Italy produced and sold at least 70 million litres of cheap wine containing acid, manure and fertiliser, Italian weekly L'Espresso said on Friday, largely blaming organised crime in the south.
It said bottles sold at less than two euros (around three dollars) a litre contained very little wine, and a potentially deadly concoction of water and chemical substances, including hydrochloric acid.
L'Espresso said 20 companies, eight of which are in the north of Italy, were currently being investigated. In southern Italy, two companies based in Taranto and run by the local Sacra Corona Unita mafia were the main source of the bootleg beverage, the report said.
Despite a recent crackdown, many bottles of the tainted wine are still being sold, L'Espresso said, adding that it found a whole stack in a shopping centre in northeast Italy.
The agriculture ministry, which neither confirmed nor denied L'Espresso's findings, told AFP enquiries had allowed the government to protect consumers and to distinguish genuine producers from criminals.
In a statement Agriculture Minister Paolo De Castro described the Italian wine industry as dynamic and healthy, insisting that habitual wrongdoers known to the police "would not ruin the image of an entire economic sector".
Nonetheless, on Friday, the European Commission's spokeswoman on health Nina Papadoulaki asked Italian authorities for an explanation on the matter.
L'Espresso's findings come as the government is investigating 13 producers of the upmarket Tuscan wine Brunello di Montalcino for using unauthorised grapes. It has since confiscated bottles from four of the producers.
The new scandal comes two weeks after Italy was forced to withdraw mozzarella from the market when raised dioxin levels were found in the soft buffalo milk cheese.
Scientists linked the case to thousands of tonnes of rubbish which has accumulated in the Naples area, again partly because of mafia activities.