The EU government subsidizes the hell out of everything to keep euro wine producers alive, but demand for most EU wine is declining, and imports are on the rise. Europeans are buying more and more wine from California, Chile, and Australia. Sometimes they talk about pulling up vines to reduce production.
They also manufacture up to 1.3 million tons of extra butter each year for similar reasons. This kind of thing is just sad. Put the stuff in boxes and ship it somewhere. Certainly it would be more profitable to sell it dirt cheap in bulk as wine.
The unfortunate reality is that it's more profitable to crank out too much wine, put it in little bottles with fancy labels, price it too high, fail to sell most of it -- and then whine and cry to the government until they pay full price for your shitty rotten grapes. Then talk about solutions, never implement any of them, and repeat the process the next year at taxpayer expense.
A major part of the problem is grower cooperatives (often "fair trade" coops), where an entire region comes together to pool their grape harvests, and each grower is paid by the ton. To maximize income, growers churn out huge batches of low quality grapes and quality plummets. If each grower were paid by the quality of his grapes instead of raw tonnage, things might be different.
"The central problem is that European winemakers do not want to live in a free market world. They are addicted to subsidies, with hundreds of millions of pounds spent every year propping up prices which duly frees them from the pesky requirement of making wine that paying customers might want to buy."
http://blogs.telegraph.co.uk/david_rennie/go/tag/view/all/Farmers
http://en.wikipedia.org/wiki/Wine_lake#cite_note-0
http://www.winespectator.com/Wine/Archives/Show_Article/0,1275,6198,00.html
http://www.dairyreporter.com/Financial/EU-slices-through-butter-mountain
