After more than two decades of negotiations, the European Union and the Mercosur bloc reached a political agreement on a comprehensive trade partnership in December 2024, with EU member states formally endorsing the deal on 9 January 2026. From a beverage industry perspective, the agreement is designed to eliminate tariffs on more than 90% of bilateral trade, potentially reshaping flows of wine, beer-related agricultural inputs, sugar and ethanol across both regions. If ratified, the agreement would create one of the world’s largest free trade areas, linking around 770 million consumers and accounting for a significant share of global agricultural and beverage trade flows.
For European beverage producers, the pact would ease access to fast-growing South American markets, particularly for wine, spirits and premium beers, while also lowering costs for imported raw materials such as sugar and agricultural feedstocks used in brewing and distilling. At the same time, Mercosur exporters would gain improved entry to the EU for sugar, ethanol and agricultural commodities, increasing competitive pressure on European suppliers.
However, the agreement’s future remains uncertain. On 22 January 2026, the European Parliament narrowly voted to ask the Court of Justice of the European Union to assess whether the pact aligns with EU treaties and environmental and consumer protection standards. This legal review, expected to take up to two years, injects fresh uncertainty into ratification and could delay or amend implementation.
The controversy is driven largely by agricultural concerns, with farmers warning of lower-priced imports from South America. While beverages are not at the centre of the protests, the outcome matters directly to brewers, soft drink producers and spirits makers, whose cost structures and export opportunities depend on predictable trade rules. Supporters such as Germany and Spain argue the deal is strategically vital to diversify supply chains, including access to critical minerals and agricultural inputs, and to reduce reliance on volatile partners.
The European Commission has signalled disappointment with the parliamentary challenge but maintains that safeguards for EU standards are already built into the agreement. Provisional application remains possible, though politically sensitive, leaving beverage companies in a holding pattern as they assess investment, sourcing and export strategies tied to the Mercosur market.
