BRUSSELS -(Dow Jones)- Vodka could be made from grapes, not just potatoes or grain, under proposed new labeling rules released Wednesday.

The European Commission rejected demands by traditional vodka-making countries Estonia, Finland, Poland and Sweden to restrict the approved ingredients to grain, potato, sugar beat and molasses.

But southern European countries - and some major drinks players such as Diageo PLC (DEO) (DEO) also make the drink from grapes, a Commission official said. In 2003, the U.K.-based drinks group launched Ciroc vodka distilled from grapes grown in France's Gaillac region. In its publicity, Diageo compared this favorably from other vodkas "produced from common grains."

"As long as there is a label at the bottom saying what the vodka is made from, it is O.K. under the new rules," the official said. Once distilled, grape or potato-based vodka has a similar composition and taste, he added.

E.U. governments still must approve the proposal and the official said final approval remains far off.

The dispute over vodka labeling has lingered for the past five years. Keen to protect national industries, they say their vodka recipes have been around for centuries.

By William Echikson
Dow Jones Newswires: 32-2-285-0134
william.echikson@ dowjones.com