Wine market marches east with EU expansion.

On May 1, the European Union, the world's leading wine region in terms of production, consumption and exports, welcomed 10 new members. The area includes six new wine producing countries: Cyprus, The Czech Republic, Hungary, Malta, Slovakia and Slovenia, and some of the world's oldest wines and winemaking traditions. By 2007, the union will include Romania and Bulgaria, Eastern Europe's biggest wine producing country, adding an extra 500,000 hectares of vineyards (1 hectare = 2.47 acres) to Europe's viticultural landscape.

"We are extremely happy about Hungary's accession to the EU," said Andras Egyedi, director of Tokaj Renaissance (Classified Vineyards of Tokaj), a wine company that groups several producers of the Tokaji wine for which Hungary is famed. Among the new members, Hungary is the largest producer of wines.

"Accession is changing things," Egyedi said. "Bureaucratic barriers have been dismantled. Since May 1, consumers have been allowed to contact our winery directly, rather than looking through 30 different stores or changing states--if they are in the U.S.--to find our wines. That's a small example, but it makes a difference."

Most of the winemakers in the new member states share Egyedi's enthusiasm. Years of communist rule in Eastern Europe have generally contributed to underproduction (the new members produced only 4% of the total wine made by the previous, 15-member EU in 2003), and poor quality wines in the region. Since the fall of the Soviet bloc, changes have taken place, but the industry remains generally fragmented and under-exploited. High duty on imported goods and weak purchasing power in the region have limited most consumption to local wines.

"Tastes in Eastern Europe are very much focused on simple wines like table wines," said Jean-Francois Berger, head of the wine and spirits section at the CFCE, the French foreign trade center. "It is quite difficult to see what is going to happen now, although we can say that these countries will eventually open up. But they have a weak spending power, and so the wine offering has generally stayed basic, as these countries have other priorities such as health and housing."

But joining the EU will gradually change this. Since May 1, trade tariffs have been banned throughout the union, shaving up to 70% excise duty on wine in some countries, while in many cases, tariffs on non-EU imports have also been reduced. Shoppers from the 25 countries can now buy wine throughout the union and bring as much as they want home, as long as it is for personal consumption.