Austria Battles to Recover From Wine Scandal

The Austrian wine-tainting scandal a year ago has reduced the nation’s wine exports to a trickle this year. Industry and government have launched campaign to regain lost markets abroad.

“That was a national catastrophe,” commented Johann Stadlmann, president of the Federal Wine Growers Assn., the chief organization of producers. A new wine law providing for strict labeling rules and quantity and quality controls plus up-to-date sales promotion are intended to restore prestige and confidence abroad. The law also stipulates acreage restrictions for premium quality wines.

But the consensus of the wine industry is that an uphill battle lies ahead and image repairs will take many years.

Austrian wines were pulled off shelves last year from West Germany, Austria’s main export market, to Malaysia after tests revealed that an illegal substance, diethylene glycol, had been added for greater sweetness.

The additive is used in some anti-freeze solutions and can damage the human nervous system, kidneys and liver.

There was, however, no record of anyone becoming ill from drinking the Austrian wines. In Italy, 24 people were known to have died after drinking wine poisoned there with methanol.

Extent of Damage

Figures released by Austria’s Central Statistical office illustrate the extent of damage done by vintners and dealers who doctored hundreds of brands in an effort to increase wine sales at home and abroad.

In 1984, exports totaled 11.8 million gallons. News of the large-scale adulterations in July, 1985, sent foreign sales nose-diving to 7 million gallons.

In the first six months of this year, exports plunged to 539,600 gallons, or 4.34% of the annual 1984 total. Estimates of financial losses range from $33 million to $50 million.

However, growers and dealers say domestic sales dropped only 6% to 10%, with Austrian wine drinkers obviously much less deterred by potential health hazards and prices, which rose by 30% to 40%, partly due to a bad harvest in 1985.

Nikolaus Gabriel, a vintner from Rust, a picturesque village and center of wine growing in the southern Burgenland province, said he has no reason to complain.

“This year, the tourists are back again. The mood among small growers is good, the foreigners come and drink again. What else can we want?”

The export business is a different story, however.

“We have to start from the bottom,” Hermann Katzler, chairman of the Federal Wine Wholesale Trading Union, told the Associated Press.

Some Optimism

Other dealers are equally gloomy, but Erich Schmidt, the nation’s new agriculture minister, displayed optimism.

In a recent interview, he said he was convinced that the new law offered a realistic chance for the Austrian wine industry to rebuild its battered image.

“We will do all we can to publicize the advantages of this excellent product. We must conduct an active, offensive marketing strategy . . . and I am optimistic that we can regain lost ground and indeed obtain additional market shares.”

The Justice Ministry said 70 people were arrested in connection with the wine scandal. Most have been released pending trials, but 11 growers and dealers already have been convicted of fraud charges and sent to prison.

About 30 implicated wine dealers have gone bankrupt, including brothers Josef and Richard Grill, who were sentenced May 30 to 10 years each in prison, the maximum term given so far to convicted adulterers.

Industry executives are hopeful that the new legislation and a new marketing company will eventually boost exports.

The company, in which the government has a 51% share, started operating Sept. 1 and will receive a large portion of the 160 million schillings (about $10 million), the government has set aside to finance sales promotion efforts.

Some of the money will be used by a commission set up to stabilize the home market, Schmidt said. He added, however, that the wine trade would have to make its own additional sales efforts, particularly in West Germany.