E.U. Proposal Puts €1.061 Billion Annual Wine Aid System in Doubt

As the European Union negotiates its next farm budget, one point is already clear for the drinks industry: wine sits at the center of the bloc’s agricultural system, while beer and spirits mostly depend on indirect support for the crops and rural areas behind them.

The current Common Agricultural Policy, or CAP, covers 2023 through 2027 and has been applied through national strategic plans since Jan. 1, 2023. It is financed under the EU’s 2021-2027 budget with about €386.6 billion, including €291.1 billion in the European Agricultural Guarantee Fund for direct payments and market measures and €95.5 billion in the European Agricultural Fund for Rural Development, including NextGenerationEU money. The policy combines farm income support, eco-schemes, some production-linked aid, sector programs, market management and rural investment. Because each member state implements the CAP through its own plan, access to some measures already varies from country to country.

For alcohol producers, that framework does not function as a single policy. Wine is by far the most directly covered product. It has specific sector interventions, a reserved budget and rules on vineyard capacity. Brewers and distillers mainly feel the CAP through support for barley, cereals, hops, sugar beets and other farm inputs, along with rural development, sustainability programs and innovation funding.

The wine program is the clearest case. EU law sets aside €1.061 billion a year for wine interventions in the member states listed in Annex VII of Regulation 2021/2115. Italy receives €323.9 million a year, France €269.6 million and Spain €202.1 million. Together they take about 75% of the annual EU wine envelope. Germany, separately, has a specific sector allocation of €2.188 million a year for hops, the most direct CAP budget link to the beer supply chain.

Wine support reaches far beyond basic income payments. It can finance vineyard restructuring and replanting, winery investment, green harvesting, crop insurance, promotion in markets outside the EU, wine tourism and distillation of by-products. Current law also requires that at least 5% of wine spending be directed to environmental, climate, sustainability or energy-efficiency goals.

Since March 2026, a separate wine reform under Regulation (EU) 2026/471 has widened those tools. The reform allows aid of up to 80% for some climate and sustainability investments, broadens support for wine tourism, adds stronger measures against pests, extends the life of export promotion programs and clarifies rules for dealcoholized and lower-alcohol wine products. It also created a new structural measure that lets growers receive aid to remove vines permanently. The EU share can cover up to 70% of direct removal costs plus an estimate of lost income, with room for national top-ups. In general, growers who use that measure face temporary limits on new planting authorizations.

The market backdrop helps explain why Brussels and national governments moved in that direction. The International Organisation of Vine and Wine, or OIV, estimates that the EU produced 136 million hectoliters of wine in 2025, about 60% of global output and 1.3% less than in 2024. Italy produced 44.4 million hectoliters, France 36.1 million and Spain 28.7 million. The OIV also estimates that global wine consumption fell 2.7% in 2025 to about 208 million hectoliters, while world vineyard area kept shrinking. That suggests Europe’s wine problem is not only about weather or a short harvest cycle. It is also about weaker demand.

Beer faces a different set of pressures. Brewers of Europe says EU beer production fell from about 367.4 million hectoliters in 2019 to roughly 345 million in 2024, then declined another 2.9% in 2025. The group says around 10,000 breweries in Europe support about two million direct and indirect jobs and generate roughly €52 billion in annual value added. Like the wine figures, those numbers describe the market in which the CAP operates, not jobs or output created by CAP spending. Beer does not have a dedicated CAP budget in the way wine does.

Instead, the CAP reaches beer mostly through farms. Barley and other cereals can receive coupled aid if a member state chooses to grant it under its national plan and meets EU rules. Hops have a more visible place in the policy. Germany has the bloc’s only specific annual hops envelope, the €2.188 million allocation written into the current CAP. EU rules allow that money to be used for technical assistance, training, organic and integrated production, sustainability, promotion, quality schemes, traceability, climate adaptation, mutual funds and investment. Those measures help the brewing chain, but they do so through growers and producer organizations rather than through breweries themselves.

That indirect pattern is even clearer in spirits. The sector depends heavily on farm raw materials, rural territories and protected names tied to origin, but its CAP link is still mostly upstream. spiritsEUROPE put extra-EU exports at €8.84 billion in 2024, down 2% from a year earlier. Product rules for spirits come mainly from Regulation 2019/787, while a newer geographic indication framework adopted in 2024 strengthens protection for place-based names across wine, spirits and other farm products. For a distiller using grain, grapes or sugar beets, the CAP can affect input costs, farm resilience and rural investment. It does not operate as a standalone subsidy program for whisky, Cognac or liqueurs.

The distinction between a legal beneficiary and an economic beneficiary is one of the key issues in the debate. A barley farmer may receive CAP support and a brewer may benefit from a steadier supply of malt, but that does not make the brewer a CAP recipient. The same applies to grain or beets used in distillation. It is one reason there is no rigorous EU-wide number that can be described as total CAP aid to beer or total CAP aid to whisky. The policy tracks farms and eligible rural projects, not the final industrial use of every crop. Excise duties and value-added tax also sit outside the CAP under separate EU tax rules, and they often have a larger effect on prices and demand than farm support does.

The next phase of the policy could change the way that money is organized. In July 2025, the European Commission proposed a post-2027 framework that would fold the current CAP architecture into broader National and Regional Partnership Plans. Instead of the current split between the European Agricultural Guarantee Fund and the rural development fund, the proposal would place agriculture inside a wider fund of about €865 billion. The Commission proposed reserving at least €293.7 billion for farm income support and another €6.3 billion for a crisis safety net. The draft also would make income support more redistributive, with reductions starting above €20,000 and a proposed ceiling of €100,000 per farm.

Those figures are not directly comparable with the current €386.6 billion CAP budget, because the proposed system changes what sits inside farm policy and what would compete inside larger national envelopes. That accounting shift has become one of the most important issues for wine, beer and spirits. A broader national plan could let governments align agriculture, rural development and investment more closely. It could also make farm spending less visible and sector budgets less predictable.

For wine, that matters more than for any other alcohol product. The Commission’s draft would keep wine interventions, including investment, promotion, innovation, climate adaptation, traceability, green harvesting, sustainable vineyard restructuring and distillation of wine by-products. Hops would also remain inside the sector intervention system. The proposal would add risk tools for farmers facing losses of at least 20%, a point of interest for vineyards and hop growers exposed to drought, disease and other climate shocks. But the draft does not recreate the current model of fixed national wine envelopes in the same way. The main question for producers is no longer whether tools such as promotion, restructuring or crisis management will exist. It is how much money each government will actually assign to those tools once the national plans are written.

That issue is more complicated because the post-2027 proposal was published before the wine reform adopted in early 2026. Lawmakers now have to reconcile the older draft with tools that are already in force, including the new permanent vine-removal aid, higher support rates for some environmental investments, expanded wine-tourism measures and updated rules for lower-alcohol products. That makes it too early to assume that any one measure in the current wine package will disappear in 2028, but it also means the final law could still change in important ways.

The direction of policy is clearer than the final budget. Across both the current rules and the draft for the next cycle, the same themes appear repeatedly: climate resilience, water management, digital tools, precision agriculture, risk management, quality schemes, protected names of origin and market diversification. For vineyards, that points to more money for projects that can show lower water use, better energy performance, soil protection, biodiversity gains or stronger export potential. For brewers and distillers, it points to closer attention to the farm end of the supply chain, especially for barley, hops, grapes and other sensitive raw materials.

The market data show why that shift is gaining weight. Wine is dealing with weak global demand as well as climate risk. Beer is dealing with falling traditional volumes even as the non-alcoholic segment grows. Brewers of Europe says no-alcohol beer expanded by about 5.9% in 2025 and now accounts for roughly one out of every twelve beers consumed in the EU. That growth comes more from product development, processing and branding than from bigger harvests. Spirits remain exposed to export markets and trade conditions, while their agricultural dependence is strongest where a protected regional name ties the product closely to local crops and land.

EU institutions are still negotiating the post-2027 package, and the most sensitive choices now lie in the design of the national and regional plans that would allocate support from 2028 through 2034.