EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

Europaudvalget 2005-06
EUU Alm.del Bilag 400
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Europaudvalget

EUU alm. del - Bilag 400

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DIAGEO

DIAGEO DENMARK A/S

Strandvejen 32D

DK-2100 København Ø

Tel +45 3915 5000

Fax +45 3915 5001

Folketingets EU-Oplysning

Att. Lone Boelt Møller

Christiansborg

1240 København K

Tirsdag den 5. september 2006

Vedr. EU' s definition af Vodka

Til medlemmer af Folketingets Europaudvalg og deres stedfortrædere

Jeg skriver på vegne af European Vodka Alliance (EVA). EVA er en uformel

organisation bestående af branche interessenter, som er imod restriktioner for de

råmaterialer, der bruges til at producere vodka med.

EU Kommissionen er netop ved at behandle området omkring definition af forskellige

alkoholtyper, heriblandt vodka, hvor enkelte medlemslande foreslår at vodka kun må

produceres af begrænsede råmaterialer.

Formålet med dette brev er for det første, at vi ønsker at fremsætte vores argumenter

imod sådanne restriktioner. For det andet ønsker vi at få en bedre forståelse for

holdningen på dette område fra Folketingets Europaudvalg.

Vores argumentation er opsumeret nedenfor:

(Den komplette argumentation findes i vedlagte dokument på engelsk.)

A. I henhold til at bevare den nuværende bestemmelse om, at vodka kan produceres

af enhver form for råmateriale, foreslår Komissionen ikke noget nyt. Rent faktisk

har det altid været muligt at producere vodka i EU baseret på enhver form for

uforarbejdet landbrugsråvarer. Dette er endog muligt selv i de lande, hvor der nu

søges om restriktioner.

B. Tradition, kan i sig selv ikke retfærdiggøre og begrunde en restriktion over for

brugen af råmaterialer i produktionen af vodka. Først og fremmest er "tradition"

ikke et legitimt grundlag for interne markedsforhold. Dernæst har de pågældende

medlemslande slet ikke en sådan tradition. De fleste af medlemslandene er først

for nylig begyndt at bruge betegnelsen "vodka" til at beskrive deres traditionelle

spiritus. Alle landene har lavet traditionel spiritus af andre råvarer end korn og

kartofler indtil nu.

GUINNESS.

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Reg. No: 29072

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EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

DIAGEO

DIAGEO DENMARK A/S

C. Forbugerbeskyttelse kan ikke retfærdiggøre og begrunde en restriktion over for

brugen af råmaterialer. Markedsundersøgelser viser, at de fleste forbruger ikke

ved hvad vodka er lavet af, og dem der ved det, mener ikke at det gør nogen

forskel.

D. Vi er tilhængere af, at reglementer skal være med til at beskytte og opretholde

kvaliteten af vodka i EU. Men kvaliteten er ikke afhængig af hvilke råmaterialer

der bliver brugt i produktionen. God vodka kan og bliver lavet, ikke kun af korn

og kartofler, men også af andre råmaterialer. — Dårlig vodka kan og bliver

ligeledes lavet af korn og kartofler.

E. De manglende retfærdiggørelser og begrundelser gør, at forslaget om restriktioner

er i strid med både EU lov og WTO regler.

i. Hvad angår EU lovgivning, så har den til hensigt at sikre den frie

bevægelighed på det interne marked. Den kan ikke bruges som et

middel til at dække over landbrugsmæssig protektionisme.

ii. Hvad angår WTO, tillader alle vores vigtigeste handelspartnere

(især USA), at vodka produceres af enhver landbrugsmæssig

råvare. En restriktion af råmaterialer i produktionen af vodka i EU

vil derfor være en teknisk barriere for handel.

I alle tilfælde mener vi ikke, at en restriktion af råmaterialer i produktionen af vodka er

begrundet og retfærdiggjort, som det er blevet fremsat af de syv nordiske og baltiske

medlemslande. Resultatet vil være, at omkring to tredjedele af al vodka lavet i andre EU

lande bliver udeukket fra markedet.

Jeg er bekendt med, at Danmark hidtil støtter denne restriktion og har indikeret at den

virker hensigtsmæssig. Såfremt det er i jeres interesse, vil jeg gerne hilse enhver

mulighed for at få en bedre forståelse for jeres argumentation velkommen, samt at

fremlægge yderligere beviser som understøtter EVAs holdninger.

Med venlig hilsen

r-Ley

Christo e Kirkegaard

Kommunikationschef

Diageo Denmark A/S

Tlf.: +45 39 15 50 24

Tlf.: +45 40 73 13 09

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

Dive s:

Tr?

POSITION

ent and the Council on the

Proposals for a Regulation of the European Parliam

of spirit drinks

definition, designation, presentation and labelling

The "Vodka raw materials" issue

Background

n of the European Parliament and the

This issue arises in the context of proposals for a Regulatio

ling of spirit drinks.

Council on the definition, description, presentation and label

Regulation 1576/89, contain definitions

These proposals, which would revise and replace Council

of vodka. They state that spirit drinks

of the principal categories of spirit drinks and, inter alia,

denomination "vodka" and drinks

that do not conform to this definition cannot bear the sales

mination "spirit drink".

which do not fall into a defined category must bear the deno

osals, vodka can be made from any

Under Regulation 1576/89, and in the Commission's prop

treated no differently from other

ethyl alcohol of agricultural origin. In this regard vodka is

taste from the raw materials (eg gin,

alcoholic beverages which do not derive their characteristic

akvavit, anis).

this definition to restrict the production

A number of Member States' are now seeking to change

This would prevent vodka producers

of vodka to two raw materials — either cereals or potatoes.

or grapes) from using of the sales

currently using other raw materials (eg sugar beet, molasses

denomination "vodka" to describe their products.

Preliminary Observations

le 95 of the Treaty for the establishment

1. The Commission's proposals are brought under Artic

creation of an area without internal

and functioning of the internal market: that is to say, the

ces and capital are ensured.

frontiers where the free movement of goods, persons, servi

Estonia,

Finland, Latvia, Lithuania, Poland and Sweden

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

These proposals are not part of any agricultural market organisation. Annex Ito the Treaty

excludes " liqueurs and other spirituous beverages" from the list of agricultural products in

the Treaty and it would, therefore, be wrong in Law to attempt to introduce "quasi-

agricultural" provisions in the guise of an internal market measure.

2. Regulation 1576/89, and the Commission's proposals that would replace it, are a form of

"minimum harmonisation". They set out "European Definitions" of the main categories of

spirit drink: but do not prevent Member States from introducing stricter production

regulations and/or definitions with regard to spirit drinks for which they register a protected

Geographical Indication of origin (a "GI").

The European definition of each category is broader than any one national definition. The

Regulation therefore seeks to accommodate different traditions and methods of production in

different Member States through the GI system.

The "internal market" purpose of the European definition is to ensure that spirit drinks made

elsewhere in the EU cannot be denied free movement within the internal market as a result of

these national definitions and regulations.

3. The Commission's proposals do not change anything regarding the raw materials for vodka

production.

•

Regulation 1576/89 currently permits vodka to be made from any "ethyl alcohol of

agricultural origin".

In 1989 the national Law of all twenty five current Member States (including in

particular, Sweden, Finland, Poland and the Baltic Member States) permitted vodka to be

made from any agricultural raw materials2.

The definitions of vodka in our major trading partners permit vodka to be made from any

agricultural raw materials.

•

It follows that the current proposals do no more than maintain the status quo ante as reflected

in Regulation 1576/89. Moreover that Regulation reflects the position as it was in the

National Laws of (all twenty five) Member States in 1989; and reflects the international

norm.

It is for those who would propose a change to the Law to justify that proposal in terms of

the establishment and functioning of the internal market. It is, therefore, for the above

Member States to demonstrate that a restriction on the permissible raw materials for vodka

production is a necessary and proportionate means of ensuring free movement.

A non-argument

Before dealing with the substance of this issue, we must first consider the argument that not to

restrict the raw materials for vodka production would be in some way "unfair" as other spirits

such as whisky and rum are defined by reference to a single raw material. This argument

misrepresents the purpose of these proposals and misunderstands the nature of the spirits market.

Technically this remains true today in that Laws adopted in Sweden (1993) and Poland (1998) restricting

the raw materials to cereals and potatoes do so only in relation to vodkas bearing the GI "Swedish" and

"Polish" respectively.

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

Regarding the proposals:

•

Defining whisky, rum etc by reference to their raw materials reflects the characteristics of

the product which must derive their taste from the raw materials used. The definitions of

these, and other `eaux de vie", require them to have a taste derived from the raw materials

used and require that they are distilled below a maximum strength to ensure that this taste

is retained. Furthermore there is no "flavoured whisky" or "flavoured rum" category

precisely because the flavour of these products is a definitive characteristic. Consumers

expect a product labelled "whisky" or "rum" to have a particular flavour and the

definitions ensure that products sold under these denominations have the definitive

characteristics which consumers are entitled to expect.

Vodka does not, and is not required to, have a distinctive taste or character derived from

the raw materials. Indeed, the definition is based on the removal rather than the retention

of any residual flavour and specifically requires any such characteristics to be

"selectively reduced". Moreover vodka must be distilled above a minimum strength to

eliminate the impurities that would impart such a flavour: and there is a proposal for a

flavoured vodka category which shows that the "flavour is not a definitive characteristic.

In the circumstances defining vodka by reference to the raw materials used is

inappropriate: doubly so when very different raw materials (cereals and potatoes) would

be permitted while other, no less dissimilar, raw materials would be prohibited. Spirit

drinks fall into one of two groups. Those which derive a definitive taste from particular

raw materials for which the raw materials appear in the definition: and those which do

not; and which can be made from any ethyl alcohol of agricultural origin.

•

Regarding the spirits market:

•

The popularity of whisky and rum is not due to the restriction on the raw materials that

can be used in their production. Nor has the absence of any restriction on raw materials

prevented vodka from becoming the fastest growing category in the international spirits

market.

In the whisky market the strongest consumer association with quality does not reside in

the denomination "whisky" but in the protected geographical indications associated with

it: in particular Scotch, Irish and American. Whiskies are made in other Member States

including Sweden (Lodhian, Mackmyra), Poland (Dark Whisky, Old Family Whisky) and

Finland (Teerenpeli). These whiskies may be of equally high quality but have yet to

establish an international reputation. But markets are dynamic processes and no-one had

heard of Swedish vodka before 1979..

The focus on a restricted list of raw materials is misplaced — not least because the raw

materials used have no bearing on the character or on the quality of the vodka. Poor

quality vodka can be, and is made, from cereals and potatoes and high quality vodka from

other raw materials.

•

We support moves to introduce a clear definition of vodka in order ensure high quality and

to protect the reputation of EU spirits. However this cannot be achieved by restricting the

raw materials from which it is produced. The proposed restriction on raw materials is

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

designed only to permit certain producers (who claim to be the guarantors of quality) to

"corner" the vodka market for their industry and their agricultural producers.

Economic interests

Stripped of emotion this issue reduces to the question, "whose interests are being served?" As

usual there would be winners and losers

The winners.

The intended beneficiary of the proposed restriction on raw materials would be producers who

currently make vodka from cereals and/or potatoes: and more particularly those who distil direct

from the raw materials rather than producing vodka from "ethyl alcohol of agricultural origin"

acquired on the open market.

The benefit to these producers does not flow from the protection of traditional practices.

Producers in the Member States seeking this restriction (eg in Sweden and Poland) are already

protected and constrained by the rules governing their protected geographical indication. The

benefit flows from imposing the same burden on their competitors. Examining this in more

detail:

Industrial producers

The distillers in the Member States now seeking a restrictive definition of vodka were,

until recently, state-owned monopolies. In Sweden and Finland the dominant vodka

producers remain in state-ownership. Moreover, despite recent privatisations in the

Baltic Member States and in Poland the industry remains highly concentrated and

distillation is undertaken in a relatively small number of large `industrial scale' plants.

Agricultural suppliers

Perhaps because of their history as state-owned enterprises these large distillers have

generally purchased their raw materials from local farmers/co-operatives. However,

there is no reason why this practice should not continue regardless of whether the

definition of vodka is amended or not.

It is clearly in the interests of these producers and suppliers to tailor the "vodka" definition to

their current production practices. However, the benefit to them flows from the elimination of

competitors elsewhere in the EU who produce vodka from alcohol derived from other raw

materials (or from alcohol purchased on the open market where the raw materials cannot be

ascertained) and subsequently acquiring their current market share.

The Losers

The principal losers if a restrictive definition were adopted would be those producers of vodka

from raw materials other than cereals or potatoes (or from alcohol where the raw materials cannot

be ascertained).

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

Vodka producers

The Member States that advocate a restrictive definition of vodk

a estimate:

their territory; and

a) That 85% of the vodka produced in the EU is made in

from raw materials other than

b) That only 10% of the vodka produced in the EU is produced

cereals or potatoes.

not record the raw materials from

These figures can only be estimates, since trade statistics do

they include flaovoured vodkas and

which vodka is produced. Moreover, it is not clear whether

raw material proposal. However,

vodka based cocktails which would also be affected by the

insofar as these figures broadly reflect the reality it means that:

•

million litres) much of which is

10% of EU vodka production (estimated to be more than 50

would be denied its

produced by small and medium sized enterprises across the EU

traditional sales denomination.

States where raw materials

Mathematically if 15% of EU vodka production is in Member

of EU production is from these

other than cereals and potatoes are used; and insofar as 10%

n in these member States is from

`other' raw materials, it follows that two thirds of productio

raw materials other than cereals or potatoes.

ately 30% of the vodka

This estimate is consistent with figures showing that approxim

and 95% of the vodka

consumed in the UK; 73% of the vodka produced in Germany;

other than cereals or potatoes.

produced in the Czech Republic, is made from raw materials

•

tion "vodka" — to which they have

Denying these producers and products the sales denomina

d — and requiring them to use the

always been entitled and which consumers readily understan

compromise the marketing of these

term "spirit drink" (proposed Article 7(2)) would seriously

et.

vodkas and in all probability drive them from the mark

their products an alternative sales

It has been suggested that people would be able to give

hardship. However, in this regard:

denomination — and so they would not suffer undue economic

•

denominations have a reputation

These proposals are founded on the recognition that sales

should be protected.

with consumers, and therefore a value to producers, which

d by considering the situation where

The value of the denomination "vodka" can be illustrate

Products that are not entitled to

a customer walks into a bar and orders a "vodka and orange".

possibility of customers asking for

the sales denomination "vodka" could not be served. The

native market.

a "spirit drink and orange" does not offer a credible alter

ed right to sell in the generic "vodka"

•

It would be wrong to deprive producers of the long-establish

market.

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

Alcohol suppliers

from the raw materials. Rather they

Many small producers of vodka do not distil vodka direct

e producers and use this as the raw

purchase "ethyl alcohol of agricultural origin" from large-scal

know — and have no need to know

material for their vodka. In many cases these producers do not

alcohol.

- which agricultural raw materials were used to produce this

If a restrictive list of raw materials were introduced into the vodk

happen:

a definition two things would

the raw materials from which

a) First, these vodka producers would be obliged to stipulate

ol suppliers to keep separate

the neutral alcohol was to be produced — and to require alcoh

stocks of alcohol derived from different raw materials.

yl alcohol of agricultural origin"

b) Secondly, these suppliers would no longer be selling "eth

may be).

but rather a specific distillate of cereals (or potatoes as the case

ated. However, the investment

The full implications of these changes need to be further evalu

g on the raw materials; and the

necessary to be able to keep separate stock of alcohol dependin

justifiable in every case. One can

running costs associated with doing so, are unlikely to be

rage market and concentrate on

anticipate that some neutral alcohol producers will exit the beve

market will therefore rise.

bio-ethanol and that the price of neutral alcohol for the beverage

Legal implications

rials from which vodka can be

A change to the definition of vodka which restricts the raw mate

made would be contrary to EU Law and to WTO rules.

EU Law

that is to say they propose an

The legal base for these proposals is Article 95 of the treaty —

6/98 Federal Republic of Germany

internal market measure. As the Court observed in Case C-37

Union, measures taken under this

v European Parliament and the Council of the European

ng of the internal market: i.e. the

Article must have as their object the establishment and functioni

t of goods, persons, services and

removal of internal barriers so as to ensure the free movemen

capital.

of "vodka" and there are, therefore,

The current Regulation already establishes an EU definition

basis on which the proposal to

no barriers to the free movement of "vodka". Therefore the only

unt to a single market measure would be

restrict the raw materials for vodka production could amo

ng a restriction in their national Laws

if Member States would, otherwise, be justified in introduci

materials in other Member States.

and blocking the importation of vodka made from other raw

ssary. However National Laws and

In such circumstances a further harmonisation could be nece

harmonising measures could only be justified if:

e public policy objective and was

a) The proposed national measure was pursuing a legitimat

iction on free movement

"proportionate"— that is to say it imposed the minimum restr

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

Law, the subsequent harmonising

necessary to achieve that end. Equally, with regard to EU

measures would also have to be "proportionate".

vodka producers or agricultural

b) In this context it is clear that the protection of domestic

the Treaty specifically

interests would not be a legitimate public interest. Annex Ito

ral provisions of the Treaty.

excludes spirituous beverages from the scope of the Agricultu

such a measure would be the

Therefore the only potential public interest that might justify

regard:

need to ensure a high level of consumer protection. In this

•

rials used to

There are no public health or safety issues that turn on the raw mate

produce vodka;

what vodka is made

There is nothing to suggest that consumers either know or care

from" is a relevant

from. Only 1% of vodka drinkers state that "what it is made

factor in choosing a vodka3.

ed, they could be

In any event, if there were a danger that consumers might be misl

ortionate measures,

adequately protected by less restrictive measures, and more prop

such as labelling.

•

for a Member State to block the

The question of proportionality is always debatable. However,

throughout the EU — and in the

importation of products that have always been freely available

r would be very hard to justify.

Member State concerned - without any detriment to the consume

such a way as to deprive a great

Harmonising the vodka definition to avoid this possibility in

denomination would be even

many established products of the use of their established sales

harder to defend.

WTO Rules

ld be a technical barrier to trade

The restriction on the raw materials for vodka production wou

a to be made from any "ethyl

under WTO rules. The current EU Regulation permitting vodk

vodka in the vast majority of third

alcohol of agricultural origin" is in line with the definition of

e) and Russia (the largest vodka

countries. Thus both the USA (the largest vodka market by valu

ultural raw materials — as do India,

market by volume) have definitions which permit any agric

Republic of China. Australia and New

Brazil (and other Latin American Countries), The People's

Zealand.

a barrier to

For the EU to now introduce a restrictive definition would be

trade because:

r than cereals and potatoes

a) Vodkas produced in third countries from raw materials othe

would be denied access to the internal market; and

undertake a process of due

b) All vodkas imported from third countries would have to

ls or potatoes.

diligence to establish that they had been produced from cerea

if it could be justified by reference to a

As such the restriction could only comply with WTO rules

. Failing which the restriction

legitimate public policy objective such as consumer protection

could:

•

Lay the EU open to a WTO complaint from a third country;

in 2005

United Kingdom by Taylor Nelson Sofres plc

Market research conducted in Spain. Sweden. Poland and the

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

•

enjoys a very favourable

Entitle third Countries such as the USA, with whom the EU

should be noted that the US

balance of trade in vodka (and other spirits) to retaliate. It

ultural raw

materials

definition of vodka not only permits it to be made from any agric

the Nordic Member States

but also requires it to have no distinctive flavour. Insofar as

ed from the raw

are now arguing that their vodkas have distinctive flavours deriv

. and/or

materials those vodkas may not conform to the US definition

ter market access for EU

Enable third countries such as India where we are seeking grea

closing off its market to their

spirits to continue to prevaricate on the basis that the EU is

vodka.

fication of the proposed

osed justi

In both EU Law and WTO rules the legal issues turn on the supp

restriction.

Justification

rials for vodka production would be

From the above it is clear that any restriction on the raw mate

be justified as being taken in

compatible with the Law only — and to the extent that — it can

to that end. It is therefore

pursuit of a legitimate public policy objective and proportionate

ber States seeking the restriction.

necessary to examine the justification presented by the Mem

These fall under the following heads:

The need to protect the reputation of traditional products

vodka production which entitles them

These Member States claim to have a particular tradition of

founded on a restricted list of raw

to define the product; and, moreover, that that tradition is

n of the product and of the

materials which is fundamental to the character and reputatio

Thus:

denomination "vodka". Neither proposition is actually true.

•

"vodka" on their

None of the Nordic Member States used the sales denomination

tions were Brannvin

products before the 1970s4. Prior to that the sales denomina

a in 1989 however the

(Sweden) and Viina (Finland). Denmark first produced vodk

et.

Danish brand Danzka was recently withdraw from the mark

been produced from raw

Brannvin in Sweden and Viina in Finland have historically

sulphite waste liquor (a by-

materials other than cereals or potatoes. Most notably from

s to make Brqnnvin from other

product of the paper industry). Indeed Sweden continue

raw materials such as sugar beet.

tion "vodka" for their products

None of the Baltic Member States used the sales denomina

sales denomination "vodka".

prior to the 1990's and none has registered a GI under the

tion "Degvins" and Lithuania

Latvia has registered a GI under their traditional denomina

tine" implying that these are

has registered a GI under their traditional denomination "Deg

the sales denominations for their traditional products.

•

these Member States conform

The fact that some of the traditional spirits produced in

mination — does not mean that the

to the definition of vodka - and so can use that deno

ts.

definition of vodka should now conform to those spiri

Sweden's Vin&Sprit tried to launch a vodka brand "Explorer

success.

" in the USA in the 1950's but this was not a

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

"Swedish vodka" or "Latvian

These Member States are free to call their products

protected geographical indication

Vodka" should they so choose — and can apply for a

in those terms if they consider that they are so entitled.

•

g and selling spirits under the

Poland is the only Member State with a history of producin

ever in this regard:

denomination "vodka" (or more accurately "wodka"). How

for the spirit now

In the past in Poland the name "wodka" was not reserved

has traditionally had

denominated "vodka" in the international market. "Wodka"

d be applied to any

a broad meaning in Polish — translating as "spirits" — and coul

materials used.

beverage with more than 20% alcohol regardless of the raw

national market

The spirit now bearing the denomination "vodka" in the inter

Polish. In the past this

would properly be called "Czysta wodka" (clear spirit) in

cereals and

product has been made in Poland from raw materials other than

potatoes — including sugar beet, molasses and fruits.

any agricultural raw

Polish Law has always permitted vodka to be made from

in relation to the GI

materials. Only in 1998 were restrictive rules introduced

Polish cereals or

"Polish vodka": these require Polish vodka to be made from

potatoes.

n in the EU that could ground a

In all the circumstance there is no tradition of vodka productio

ka" can be made.

measure to now restrict the raw materials from which "vod

Fair competition

raw materials other than cereals or

It has been argued that to permit vodka to be made from

would destabilise the market. The idea

potatoes would amount to a distortion of competition; and

stainable and the argument has no merit

that the status quo could "destabilise the market" is unsu

whatsoever.

•

is strong competition

There is no restriction on raw materials at present and there

between different vodkas.

molasses) is not a

• The fact that some producers may use cheaper raw materials (eg beet

ion. Denying producers access to

distortion of the market but a manifestation of competit

artificial constraint of certain

cheap raw materials, on the other hand, would impose an

Court in Case C-376/98

types of competition (analogous to the position noted by the

and the Council of the

Federal Republic of Germany v European Parliament

European Union)

nsive raw materials — eg grapes —

• Denying producers the possibility of using more expe

could not possibly distort competition.

d alcohol (eg grape alcohol produced

A distortion of competition could only arise if subsidise

vodka market. Since this is not

under the CAP wine regime) were to be allowed onto the

osals to permit it would be vigorously

permitted under the relevant EU Regulations — and prop

opposed — there is no prospect of this happening.

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

ificant number of one's

Proposing a measure that is calculated to eliminate a sign

fair competition displays a remarkable

competitors; and seeking to justify it on grounds of

insouciance.

Preventing fraud

uce vodka is necessary in order to

It is also argued that restricting the raw materials used to prod

ol (which bears an import duty)

prevent a particular `fraud' in which importers of neutral alcoh

(which does not).

dilute their product to below 80% abv and rename it "vodka"

place, the fact is that introducing

Accepting for the purposes of the argument that this fraud takes

not prevent it. Even if the diluted

a restrictive list of raw materials for vodka production would

it would nonetheless qualify as a

alcohol were no longer entitled to the denomination "vodka"

-zero" tariff provisions.

"spirit drink" and would continue to benefit from the "zero-for

clearly that the proposed

The argument does, on the other hand, demonstrate quite

so re-enforces the concerns

restriction would act as a barrier to trade in "vodka" — and

regarding compatibility with WTO rules.

Consumer protection

unt to a justification for denying 10%

In the final analysis none of the above arguments could amo

third countries — the use of the sales

of EU production —and a significant number of producers in

denomination "vodka".

ification of "vodka" (which is

Even were there to be an issue regarding the traditional spec

g misled as to the nature of the

denied) this would turn on the fact that consumers were bein

rial issue. In this regard we would state

product. Consumer protection is, therefore, the sole mate

at the outset:

raw materials used. There are high quality

a) That there is no issue of quality which turns on the

toes — and relatively poor quality

vodkas made from raw materials other than cereals and pota

are no guarantee of quality.

vodkas made from cereals and potatoes. The raw materials

h turn on the raw materials used.

b) That there are no issues of consumer health or safety whic

to the abuse of alcohol we can

While recognising that there are public health issues relating

h is altered in any way as a

state with confidence that there is no public health issue whic

result of using different agricultural raw materials.

"vodka" to be made from particular raw

The sole issue is, therefore, whether consumers expect

to be produced from other raw

materials and would be misled to their detriment if it were

materials. In this regard we can state that:

•

materials throughout the EU and

It has always been possible to produce vodka from other raw

ing a restrictive list of raw

most of the World: even in those Member States now seek

on on the part of consumers.

materials. Thus there would be no basis for such an expectati

Consumer research does not reveal any such expectation.

States5 show that:

Research in different Member

•

the United Kingdom by Taylor Nelson Sofres plc in 2005

Market research conducted in Spain, Sweden, Poland and

EUU, Alm.del - 2005-06 - Bilag 400: EU's definition af Vodka

When asked what vodka mainly tastes of NO vodka drinkers refer to the raw

materials. The vast majority either don't know or refer to "nothing" or "alcohol"

when describing the taste. The sole exception being Poland where the most common

response is "bad".

When asked for the three factors they consider important when choosing a vodka

only 1% of vodka drinkers refer to "what it is made from" as being a relevant

consideration.

In most Member States, when asked what vodka is made from over two thirds of

consumers do not know. The exception to this rule is Poland — where consumers

generally refer to cereals and potatoes — but also to other raw materials (perhaps

reflecting the wider historical usage of the word).

One might add that in most Member States the vast majority of the vodka consumed

in drunk in cocktails and mixed drinks — making any taste attributable to the vodka

(let alone the raw materials) largely irrelevant.

In sum, therefore, there are no grounds for suggesting that consumers have any expectation with

regard to the raw materials from which vodka is produced — and to the extent that they know what

it is produced from they do not care. Given that only 1% of consumers consider, "what it is made

from" to be relevant to their choice of vodka the suggestion that consumers generally might be

misled to their detriment cannot be sustained.

Moreover, even if there were a remote possibility of consumers being misled — this is addressed

by the Commission's proposal that requires the raw materials to be indicated on the label. To the

extent that this is necessary it would clearly be a more proportionate measure than the elimination

of 10% of current EU vodka production.

Concluding remarks

The European Vodka alliance concludes that there is no possible justification for a restriction on

the raw materials from which vodka can be produced. There is no tradition of producing "vodka"

from particular raw materials — and the suggestion that consumers expect vodka to be made from

particular raw materials has been disproved by market research.

In the absence of any such justification — and in particular in light of the evidence that consumers

cannot discern, and are not concerned about, the raw materials from which vodka is produced —

the proposed restriction would be an unwarranted intervention in the market and unlawful both in

terms of EU Law and in terms of WTO rules.