The shelves carrying the Golan Chardonnay, produced in the occupied Golan Heights, had previously labeled the kosher wine as coming from Israel. But Systembolaget says it changed the labels after complaints from members of the public.
Systembolaget's press spokesman Björn Rydberg said that the state-owned company had asked the foreign ministry to help it find a politically correct formulation, according to Svenska Dagbladet.
But Christian Democrat parliamentarian Annelia Enochson called the decision "very disturbing", adding that it was tantamount to "unfair special treatment of Israel."
Rydberg insisted that the company, led by the prime minister's wife Anitra Steen, had not intended to make a political statement.
He said Systembolaget would now review the labeling.