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Diageo wins first round in row over grapes in vodka

Diageo Plc, the world's biggest liquor company, moved closer to keeping the right to label a spirit distilled from grapes as „vodka” after European lawmakers dismissed Swedish calls to limit the drink's raw materials to more traditional ingredients.

Sweden's Vin & Spirit AB, which makes Absolut vodka, and Polish, Finnish and Baltic distillers want to limit the name to alcohol made from grain or potatoes. They say vodka is entitled to the same strict ingredient rules in the European Union as applied to whiskey or rum. London-based Diageo Plc has produced Ciroc vodka from French grapes since 2003. Vodkas distilled from less traditional ingredients such as grapes or molasses make up about 10 percent of the vodka market in the EU.
Today's vote by the European Parliament's Environment and Food Safety Committee, permits vodkas that aren't made from potatoes or cereals provided they're labeled as such. „Vodka has always been made from a wide range of raw materials and the Parliament has agreed to set minimum standards and given the clear view that the raw materials shouldn't be restricted,” Alan Butler, a spokesman on EU affairs for Diageo, said by telephone. The proposal, a first step in updating an 18-year-old law, still needs further approvals from the full Parliament and the EU's 27 governments.

Diageo, which owns the grain-distilled Smirnoff brand, would be satisfied with a law that requires distillers to list ingredients on the labels, as most already do, Butler said. Diageo prints the wording „distilled from fine French grapes” on bottles of its Ciroc brand vodka.
The parliament committee's proposed labeling solution may run into difficulties in court if producers claim there is discrimination against products that are considered legally identical, said Peeter Luksep, head of European affairs for Vin & Sprit, which makes Absolut from wheat. „We would have preferred not to have any hybrid categories,” he said in a telephone interview from Stockholm. „But if this leads to legislation that works as intended, it would deter producers from using unusual raw materials” because they'd have to declare them on the bottle.

The debate over changes to an EU definition dating from 1989 pits countries that weren't members of the bloc at the time - Poland, Sweden, Estonia, Latvia, Lithuania and Finland - against the UK and France, which don't have a tradition of making the spirit. Defenders of other raw materials for the spirit point to a tradition at least 1,000 years old in Russia and Poland that includes distilling vodka from grapes for medicinal uses as well its use as an ingredient in making gunpowder, according to the London-based Gin & Vodka Association.
Without quality criteria similar to those applied to whiskies, brandies and rums, vodka can, in theory, be distilled from any agricultural product including surplus wine, Luksep said. „Vodka's reputation comes from being seen as the purest of alcohols because it uses raw materials that aren't smoked or kept in casks to age, so there's a sense of discrimination that the label can be used as a generic,” he said. Diageo may seek to buy Absolut when the Swedish government puts the brand up for sale, CEO Paul Walsh said last month. Absolut is the second-most popular vodka brand in the US after Smirnoff, the most popular brand worldwide.