THEY used to uncork their best bottles for festivals on July 14, but French wine growers such as Bernard Farges have little to celebrate next week. Far from evoking the triumphant storming of the Bastille, the date makes him and other bordeaux vignerons queasy.

“I feel sick to the heart,” said Farges, from Mauriac. The source of his melancholy is a European Union-funded process in which some of the quality red wine he produces will be distilled into undrinkable ethanol for use as factory fuel. The deadline for participating in the scheme is Bastille Day, a cruel irony. Farges has already sent in his forms.

It may seem heinous to any enthusiastic bordeaux drinker, but the EU has pledged £100m under the common agricultural policy to turn 670m bottles of French and Spanish wine into industrial alcohol to help reduce a surplus caused by competition from the New World.

This is not the first year in which plonk has been sold to industrial distillers, but never before have quality wines protected by the appellation d’origine contrôlée (AOC) label been subjected to such indignity. Some 200m bottles that might have graced the dining table are destined to become factory chemicals this year.

The idea is to help to prop up a slumping market for French wine but the EU’s “crisis financing” of the process is being cited as an example of the profligacy of a system that Tony Blair wants to reform but which the French are fighting to keep.

Farges, 40, produces a “very drinkable” 350,000 litres of quality AOC-labelled bordeaux that is normally sold to restaurants and cafes. This year, however, some 20,000 litres of it — about 26,000 bottles — will go to the distillers.

“I hate to do it,” said Farges, who works with his brother and two staff on a vineyard at Mauriac. “Mentally it hurts. But it is an economic necessity.”

Bordeaux has been losing ground in the world market not only because drinkers are turning up their noses at French wines in favour of brands from the New World; domestic consumption is falling too as France becomes more health conscious and the police enforce drink-driving regulations more vigorously.

“People are ashamed, of course,” said Gabriel Chevrier of Onivins, a national wine industry organisation that is encouraging producers to apply for distillation. “People don’t put their passion and sweat into this business to see their produce turned into industrial alcohol. But it is a necessary evil.”

The market for brandy and other products is already saturated so the wine will be turned into ethanol and other chemicals. The European commission’s wine management committee has offered crisis funding to cover the process on condition that France takes other steps to curb overproduction, including the destruction of up to 45,000 acres of vines.

French winegrowers received £213m in subsidies from Brussels in 2002 out of the overall £6.75 billion allocated to French agriculture.

Critics of the system believe Brussels has done enough and that France’s failure to adapt to competition from the New World is the reason for its woes. Neil Parish, a Tory MEP, said: “They need to react to the marketplace rather than be subsidised out of their problems.”

Only champagne and the highest quality bordeaux, burgundy and loire wines have been unaffected by the worst crisis for the industry since the phylloxera disease killed off a large portion of the country’s vines a century ago. Even though France is still the biggest wine exporter with 20% of the world market, experts concede that the complex AOC system might have to be changed.

That is because it seems impenetrable to all but the most knowledgeable oenophiles and can allow indifferent wines to masquerade as something much better.

There has been stiff resistance from traditional French wine growers to suggestions that they make their wines taste more like popular Australian or Argentine upstarts. Yet such is their despair that parts of Languedoc-Roussillon now resemble a war zone as masked men with baseball bats rampage through shops selling foreign wine and hold up lorries bringing in grape juice from Spain.

“Growing vines is a way of life for us,” said Farges. “What else are we going to do?”

Critics of the French system might suggest that he try making even better wine.

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