What is the purpose of an appellation of origin?

Lets start by defining the concept of a Denominación de Origen (Appellation of Origin), “the system used in Spain to recognize distinctive quality resulting from specific differentiating characteristics. These stem from the geographical area where the raw materials are sourced and the products made, as well as the influence of the people involved in the process.”
In simple terms, it is a quality classification system, which isn't limited to wine, but also used for spirits (brandy from Jerez, Galician orujo or Majorcan hierbas) and food products (L'Empordà olive oil, Idiazábal cheese, Teruel ham or Alcarria honey). These are all products of distinctive quality and therefore protected.
What is being protected? In addition to the product's geographical provenance or place of origin, the system strives to protect its quality, unique characteristics and factors related to its production and reputation.
Appellations of origin began as a European construct, because the continent has the oldest grape-growing and winemaking tradition in the world. Many areas have grown into important wine regions due to a unique interaction between the terrain, the vineyard and the people who work the land and make the wine. As a result, the system developed as a way of protecting the specific wine culture of each region.
Understanding the concept is easier than making sense of its legislation, especially considering the continuous changes in rules, regulations, laws and ordinances, both on a Spanish and EU level.
A bit of history
The regulation of appellations of origin began during the 1930s. The first official ones in Spain were approved in 1932: Jerez-Xères-Sherry, Manzanilla from Sanlúcar de Barrameda, Málaga, Montilla-Moriles, Rioja, Tarragona, Priorat, Alella, Utiel Requena, Valencia, Alicante, Ribeiro, Cariñena, Penedés, Condado de Huelva, Valdepeñas, La Mancha, Navarra and Rueda.
Since then, Spain has passed two important regulations with regard to wine: the Vineyard, Wine and Spirits Statute of 1970 and the Wine Law of 2003, which replaced the former. All the while, regulations and decrees were also being passed on a European level. As a curious aside, the latest law determined that wine is not only a beverage made from fermented grapes, but also a food product. With regard to appellations of origin, Spanish wines are currently subject to European legislation, which introduced new regulations several years ago.
Deciphering the system
All wines fall into one of two large categories: those with PDO (protected designation of origin) status and those with PGI (protected geographical indication) status. Some of you might recall back labels featuring the initials vcprd (quality wines produced in specific regions), but this category no longer exists. Furthermore, the European Commission is the entity responsible for granting these designations.
1. PDO wines: All grapes used must be a variety of Vitis vinifera grown exclusively in the geographical area in question, and the wine must be produced within this same area.
2. PGI wines: At least 85% of the grapes (either Vitis vinifera or others) must come from the geographical area in question. The wine is produced in said area, but not every step of the production process must take place there.

What is a Regulatory Council?
Different entities are responsible for overseeing each individual category. Among these, the most important is the Regulatory Council, which manages and supervises the DOs and DOCs. Wines not included in one of these two categories are overseen by local public administrations or special institutions authorized to do so.
Regardless, the overall objective of a Regulatory Council is to represent, defend, guarantee and promote the wines within its purview, support their protection, as well as research and develop markets. In addition, the council certifies the vintages, establishes criteria with regard to yields and production limits, and produces statistical data pertaining to production, winemaking and marketing, either for general publication or to set up a system of controls and certification.
The DO or appellation of origin concept is frequently called into question in terms of its usefulness, the rigid nature of its rules, and the lack of flexibility when it comes to winemaking or vineyard plantings, as well as an insufficient level of quality control. The debate continues...