The tobacco subsidy was abolished – even the European Commission couldn’t think of an argument to pay people to grow the killer weed. With ashtrays rapidly acquiring the social status of spittoons, there was only one way to go for that annual Brussels bung to the European Union’s tobacco farmers.

Easy-peasy. Today, however, the Commission grapples with a different class of drug and an altogether bigger problem. Last year, Brussels paid €1.3 billion (£900 million) in subsidies to Europe’s wineries. In the same year the Commission made a commitment to do something about the expanding wine lake and the many euros drowned in vats of plonk distilled into industrial alcohol.

So, emboldened by its firm hand on tobacco and mindful of the watchful eye of American and New World trading partners, the Commission today will ignore whining winemakers and cut their subsidies. Producers of rotgut table wine will quit the business, their vineyards acquired by more skilled operators. Foreign investors will buy land, bringing new skills to old vines. Wine will get better, the lake will dry up and prices will improve.

Actually, no. The Commission will announce today that the subsidies will not be cut. Instead, they will be used differently. There will be one good outcome: no more money will be spent boiling wine into fuel for the family Renault. Half a billion euros is spent every year getting rid of undrinkable wine. Those payments, export subsidies and money for additives, such as sugar to fortify weak wine, will be eliminated.

The savings will be ploughed into the land, or rather the farmer’s pocket, on condition that he digs up his unproductive vines and quits winemaking. Instead of being paid to produce bad wine, he will be paid to produce . . . nothing.

This is the new Europe, in which farmers are no longer subsidy drunk but subsidy comatose. There is a tortuous logic to the single payment scheme. It is intended to prevent one evil – market distortion – such that payments are no longer propping up output, but the result is a countryside living on the dole. Farmers become direct employees of the State, as long as they do nothing. Of course, it is intended that they manage the countryside, maintain the stone walls and farm buildings that keep the environment pretty. But we urbanites know a little bit about living off the State. It is destructive, corrupting and stifles economic activity.

The new wine regime acknowledges the root of the wine problem. It wishes to encourage better labelling rules and better branding. There will be money for marketing and promotion and rural development. Someone, somewhere has noticed that Europe’s 2.4 million winemakers represent the world’s biggest cottage industry and it doesn’t work any more. In Australia, America, wine is big business. These are good intentions destined to go awry. Those masters of poisonous plonk in Provence understand: why produce good wine if you cannot sell it? Better to produce rubbish cheaply and blackmail the State into buying it. The world is full of sales genius – France has its own irrepressible wine showman, Georges Duboeuf, but he is an exception. Marketing skills are not easily acquired in a farmyard.

The rural upheaval that the Commission fears should be allowed to happen. It would force bad wineries to sell to those with marketing skills and commercial nous. It would create new brands capable of fighting back against the New World wineries. It would be a market solution – and that is why it will not happen.

Translating Danone

Two years ago, while on a state visit to Madagascar, President Chirac rallied to the cause of Danone, declaring himself vigilant et mobilisé in defence of the French yoghurt and biscuit company.

There was rumour of a bid from PepsiCo that sent Danone stock flying upwards. Nicolas Sarkozy joined in the patriotic frenzy and eventually the American company was forced to quell the rumours. Yesterday, Danone was unapologetic in selling its biscuit business to Kraft.

For M Chirac, who was excoriating while in office about the poor quality of foreign food, Danone exhibits some of the problems of turning taste into multinational dollars. The yoghurt brand itself is not French but was invented by Isaac Carasso, a Spanish doctor who created a yoghurt and called it Danone, after the nickname of his son Danilo. The company moved to the United States during the Second World War, when it became Dannon, and became part of French industry only when it merged with Gervais in the 1960s.

Big brands are difficult to create in food – the Americanised spelling of Danone is an example of the problem. Tastes are rarely universal. Unilever, in particular, has struggled with this problem and beverages seem to do better than food. Danone is following Nestlé’s example, focusing on mineral waters and healthy nutrition products, while taking investment capital out of sweets and chocolates. Danone has some good biscuit brands, but competition is large and barriers to entry are low. Biscuit sales grew by 4 per cent last year, the Danone dairy busines expanded by more than 9 per cent and beverages were well into double digits.

The solution, then, is to sell the low-margin sugary and fatty biscuits to Kraft and focus on selling overpriced mineral waters and bacterial yoghurt cultures with fancy names like Actimel. Let the Americans figure out how to translate Petit Beurre.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts