The EU traditionally has a leading position in the global wine industry. Its wine sector has been highly regulated by market interventions and support measures. Following trade liberalization in accordance with the WTO agreements, however, the EU protected wine sector is opening to considerably foreign competition. Even though the majority of the EU wine imports are intra-EU trade, the market share of foreign wines is significantly increasing from 4 in 1989 to 16% in 1997. The purpose of this study is to analyze the competitive performance of EU and non-EU wines in the European common market. The constant market shares (CMS) approach is used to capture the structural and competitive factors causing the change pattern of the EU wine trade for the period between 1989 and 1998.