PGIs (including restrictions on variety labelling)

5.1.1.1 Description of wine labelling rules in Spain In Spain, in addition to the provisions laid down in Regulation (EC) 607/2009, other specific labelling rules are applied, laid down in the Royal decree 1363/2011: . Name of the producer: Spanish term “producer” (“productor” in Spanish) can be replaced by “processor” (“elaborador” in Spanish). For sparkling wines, in the case of an elaboration by order, the indication of the processor shall be completed by the terms "prepared for by" (“elaborado para por” in spanish). . Use of a code The code to replace the name of the bottler, producer, importer or seller when it consists of, or contain a DO/GI wine, will be the Spanish Wine Packer Registration number. If the product in question or the economic operator is not subject to registration in the Register of Wine Packers, the of Identification Tax Code (CIF) will be used.

Optional requirement in Spain for PDO/PGI wines: . Fermentation or ageing in oak barrels: To indicate that the PDO/PGI wine products have been fermented or aged in wooden containers, operators can use also: o The term "Barrel“: can be used for PDO/PGI wine products that have been fermented, aged or aged in wooden containers. When this term is used, the period of time the wine has remained in the barrel must be labelled, in months or years. The maximum capacity of the barrel should be 600 liters. The indication "Barrel fermentation" may be used provided that the fermentation of the wine has taken place in the afore mentioned barrel. o The term "Oak" can be used for PDO/PGI wine products that have been fermented or aged in oak barrels. When this term is used, the period of time the wine has remained in the oak barrel must be labelled, in months or years, whose maximum capacity should be 600 liters. The indications "noble", "vintage" and "oak" may only be used when the container is made of oak, while 'barrel' may be used when the container is of any kind of wood. These terms may not be used for the addition of chips during the elaboration process, even when the wine has also been aged in wooden barrel. . Traditional terms Traditional terms “crianza”, “reserva”, “gran reserva” and other traditional terms included in the EU data base E-Bacchus will be indicated on labels with characters whose dimensions do not exceed those who indicate the geographical name. . Geographical units greater than the area covered by a PDO/PGI The use, for PDO/PGI wines, of the name of a certain geographical unit greater than that corresponding to its production area is authorized, in order to specify its location. o The name of the largest geographical unit must include the latter. o This indication shall appear on the label of the corresponding PDO/PGI wine. o The competent Administrations shall inform the Ministry of the Environment, Rural and Marine Affairs of the actions carried out in accordance with this article, in order to add it into Annex V of the royal decree.

Requirement in Spain for varietal wines: . The variety “Albariño” can not appear on the label

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5.1.1.2 Description of labelling rules applied in La Rioja20

PDO “Rioja”

In the labeling should appear a registered trademark that will also stand out from the expression 'RIOJA', on the label, for its superior size and thickness. To justify its registration, at least accreditation must be provided if the registration of the trademark in the corresponding Industrial Property Registry has been requested. In the event of a possible conflict of interest between registered wineries due to overlap between trademarks included in the labeling, said circumstances will be transferred to interested wineries for their knowledge and Registered trademark effects.

In the case of shared use of brands, to be used for selling PDO wines from La Rioja and other wines or drinks derived from wine, the proposal of all the designs (Rioja and non-Rioja) will be transferred for evaluation before the General Directorate of the Food Industry of the Ministry of Agriculture and Fisheries, Food and Environment for the purpose of checking whether the designation and presentation of the wines allows, clearly and easily, to identify the origin and characteristics of the different products of so as not to induce error or confusion of the consumer.

In the labeling the word 'RIOJA' must appear and immediately below, in one or more lines, and lower font size, the indication 'Qualified Designation of Origin'. They are inseparable. The name of the Denomination 'RIOJA' must appear prominently, appearing with clear, readable, indelible characters and with strokes not excessively thick but its size can not exceed 1 centimeter in height, nor occupy more than half the width total of the label. These characters can not be less than 0.3 cm. of height when the container carries a single label. Category In cases where the container carries two labels or two different visual fields, these characters can not be represented in a size smaller than 0.3 cm. on the label or in the visual field other than the one that gathers all the obligatory mentions. 18.7 cl containers are excepted from compliance with the minimum size indicated. capacity. In the range of packaging exceeding 18,7 cl. and less than 75 cl., the word 'RIOJA' can not be represented in a size smaller than 0.2 cm tall.

Two possible options: - “Bottled by” Information on the - “Bottled for… by” bottler o Bottled for another winery from La Rioja o Bottled for a third party

Nominal Volume For Rioja, the liter range is not allowed.

The stamp of the Regulatory Council must be included prominently.

Seal with crumpled edges

It will be indicated in percentage, unit or half unit followed by the symbol '% Vol.' And can be preceded by Volumetric alcohol 'alcoholic degree', 'acquired alcohol' or 'alc'. degree acquired. Tolerance in relation to analysis of 0.5% vol. or 0.8% vol. for PDO PGI wines. stored in bottle more than three years

Each package must carry indelibly, easily legible and visible the nominal quantity expressed in liters, centiliters or milliliters by means of figures. Nominal volume The ranges of the nominal quantities of the contents in the prepared packages for 'still wines', in the range of 100 ml to 1500 ml are eight: 100 -187 - 250 - 375 - 500 - 750 - 1000 - 1500. Outside the interval, the use will be free.

Wines without PDO/PGI

1. The harvest year may appear on the labeling, in the relevant records and supporting documents provided Harvest year that at least 85% of the grapes used to produce the wines in question have been harvested in the year in question. This figure shall not include the products indicated in Article 61.1 of Regulation (EC) No. 607/2009.

20 https://es.riojawine.com/es/842-guia-informativa-del-etiquetado.html

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2. In the case of products traditionally obtained from grapes harvested in January or February, the harvest year that should appear on the label will be that of the previous calendar year.

1. The names, or respective synonyms, of the wine grape varieties used in the production of the wines that may appear on the labeling, in the registers and the relevant supporting documents shall be the following ones: Chardonnay, B. Graciano,T. Macabeo, Viura, B. Mazuela, T. Moscatel de Alejandría, B. Moscatel de Grano Menudo, B. Pinot Noir, T. Tempranillo, T. Variedades autorizadas: Albillo Mayor, Turruntés, B. Garnacha Blanca, B. Garnacha Tinta, T. Name of the wine Gewürztraminer, B. grape variety Malvasía, B. Maturana Blanca, B. Maturana Tinta, T. Monastrell, T. Parellada, B. Riesling, B. Sauvignon Blanc, B. Tempranillo Blanco, B. Verdejo, B. Xarello, B except in the case of wines originating in third countries, in which case it will be established in article 62.1 b) of Regulation (EC) No. 607/2009.

2. For wines without PDO or PGI elaborated or bottled in the Autonomous Community of La Rioja, it is forbidden to indicate as an optional particular the following wine grape variety(-ies): Graciano, Tempranillo, Maturana Tinta, Macabeo, Viura, Tempranillo Blanco, Albillo Mayor, Turruntés, Maturana Blanca Sources: Regional Order 11/2013, from the 22 of March and “Informative guide to labeling”, PDO Managing organization of “Rioja”

5.1.2 Description of the system set up for controlling the labelling

The Regional Order 11/2013, from the 22 of March, lays down the rules for the certification of the vintage and the variety of wines without designation of protected origin or protected geographical indication 21

Competent authority

The competent authority responsible for guaranteeing the certification established in Article 63.1 of Regulation (EC) 607/2009 in the area of the Autonomous Community of La Rioja is the General Directorate with competence in matters of agri-food quality.

Authorization of the operators.

21 http://www.larioja.org/bor/es/boletines-nuevo?tipo=2&fecha=2013/03/27&referencia=1151099-2-HTML-462781-X

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1. Operators who produce and / or bottle wine in the Autonomous Community of La Rioja and intend to include one or more grape varieties or the year of harvest in the wines without a protected designation of origin or geographical indication protected, must meet the following conditions: a) Be the owner of an industry of the wine sector that is registered in the Register of Agri-Food Industries of La Rioja or have signed a contract with one of these holders. b) Have a contract with an accredited certification body in compliance with standard EN 45011 or ISO / IEC Guide 65 (general criteria relating to product certification bodies) or a substitute standard for certification of the variety and the vintage of the wine products, which has been authorized by the General Directorate with competence in agri-food quality.

2. Those interested, who meet the conditions set out in section 1 will submit an application for each of the facilities in which they carry out their activity, addressed to the General Directorate with competence in agri- food quality. 4. The Directorate General with competences in agri-food quality will be responsible for the instruction, processing and resolution of the authorization requests corresponding to operators whose facilities are located in their territorial scope.

9. The authorizations granted by the General Directorate with competence in agri-food quality, to indicate the vintage and / or the variety in the wines without designation of origin or protected geographical indication, will have a validity of 5 years, which will be automatically extended for another 5 years while the requirements regulated in this decree are met.

Obligations of varietal wine operators.

Producers and bottlers of varietal wines must: a) Before making the elaboration, communicate to the certification body, by some means that allows to have proof of its reception, the date of beginning of the wine elaboration and its intention to elaborate "varietal wine". b) Having submitted the production declaration in accordance with Commission Regulation (EC) No. 436/2009, or the standard that replaces it.

Producers and bottlers or bottlers of "varietal wines" must:

a) Keep a specific record book of "varietal wines", and with different accounts for: o each varietal wine o each wine with indication of the year of harvest.

b) Establish a system of self-check that allows to trace the origin of each item and the veracity of all the mentions that appear on the labeling c) identify the containers for the storage of the "varietal wines" d) Having submitted the declaration of stock e) Before January 31 of each year, authorized operators must communicate, as a minimum, to the General Directorate with competence in agri-food quality: o Quantity of grapes (in kilograms) o Volume of wine (Hl). o Value of wine marketed by destination (national market, European Union and third countries), with the distinction between bulk and bottled. In all cases, it must be differentiated for each type of wine. In addition, the type of wine (white, pink or red) must be indicated.

Obligations of the certification entities. Certification entities must comply with the following obligations:

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a) Have the updated list of wine operators with the mention "varietal wine". b) Carry out regular on-site and documentary checks in order to obtain guarantees on the traceability of wine, which must reach the level of grape production, and checks on compliance with the requirements of this decree. The control will be carried out in all the facilities at least once per campaign. c) Communicate to the General Directorate with competence in agri-food quality, at least 15 days in advance, the expected date of the on-site controls. d) Notify the General Directorate with competences in agri-food quality, the issuance of the certificate, the withdrawal or the suspension of the certification of the operators within ten days of its occurrence. e) Inform the competent General Directorate, within seven days of its detection, of any circumstance or action of the operators subject to the control of the certification entity that may constitute an infraction. f) Report annually to the General Directorate with competence in agri-food quality on the actions carried out within the scope of this decree. The report must include the operators on which the certificate was issued, the operators that are in the process of certification, the non-conformities detected to each one and the term granted to correct them. g) Send to the General Directorate with competence in agri-food quality, before January 31 of each year, a statistical summary in relation to its activity as a certification entity that contains at least the following information: - Quantity of grapes (in kilograms) - Volume of wine (Hl). - Number of operators, with the specification of the activity: wine growers, processors and bottlers. In all cases, it must be differentiated for each type of wine, understood as those presenting optional indications that are not exactly the same. In addition, the type of wine (white, pink or red) must be indicated. h) To inform the General Directorate with competence in agri-food quality, within ten days of the modification has occurred, any modification that affects the conditions that have been taken into account for the authorization.

5.2 Existing national data on non-compliance with labelling rules

Table 21: Number of controls performed in La Rioja in 2018 Number of controls in 2018 Wine without PDO/PGI 9 Wine with PDO/PGI 50 Source: Gobierno de la Rioja Table 22: controls performed in La Rioja in 2017 Labelling infractions in 2017 Number of controls Number of infractions Wine without PDO/PGI 21 2 Wine with PDO/PGI 64 0

Source: Gobierno de la Rioja

As one may notice, very few infractions have been detected in La Rioja.

5.3 Synthesis of the interviews

5.3.1 Effects of labelling and presentation rules on the adequate information of consumers

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IQ 6.2 Do EU rules on labelling allow an adequate, clear and sufficient information on the products?

. At national level The National agri-food cooperatives organisation reported the increasing requirements from public authorities in terms of labelling rules, and the increasing demand agri-food cooperatives for more information. The interviewees reported that it is complicated to follow both demands. The increasing requirements in labelling rules was considered as an issue by the interviewees.

. At regional level Expert’s opinion: Many stakeholders interviewed mentioned the differences of labelling rules within the EU. Thus, the information labelled on products could be clearer if easily comparable between Member States. Many interviewees at regional level, mentioned that the wine is a particular agri-food product that shouldn’t be compared to other agri-food products. The wine operators stated that the information provided on the packaging was already sufficient and adequate, and if more information were to be added on the packaging, it should start with information concerning enrichment operations. The addition of information should come with the possibility to dematerialize the information, since there is already a lot of information on the labels.

IQ 6.3 Is the information provided sufficient as regards health warnings, alcohol content, calorie and nutritional aspects? . At national level The national organisation bringing together wine cooperatives stated that wine operators can add more health warnings, such as “prohibited for minors” or add the logo of the pregnant woman only on a voluntary basis. However, the organisation stated that it should be compulsory to every operators. Indeed, if mandatory, the wine sector will show to the population that it is a responsible sector.

. At regional level It was explicitly stated by the regional PDO managing organisation of “Rioja” that the wine is not a pharmaceutical product on which all the product details and information on the way it should be consumed must be added.

IQ 6.4 For foreign wines sold on the local market, do the languages used allow an adequate, clear and sufficient information on the products?

n.a

IQ 6.5 Is there any other type of information that would be necessary to add on the labels to ensure an adequate, clear and sufficient information on the products?

National authorities interviewed didn’t mention any other type of information that would be necessary to add on the labels.

IQ 9.1 To what extent do consumers understand the specificities of PDO/PGI labelling compared to non- PDO/PGI labelling? . At national level It was mentioned by the national agri-food cooperatives organisation that the consumers do not always make the difference between a PDO/PGI wine and other wines. However, the interviewees stated that the issue does not come from the labelling rules but the lack of awareness from the consumer.

. At regional level

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The opinion was shared by regional authorities (regional ministry for the Agriculture) that mentioned that the consumers still have difficulties to distinguish PDO/PGI wines from other wines, but their awareness is slowly improving. More-over, the regional PDO “Rioja” managing organisation stated that new information that were exclusively labelled on PDO wines were nowadays authorized on non PDO wines, leading to confusion of the consumers

5.3.2 Effects of labelling and presentation rules on marketing conditions and fair competition between operators

IQ 6.6 Did the new rules on labelling allow an increase in the quantity of production marketed/traded?

. At regional level, The stakeholders at regional level couldn’t tell the relation between the increase in the quantity of production marketed / traded and the new rules on labelling. However it was explicitly said by the union of wine companies that the EU labelling rules are much more complicated than the ones in third countries. Because each third country follows specifics rules, they have to adapt the labels of their products to the country they plan to export it. One of the most famous winery in La Rioja declared that their reputation with their brand allow an increase in the quantity and value of the production marketed/traded. Their objective is to maintain as much as possible the same design of their labels, taking into account the EU rules. Their philosophy is to maintain their image through the same brand, considering the fact that their wineries has more than 100 years of history. It is important for the consumer to identify easily their wines. That’s why they try to change as little as possible the labels of their wines.

IQ 6.7 Did the new rules on labelling allow an increase in the value of production marketed/traded?

. At regional level, The stakeholders at regional level couldn’t tell the relation between the increase in the value of production marketed / traded and the new rules on labelling. However it was explicitly said by the union of wine companies that the EU labelling rules are much more stricter than the ones in third countries. Because each third country follows specifics rules, EU Member States have to adapt the labels of their products to the country they plan to export it.

The rules on labelling allow to put forward the PDO PGI and the grape variety on the label, but many stakeholders stated that the consumer still have difficulties to distinguish the difference between a PDO wine, a PGI wine, a varietal wine and a wine without any mention. The consumers tend to recognize better the region a wine comes from. Thus, the goal is to make the consumer aware of the region La Rioja. It was mentioned by the group of wine companies that more and more consumers start to make the difference between the wine categories. Different regional stakeholders shared the idea declaring that consumers start to make a difference between wine categories but it really depends on the market and many consumers in third countries do not make the difference yet. One winery stated that in third countries, they only identify the country / Member State of provenance (such as “Wine from Spain”). One of the most famous winery in La Rioja stated that in some markets, such as China, the price of the bottle may be more important than the information on the label. They either look for expensive wines or very cheap ones.

IQ 6.10 Do the new rules contribute to ensure a fair competition between operators? . At national level, National representative of the sector reported the need to homogenise the labelling rules between EU Member States to ensure fair competition between operators.

. At regional level,

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The PDO managing organization mentioned that EU rules allow non PDO/PGI wines to add information on the label that before used to be only on PDO and PGI wine and helped the consumer to identify the wine category. Now, the consumer has more difficulties to differentiate a PDO/PGI wine from another wine to the disadvantage of PDO/PGI wines.

IQ 6.11 In your opinion, what changes would be necessary in the labelling rules to ensure a fair competition between operators? . At national level, The Spanish Wine Federation stated that to ensure a fair competition between operators in a context of adding information, the addition of sugar in the wine should be specified on labels when sugar residues is found. Moreover, the organisation bringing together all wine cooperatives stated that the chaptalization is an operation that should be specified on the labelled. The interviewees mentioned that the opinion was shared by their counterparts in Italy. More over the National agri-food cooperatives organisation reported the increasing requirements from public authorities in terms of labelling rules, and the increasing demand for more information from wine consumers. The interviewees reported that it is complicated to follow both demands. At last, it was explicitly stated by the Spanish Wine organisation that there would be a fairer competition playing field between operators if all Member States had the same labelling rules. The interviewees mentioned the benefits of less subsidiarity to Member States and more explicit and defined EU labelling rules.

. At regional level, It was mentioned by many stakeholders, cooperatives and wineries, that to have a fair competition, one wine producer should add the information on the enrichment practise if the sucrose is coming from another fruit/vegetable. For many stakeholders, the addition of sugar when coming from another type of fruit/vegetable is not justified. Hence, their wish to make people become aware of this practice.

IQ 6.8 Were the rules on labelling simple to implement? . At national level, National representative of the sector reported the increasing requirements from public authorities in terms of labelling rules. According to the interviewees, these increasing requirements represent an issue for operators and it is necessary to simplify the EU labelling rules. Some interviewees suggested for example, the labelling of a QR code in order to avoid too much information on the label and keep it pure. The operator would add all the information on a dematerialised website thanks to the QR code. It was mentioned by the interviewees that the operators are used to implement labelling rules since they have been the same for many years. What was denounced by the stakeholders were: - the possible differences in labelling rules observed in EU Member States because of the subsidiarity given by the European Commission to Member States. - The difference in labelling rules between the EU and the OIV, and third countries

. At regional level, No stakeholder stated that the labelling rules were complicated to implemented. All wine producers are used to the rules and know the type of compulsory and optional information to add on the label. At was mentioned by the group of wine companies from La Rioja that the EU labelling rules were much more complicated than other third countries because operators wish to add more information compared to third countries such as the geographical zone, the wine category (“crianza”, “reserve”, “gran reserva”, the brand, the quality stamp etc.)

IQ 6.9 What would be the consequence of rules requiring more detailed information (on ingredients for instance)? . At regional level, The regional authorities declared that the level of information added on the marketed product was enough as it is today. More information added on the product, will lead to saturation the consumer with information. The PDO organization shared the same idea stating that the wine isn’t toxic and there is very little sanitary risks.

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Nutritional aspects should not be added on the product in their opinion. Wine product is a specific agri-food product different from the others. If there is a real demand coming from the consumer to add some information on the nutritional aspects, they propose the use of a QR code to keep a refined label. Many other stakeholders such as cooperatives and wineries shared this idea of keeping the level of information on the label as it is today and eventually adding a QR code for consumers that wishes to know more on the wine product (the elaboration of the product, nutritional aspects, specificity of the harvest etc.). One winery declared that it was important to identify the allergens in a wine. However, if they were to perform analysis to identify all the ingredients and residuals that a wine contains every year, it would involve excessive costs. The quantity of ingredients varies from one batch to another, meaning that the addition of details on the label will involve printing different labels according to each batch. The interviewee didn’t find it relevant to even put a QR code on the wine product. One cooperative stated that many of the inputs added during the elaboration of the wine is transformed and do not remain in the finalized product. Therefore, there is no reason to add information on inputs on the label if there are no residual traces in the finalized product.

IQ 9.5 If you could change some of the labelling rules for non-PDO/PGI wines, what would you change? What additional quantity of wine would this change in the rules allow to sell? What would this represent in value? At regional level, non-PDO/PGI wine producers haven’t been interviewed. More than 95% of the wine producers are producing PDO “Rioja” wine.

5.4 Comments and conclusions of the expert

5.4.1 On the effectiveness of labelling rules on the adequate information of consumers

It was stated that there is a high level of regulated information on product packaging compared to third countries and many stakeholders do not wish to add more information.

The interviewees seemed to manage the EU rules in terms of labelling, and are very well aware of the labelling requirements. It was mentioned several times that if stakeholders, in the future, have to add more information (on ingredients, allergens, inputs during elaboration) on the product packaging, the most important information to add should be the addition of all ingredients that do not come from the wine grape. Stakeholders repeatedly mentioned the addition of sucrose coming from sugar beet as an information that consumer should be aware of.

The information labelled on products could be clearer if easily comparable between Member States. The addition of information should come with the possibility to dematerialize the information, since there is already a lot of information on the labels.

5.4.2 On the effectiveness of labelling rules on marketing conditions and fair competition between operators

It was often stated that EU rules differ from other rules applied in third countries. These differences could mislead the consumer. For example, in Chile, the use of the qualification “reserva” is allowed and the requirements to put this word on the label are less restrictive than in La Rioja. Some consumers may confuse a Chilean “reserva” wine and a Spanish “reserva” wine. Some stakeholders declared that to have a fair competition between operators, the operators using products coming from outside the vineyard should be detailed on the label.

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6. THEME 5: CERTIFICATION PROCEDURES, MONITORING AND CHECKS

6.1 Description of the local implementation of the rules

6.1.1 Description of certification procedures applied in your Member State and region

. Description of certification procedures in the Autonomous Community of La Rioja

o For PDO “Rioja” wines

In Spain, the General Directorate of Food Industry from the Ministry of Agriculture, Fisheries and Food has authorized / delegated to the PDO Managing Organization of the PDO Rioja, the verification of the PDO specifications and the process of certification. The PDO organization certifies the product by checking all requirements from the vineyard to the elaboration of the wine. The whole process of elaboration, from the control of the raw material, grapes, to the certified labeling of the product, takes place in the area of production, aging and aging. To be allowed to sell wine under PDO “Rioja, stakeholders must comply with the following requirements: - The area under vines dedicated to production of PDO wine must be registered in the Register of the PDO organization (called “Consejo Regulador”). For new area under vines, and new plantings, each year, there are on-the-spot inspections of 100% of the new plantings and new areas under vines. If the area comply with the PDO requirements, the area is added to the register of the PDO organization. If the owner of the land posess a geographic information system identifying the area in question, a technical from the PDO organization will control on field with the information provided by the GIS. - On the spot controls in the vineyard consist of two controls: o plant management (growth, number of sprouts, pruning etc.) o water use: The inspector will check if the wine grower is authorized to irrigate the area and if he respects the limit date(15/08) to irrigate. (if he implemented a drip irrigation system, the wine grower is allowed to irrigate at anytime of the year) - On the spot control is also performed at the entrance in the winery/cooperative every year, i.e. where the wine grape is unloaded. To be certified, the wineries and cooperatives must have a self-monitoring system allowing to trace all products. Before producing wine under PDO “Rioja” for the first time, the inspectors will check all the facilities considered. Then 6 samples of each batch will be taken for analytical and organoleptic tests. Every year, analytical and organoleptic tests are performed on approximately 4000 samples from 100% of the wineries/cooperatives producing PDO “Rioja”. As stated in the Annex II of the order APA/3465/2004, the wines produced in the PDO "Rioja", in a given campaign, must undergo analytical and organoleptic checks, item by item, whose volume may not exceed 1,000 hectoliters. 1) The sampling will take place after the fermentation and in the place of the same. 2) The wine consignments in the wine cellar will be checked, taking a sample of six bottles in a regulatory manner for each homogeneous batch. Two of the bottles will remain in the original cellar and the rest will be used for analysis, tasting and reference controls. The processor must have the necessary means for the correct taking of samples. 3) Samples will be taken during the ninety days after November 30 of the year of harvest. Samples can be pre-empted for processors that request it, with the exclusive purpose of rapid commercialization of young wines from that harvest. To this end, the Technical Services of the Regulatory Council will draw up a calendar of visits to the different localities within the scope of the denomination of origin, so that the collection of samples is carried out in an orderly manner. 4) The samples will be taken going through all deposits or by multiple lots, only -in the latter case- when they contain homogeneous items.

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The analytical and chemical tests are performed by 3 certified laboratories for the 3 Autonomous Communties producing PDO “Rioja” wine. Test results are free of charge and are sent on computers.22

Concerning the organoleptic test: The samples will be sensory-qualified by the Qualification Committee of the PDO organization, formed by experts from the winegrower-processor, winemaker and winemaking professionals. This Committee must act on a committee of five members.

The PDO Managing organization mentioned that it is compulsory for all PDO “Rioja” wine to be bottled before being sold. The proof of compliance to the PDO specifications, in addition to the Accompanying Document, is the guarantee certificate that the bottles have attached. It is the one that accredits the origin.

o For PGI wines Valles de Sadacia (single PGI in the Autonomous Community of La Rioja)

The Autonomous Community of La Rioja is in charge of certifying PGI and varietal wines, and wines with mention of the vintage year. PGI wines in La Rioja, represent a very small part of the regional wine production. The certifying and controlling body is the Regional Ministry for Agriculture. They will perform administrative and on the spot checks of PGI specifications. There are only two wineries certified under the PGI and only one is producing currently PGI wine. On-the-spot checks are performed every year. Samples are taken and analyzed in accredited laboratories

o For varietal wines and vintage wines

In order to be allowed to produce varietal and vintage wines, wine producers must be certified by a competente certification body and must be registered in the Register of Agri-Food Industries of La Rioja and approved by the General Directorate with competence in matters of agri-food quality in the Regional Ministry. (the General Directorate of Rural Development in la Rioja)23. The registers of involved operators are automatically checked every year before issuing the certificate. An authorized operator must tell the certification body every year the date of the beginning of the elaboration of the wine and give them their production declaration. They must keep a traceability of all the wine to be sold under varietal wine or vintage wine. They must establish a system of self-monitoring so that certification body can trace back all the production from the finalized product until entrance of the wine grapes. They must have submitted the stock declaration to regional authorities and must have communicated by the end of January of each year : - Quantity of grapes (in kilograms) - Volume of wine (Hl). - Value of wine marketed by destination (national market, European Union and third countries), with the distinction between bulk and bottled.

In all cases, it must be differentiated for each type of wine. In addition, the type of wine (white, pink or red) must be indicated. The certification is performed annually on all operators willing to sell varietal wines. All operators are checked before issuing the certificate. The Regional Ministry may supervise the control performed over a sample of operators and perform audits of certifying bodies to control their activities. A sample of all wine lots is taken for analytical tests in laboratories. However, the proportion of each grape variety cannot be measured.

The certification will have a validity of 5 years, which will be automatically extended for another 5 years when the requirements regulated in this decree are met.

For exported wine products,

22 https://de.riojawine.com/es/paginas/229-normas-relativas-al-proceso-de-calificacion-de-los-vinos-de-la-d-o-c-rioja.html 23 https://www.larioja.org/direcciones-utiles/es?id_str=1&id_ele=441&id_opt=4

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The Spanish Wine Federation stated that, in Spain, there are several stakeholders playing a role in export certifications: - The Chambers of Commerce are in charge of certifying the origin of the wine products - The PDO/PGI managing organisation will provide the specific PDO/PGI reference number to be added on the wine product certifying the PDO/PGI. - The regional Ministry of Agriculture will certify the sanitary aspects and the agricultural type of the product. Accompanying documents managed by the Customs Agency are all checked by the regional Ministry

6.1.2 Description of monitoring and checks procedures applied in your Member State and region

Please detail the organization of the system of monitoring and checks addressing the risks of fraudulent manipulation of wine, including the role of the various types of actor involved in the system.

. Description of monitoring and checks in the Autonomous Community of La Rioja

In La Rioja, and in all Autonomous Communities, there is a computerized system implemented monthly used by operators to declare all movements of wine products. This computerized system has been implemented and is monitorized at regional level by the regional authorities (the Regional Directorate of Agriculture and Rural Development). The computerized system the interviewees referred to was probably the so-called INFOVI. According to the Regional Ministry of Agriculture of La Rioja, a specialised service in control procedures will check all administrative declarations related to wine products including the accompanying documents issued by the regional Custom Agency. Each Autonomous community design his own control plan to control wine operators according to a fraud-risk analysis regardless of the type of wine they produce. It was stated by the regional service in charge of these controls, that 2% of wineries producing the PDO “Rioja” are controlled on-the-spot. During these controls, the coherence between registers/declarations and physical observations is checked.

o For PDO “Rioja” wines

The Control and Surveillance of the Rioja Qualified Denomination of Origin will be carried out by Inspectors. These Inspectors will be enabled, at the initiative of the Regulatory Board by the M.A.P.A, with compliance with the provided in article 27.1.b) of Law 24/2003. The control and surveillance will be carried out on the following areas:  On the vineyards located in the production area  About the wineries and bottling plants in the production and aging area.  About the grapes and wines in the production area.  On wines protected in national territory in collaboration with the relevant authorities, giving an account of their actions.24

At the field level, on the spot controls are performed on a sample representing 10% of the wine growers. In order to trace the movement of wine grape production from the field to the winery or the cooperative, all winegrowers under the PDO “Rioja” have a magnetic card that they must use every time they discharge wine grapes in a winery or cooperative producing PDO “Rioja” wine. This magnetic card system allow the PDO organization to have a real-time picture of the movement of the wine grapes production.

24 https://www.boe.es/boe/dias/2004/10/27/pdfs/A35560-35568.pdf

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Then the PDO organization, with 200 computer terminals, is able to compare the information provided by the vineyard register and the theoretical threshold not to cross with the information given in real-time by the magnetic card. In every single wineries, there is specific inspector from the control body associated to the PDO organization that measure the volume and check the provenance of the wine grape. There are 20 inspectors performing these checks on field (moving to wineries and cooperatives) every year on all the registered wineries and cooperatives.

Rules concerning the tracking of qualified wines

1.- The PDO organization will sample the transfers of qualified wines between registered wineries, in order to ensure compliance with the analytical and organoleptic conditions of the wines transferred. Sampling will affect, at least, 5% of the total number of transfers made during one wine campaign.

2.- The wines that have passed the qualification phase, and therefore, have the right to use the DOCa "Rioja", must maintain the characteristic organoleptic qualities of the wine, taking into account the derivatives of its evolution, especially in terms of color, aroma and flavor.

The PDO organization will continue to carry out the pertinent controls and, in the event of finding any alteration in those characteristics to the detriment of the quality, or that in its elaboration or aging, the precepts indicated in the current legislation are breached, actions will be taken so that said wines are disqualified.

3.- Likewise, any wine obtained by mixing with another previously disqualified will be disqualified.

4.- The disqualification of the wines may be carried out, by the PDO organization, at any stage of its elaboration or aging, and from the initiation of the disqualification record they must remain in identified and duly labeled containers, under the control of said body, which in its resolution will determine the fate of the disqualified product.

5.- At least once a year samples will be taken in each of the bottling registered wineries, of the finished products belonging to the harvests and types of wines that are in the process of commercialization, being subjected to analytical and organoleptic control.

The PDO organization may establish complementary controls for wineries that exceed a certain marketing scale.

Accompanying documents

The control of accompanying documents is performed by the PDO organization for all bulk wine circulating inside the PDO territory. All information is computerized and monitored by the tax authorities. In reality, the lots are traced via a reference number for circulation. The PDO organization will check coherence between the reference numbers. For bottled wine, the wineries and cooperatives must be registered in the official Register of Agri-Food Industries of the regional authorities, and need to be registered in the General Sanitary Register of Food and Food Companies in order to have an authorization to produce wine. The wineries and cooperatives will declare to the PDO organization each month all the wine product movements they are involved in.

o For PGI wines Valles de Sadacia (single PGI in the Autonomous Community of La Rioja)

The Autonomous Community of La Rioja ( the regional management authorities) are in charge of certifying the PGI wines and the varietal and vintage wines. Concerning PGI wines, certification and control concern only 2

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wineries. Among these 2 wineries, only 1 is currently producing PGI wines and has 2 sites of wine productions. Thus, the control isn’t difficult. A wine producer has to request authorization for the production of varietal and PGI wines. Before issuing the authorization, inspectors will perform on the spot control that mainly consist in the case of varietal wines, of the porcentage of The PGI specifications are checked by inspectors. They perform both administrative and on-the-spot controls. There is no magnetic card system implemented to control the traceability of wine grapes and wine products. All compulsory declarations are filled-in and sent to the Autonomous Community.

o For varietal wines and vintage wines

The certification bodies: - carry out regular on-site and documentary checks in order to obtain guarantees on the traceability of wine, which must reach the level of grape production, and checks on compliance with the requirements of this decree. The control will be carried out in all the facilities at least once per campaign. - Communicate to the General Directorate of Rural Development, at least 15 days in advance, the expected date of the on-site controls. - Notify the General Directorate of Rural Development, the issuance of the certificate, the withdrawal or the suspension of the certification of the operators within 10 days of its occurrence. - Inform the competent General Directorate, within 7 days of its detection, of any circumstance or action of the operators subject to the control of the certification entity that may constitute an infraction. - Report annually to the General Directorate of Rural Development on the actions carried out within the scope of this decree. The report must include the operators on which the certificate was issued, the operators that are in the process of certification, the non-conformities detected to each one and the term granted to correct them. - Send to the General Directorate of Rural Development, before January 31 of each year, a statistical summary in relation to its activity as a certification entity that contains at least the following information:  Quantity of grapes (in kilograms)  Volume of wine (Hl).  Number of operators, with the specification of the activity: wine growers, processors and bottlers. - To inform the General Directorate with competence in agri-food quality, within ten days of the modification has occurred, any modification that affects the conditions that have been taken into account for the authorization.

The regional public authorities will perform administrative and on-the-spot checks on selected operators.

6.1.3 Description of the control system related to NSP implementation

Please describe in detail the organisation of the control system related to NSP implementation and mention any difficulty or problem in the implementation of this system

The regional Ministry for Agriculture is in charge of monitoring all applications forms and projects of beneficiaries of the restructuring, investment and promotion measures. They will perform administrative and on-the-spot checks. For the restructuring measure, all operators and area under vines are checked to analyse the eligibility of an operator/area. That is to say, ex-ante control of 100% of area under vines are controlled. inspectors will measure the eligible areas with a GPS and ex-post controls will be performed before granting the total amount of the planned support. For investment measures, administrative and on-the-spot controls are performed by regional authorities on all beneficiaries, (as stated in the section 2.6.3)

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For the promotion measure, the controls are mainly performed on the supporting documents provided by operators justifying the operations theoretically eligible for support. These controls are complex according the Regional Ministry of Agriculture. They imply controls based on pictures, videos, translated invoices, boarding passes etc. The service in charge of the promotion measure inside the regional Ministry is overwhelmed by these required control procedures.

6.2 Existing national data on non-compliance and workload

6.3 Synthesis of the interviews

IQ 7.1 to 7.3 Is the certification procedure simple to apply? Please distinguish wines with PDO/PGI, wines without PDO/PGI and traded wines

. At national level, It was stated that the certification procedure is specific to each PDO/PGI and Autonomous Communities. The interviewees at national level, (interbranch organisation, national authorities) didn’t have much opinion on the level of complexity of the certification procedure. The General Sub-directorate in charge of quality scheme management stated that the certifying bodies are generally the same performing controls. The certification and the control procedures are very much alike in Spain. Generally speaking, the Autonomous Communities are in charge of certifying the PDO and PGI of their region. They also have the possibility to delegate this task to other accredited bodies. (such as for PDO “Castilla La Mancha”). Sometimes the PDO/PGI managing organisation can be the certifying body as well if authorized by the Autonomous Community and accredited by the National Accrediting Entity (ENAC) checks the independency between wine producers and the certifying body. The certification procedures in Spain concerns the wine product and not the operators. When a wine product is certified, a reference number from the PDO/PGI managing organisation is labelled on the product allowing traceability of the product from the sales outlets to the grapes used. Every year, 100% of the production sites and deposits are checked before certifying wine products.

From the expert’s point of view, the certifying procedures in Spain may vary according to the Autonomous Community and PDO/PGI managing organisations, but the certification procedures (as stated at regional level) have been implemented for many years now and seems to be very well managed. The fact that for PDO/PGI wines, 100% of wine deposits are checked and sampled before being certified may represent considerable amount of work, but again, task forces are used to it and do not find it difficult, only time-consuming.

. At regional level, It was stated by regional authorities (General Directorate of Agriculture and Rural Development) that the certification procedure in La Rioja has been implemented for many years now, and all stakeholders are used to it. The idea was shared by the PDO “Rioja” managing organisation that explained that to certify a PDO “Rioja” wine, inspectors from the PDO organization will undergo on-the-spot checks of all wine tanks and take samples of wine batches for each registered winery / cooperative willing to produce PDO wine for a given year. More- over, all winegrowers registered in the register of the PDO “Rioja” managing organisation have a magnetic card used to monitor every movement of each wine grape harvest.

IQ 7.4 When change occurred in the certification system, did it allow an increase in the quantity of wine marketed or exported? . At regional level, It was stated by the PDO “Rioja” managing organisation, that the certification system has kept evolving since the years 2000, from the automatization of the harvest control process (magnetic card), until the use of satellite images from a Geographical Information System to identify vineyards, calculate the vigor of the vines, and control some operations such as irrigation. In the last decades, the PDO managing organisation was accredited by the national institute of accreditation as an official inspection body (UNE-EN ISO/IEC 17020) and

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is to be accredited as a certifying body (UNE-EN ISO/IEC 17065). It was stated that It was obvious that the changes always have a positive aspect and contribute to greater loyalty and market recognition.

IQ 10.1 Did you encounter any difficulties or problems in the implementation of monitoring and checks of EU requirements?

No specific difficulties or problems were mentioned at national or regional level. Technological progress in the last few years, helped monitoring and controlling wine products via coherence checks between administrative documents. The Excise Movement and Control System is implemented in Spain and allow a traceability of all wine movements. Accompanying documents are checked by regional authorities (Regional Directorate of Agriculture and Rural Development). The Vineyard register gather all necessary information on winegrowers, while the INFOVI computerized system gather information on wine producers, storekeepers etc. These two computerized systems are managed by regional authorities with supervision in the case of the INFOVI system by the Information and Agri-food Control Agency.25 These control systems are controlling all type of wine product regardless of the quality scheme. The INFOVI system has been implemented since recently, in 2016.

. At regional level, The regional authorities did not mention difficulties or problems worth noticing, however, they mentioned that the staff costs related to monitoring and checks of EU requirements was higher than staff costs for controls related to other CAP support. In the wine sector, the regional authorities has a technical staff of 5 persons performing on -the-spot checks, and measuring/editing areas under vines, 2-3 persons working in the office, and potentially some one-time contracted workers when new system must be implemented. Only 2 inspectors are in charge of control of CAP operations.

IQ 10.2 Did you encounter any difficulties or problem in the implementation of the control system related to NSP implementation? . At national level, The control of NSP is the responsibility of the FEGA, the National Agricultural Guarantee Fund, and all control aspects for each measure have been conceived taking into account the possibility of controlling the given aspects. Thus, every aspect of the measures is controllable by competent authorities.

. At regional level, Restructuring and reconversion measure: Regional authorities stated that 100% of the vineyard area benefiting from CMO support is checked while only 5% is checked when benefiting of CAP support from pillar II. The ex-ante on the spot check before approving the applications under the restructuring measure shouldn’t be compulsory. The regional authorities explained that the controls on vineyards are already very strict and all area under vines are registered and measured to fill in the computerized vineyard register. Thus, the ex-ante check of 100% of area under vines involved in restructuring and conversion of vineyard shouldn’t be compulsory. It represents a useless double-check.

Promotion measure: It was stated by the controlling bodies, i.e. the regional authorities, that the control of this measure in particular was complicated and time-consuming. Indeed, the measure require from the beneficiary to justify all operations performed under the measure. The beneficiaries must gather pictures, videos, invoices, various quotes in order to support activities. The high level of administrative burden was denounced, especially when the applicants wish to modify their projects once approved by competent authorities. In La Rioja, when incoherence has been detected, competent authorities may undertake on-the-spot checks in collaboration with the Ministry for foreign trades. These on-the spot checks cannot be performed in all Autonomous Community

25 Real Decreto 739/2015, de 31 de julio, sobre declaraciones obligatorias en el sector vitivinícola.

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due to the lack of task force. It was also denounced by some interviewees from wineries, that some compulsory justifying documents were too complicated to collect from their trading partners in the third countries.

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ANNEXES

ANNEX 1 - Surface area per winegrape variety in la rioja

Table 23 : wine grape variety in La Rioja (in hectare) La Rioja 2012 2013 2014 2015 2016 2017 MACABEO 2 605.94 2 569.53 3 179.77 3 384.47 3 348.07 3 277.09 VERDEJO 51.79 - - - 214.59 216.02 MOSCATEL DE ALEJANDRIA 142.09 - - - 128.49 - CHARDONNAY - - - - 140.99 135.94

SAUVIGNON BLANCO 56.80 - - - 200.85 187.62

GARNACHA BLANCA - - - - 150.44 156.08 MALVASIA 57.28 - - - 106.79 -

TEMPRANILLO BLANCO 65,75 - - 583.90 577.77 594.52 White varieties White MATURANA BLANCA - - - - - 34.98 ALARIJE - - - - - 107.48 ALBARIÑO - - - - - 2.84 ALBILLO MAYOR - - - - - 4.08 MOSCATEL GRANO MENUDO - - - - 137.55 TEMPRANILLO 34 383.01 34 557.55 35 027.97 35 301.99 35 677.62 35 718.18

GARNACHA 4 873.38 4 662.94 4 532.07 4 371.74 4 244.64 4 214.76 MAZUELA 1 025.59 992.47 949.21 940.84 917.02 919.56 GRACIANO 718.46 729.78 782.63 821.02 828.27 846.88

Red varieties Red MATURANA TINTA - - - - 133.36 140.94 PINOT NOIR - - - - - 6.01 Other varieties < 1 % of 321,68 692.33 1 470.19 1230,15 185.31 110.72 representativeness26 Source: Consejo regulador La Rioja 2015, Annual reports 2017, Estadísticas 2017

26 Other varieties 2015: white Cayetana Blanca (9.02 ha), Moscatel De Grano Menudo (4.62 ha), Albillo Mayor (3.84 ha) and Albariño (3.01 ha). Red varieties 2015: Cabernet Sauvignon (39.82ha), Pinot Noir (3.95 ha), Merlot (3.23 ha), Syrah (2.56 ha), and Monastrell (1.19 ha), pinot noir 2017 6.01

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ANNEX 2 – eligible costs under restructuring and reconversion measure

Operations Maximum Amount of support A) Replanting of vineyards

Grubbing-up (including removal of vine stock) 430 €/ha Soil preparation 1.400 €/ha Disinfection 2.000 €/ha Removing rocks 400 €/ha Leveling of the land 800 €/ha Terracing 19.000 €/ha Terracing with stone walls on slopes greater than 30% 30.000 €/ha Plant and plantation 1,69 €/vine Individual protection of plants against rabbits at the time of planting 0,5 €/unit (including placement) Crop management systems (including placement)

Trellis 3.400 €/ha Palisade 5.000 €/ha Trellis or similar 15.000 €/ha B) Reconversion of vineyard

Overgrafting 0,9€/unit C) Improvement of vineyard management techniques

Change from goblet trained vines to trellis trained vines or other crop 600€ / ha + crop management system management system Source: Royal Decree 548/2013

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ANNEX 3 – Description of the NSP Measures

Table 24: Description of the measures eligible under the National Support Programmes Existing in Content of the Eligible measures Implementing conditions Type of aid the 2008 measure Wine CMO Support for information or Beneficiaries shall be professional organisations, wine producer promotion measures organisations, associations of wine producer organisations, concerning Union temporary or permanent associations of two or more producers, wines either (a) in MS inter-branch organisations or bodies governed by public law. Private to inform consumers companies are only eligible for Point (b) of the measure. about the responsible Support granted shall last no longer than 3 years for a given consumption of wine beneficiary and, for Measure (b), for a given third-country market it Max. 50% of the Promotion (Art. 45) and PDO/PGI or (b) in Yes can be extended for a maximum of two years if justified by the eligible expenditure third countries to effects of the operation. improve their competitiveness (in this Information in Member States: priority shall be given to operations case, only PDO/PGI concerning several MS / several administrative or wine regions / wines or wines with an several PDO and PGI. indication of the wine Promotion in third countries: priority shall be given to new grape varieties are beneficiaries or beneficiaries targeting a new third country. eligible). Support for MS that submitted the inventory of their Compensation up to production potential. Beneficiaries are wine growers, i.e. natural or legal person who farm 100% of the loss of Restructuring and Support can cover: an area planted with vines. revenue OR conversion of varietal conversion, contribution to 50% of Yes vineyards (Art. 46) relocation and Replanting of vineyard following a mandatory grubbing-up for health the costs incurred (75% replanting of vineyards or phytosanitary reasons shall be eligible under certain conditions. in less developed and improvements to regions) vineyards management techniques. Beneficiaries are wine growers, i.e. natural or legal persons who farm an area planted with vines. Support for total Areas concerned must be kept in good vegetative conditions and no destruction or removal negative impact on the environment shall result from the application Flat rate payment / ha of grape bunches still in Green harvesting of the measure. MS can restrict the measure according to timing of (not exceeding 50% of their immature stage, Yes (Art. 47) different varieties, environmental or phytosanitary risks, etc. the costs of removal reducing the yield of and loss of revenue) the relevant area to No support shall be granted in case of complete or partial damage of zero. the crops. Green harvesting support cannot apply to the same parcel for two consecutive years. Temporary degressive Mutual funds (Art. Support for the setting- Beneficiaries are wine growers or producers of wine products. aid covering the Yes 48) up of mutual funds Support period shall not exceed three years. administrative costs of the fund Financial contribution to the insurance premium, not Support for the exceeding 80% in case subscription of harvest Beneficiaries are wine growers. Member States may grant the of insurance against insurance safeguarding support through insurance companies as intermediaries under adverse climatic events producers’ incomes Harvest insurance certain conditions, but the amount of the support must be assimilated as natural after losses caused by Yes (Art. 49) transferred in full to the producer. disasters and 50% in natural disasters, other cases (insurance adverse climatic Member States must ensure that the support does not distort against losses caused events, diseases or competition in the insurance market. by any adverse climatic pest infestations. events / by animals, plant diseases or pest infestations).

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Existing in Content of the Eligible measures Implementing conditions Type of aid the 2008 measure Wine CMO Support for tangible and intangible Beneficiaries can be wine enterprises producing or marketing the investments in wine products, wine producer organisations, associations of two or Support dedicated to processing facilities more producers or interbranch organisations. small/medium-sized and winery Eligible actions are immovable property, new machinery and enterprises, with infrastructure, equipment, architect/engineer and consultation fees, feasibility maximum aid rate of marketing structures 40% of the eligible Investments (Art. studies, computer software and patents/licences/copyrights. and tools, intended to investment costs (50% Yes 50) Replacement investments are not eligible. improve the overall in less developed performance of the Support cannot be granted to operations benefiting from promotion regions, 75% in enterprise and its support. outermost regions, adaptation to market Priority must be given to operations likely to have positive effects in 65% in the smaller demands, as well as to terms of energy savings, global energy efficiency and environmentally Aegean islands) increase its sustainable processes. competitiveness. Beneficiaries can be wine enterprises producing or marketing wine Support for tangible or products, wine producer organisations and associations of two or intangible investments more producers. Research and development centres may participate Aid rate up to 40% of aimed at the and interbranch organisations may be associated with the operation. the eligible investment development of new Support is granted for tangible and intangible investments including Innovation in the costs (50% in less products, processes for knowledge-transfer for the development of new products, wine sector (Art. developed regions, No and technologies, processes and technologies, or other investments adding value at any 51) 75% in outermost intended to increase stage of the supply chain. regions, 65% in the the marketability and Priority must be given to operations likely to have positive effects in smaller Aegean islands) competitiveness of EU terms of energy savings, global energy efficiency and environmentally wine products. sustainable processes; including an element of knowledge transfer; and ensuring the participation of research and development centres. Aid paid to distillers that process by- Support for voluntary products into raw or obligatory alcohol of min. 92% by distillation of by- Beneficiaries are distillers that process the by-products delivered to volume. products of wine- distillation into alcohol with an alcoholic strength of at least 92% by By-product making. The alcohol A lump-sum amount volume, to be used exclusively for industry or energy purposes. Yes distillation (Art. 52) resulting from the covering the cost of supported distillation Support includes an amount to compensate the costs of collection, to collection of by- must be exclusively be transferred to the producer when relevant. product must be used for industrial or transferred from the energy purposes. distiller to the producer when relevant. Source: Agrosynergie based on regulations (EU) No 1308/2013, 2016/1149

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