Style council

As producers agonise over fruit-driven styles of Rioja for today’s New World obsessed consumer, sales of the original oak-driven version are rocking on regardless. Patrick Schmitt reports

OKAY, so sales of Rioja dipped in 2003.  In fact, volume dropped by nearly 14 million litres – that’s a fall of almost 6% compared to 2002.  But is this really a reflection of a global decline in Rioja’s popularity? Has the region peaked? Is the consumer looking elsewhere? Well, the simple answer to all these suggestions is no.

In fact, the bigger picture hides some exciting trends within Rioja and the falling sales of the region’s products are actually more a function of supply than dwindling demand. 

Further, the real irony is that Rioja, famed for an aged style of wine, has its fate or fortune decided by the very youngest element of its produce, those wines "Sin Crianza" as the Spanish describe them – and the stock of these fluctuate like a teenager’s temper.

And it was the case that in 2002 the harvest of young wines was relatively small, 190m litres were produced versus 250m sold (a record for the region).  This resulted in price increases in 2003 and a subsequent drop in sales of unaged wines from almost 133m litres in 2002 to just over 113m last year, a decrease of 15%.

For this reason the growth experienced in aged wines, which form a smaller base of Rioja’s production, was not enough to ensure that sales of the region’s wines increased overall.

"2002 was quite a small harvest and there wasn’t enough young wine to meet demand," says Tom Perry, managing director of the Rioja Wine Exporters Association.  "Prices went up and it affected sales everywhere." 

However, while sales may have been "affected everywhere", the nature of the change was different depending on the category.  And, looking at the figures a little more closely, there was in fact a 5% growth in aged wines, or rather, it appears Crianza wines grew by nearly 6% and those in the Reserva category by just over 4%.

"Prices for these wines are less volatile as the cost is spread over a number of years, whereas in young wines it’s passed on," comments Perry, explaining the discrepancy between the trends in young and aged wines.

"The point is, aged wines are far less volatile and therefore have a steadier growth potential." But, as Perry continues, "In the current economic climate people have been looking for more economical wines, and there hasn’t been that much supply."

And such a climate during 2003, a year of international conflict and recession, could also explain another aspect of the results for sales of Rioja: there was a slight drop in the sales of Gran Reserva wines – they slipped by almost 2.5%.

On the other hand, it is worth noting that climate, but of the weather-related sort, had a marked effect on a somewhat lighter style of Rioja during 2003.  "The very hot summer last year  influenced the sales of rosé wines," comments Christine Forner, chief executive and director of exports for Marqués de Cácares.

"Our shipments of Marqués de Cácares rosé to the UK were up by 45.8% in 2003, compared with the previous year."

Weaker exports

But, when one considers exports overall, which made up a little over 66m litres of Rioja’s 236m total production in 2003, it becomes apparent that most foreign markets for Rioja were weaker last year.

In fact, overall the amount of Rioja sold abroad was over 8% well below the 2002 figures, although in line with the above explanation this drop was experienced almost exclusively by young wines.

Breaking the figures down, however, it seems exports of Crianza and Reserva wines remained pretty similar to 2002, the former declining by not even 0.5% while the latter crept up by around the same amount. In Spain, on the other hand, Crianza and Reserva wines grew 7.8% and 6.8% respectively, which accounts for much of the increase in aged wines described earlier when considering overall figures for Rioja sales.

As for the individual markets, well, Rioja’s largest export market, Britain, absorbed over 19m litres of the region’s wines in 2003, however, this was down on 2002’s impressive near-21m litre-mark – a fall of nearly 7.8%.

However, it should be added this represented a less than 1% drop in value, or €600,000. Next, and some way behind Britain, is Germany, where 12.6m litres of Rioja were sold, this was a decline of 14.6% on 2002.

Switzerland is third in line, and experienced a similar declinine in sales last year compared to 2002, a 9.2% drop to 5.7m litres.  However, if there was to be any reason for cheer, it was the results from the US market, where sales of 5.4m litres meant that America was almost 14% up on 2002, causing it to overtake Sweden in terms of ranking.

"I think there is a lot of potential in the US," says Perry. "I was in Florida two weeks ago at the ‘Most exciting wine shop in the US’ as voted by the Wine Spectator [Wolf Wines & Spirits] and the guy running it said the two most exciting categories are Spain and Australia.

But," Perry adds, "this guy thought that a lot of the excitement focused around new international styles of Rioja."  Nevertheless, it should be added that the situation is somewhat different if one considers value, as the US market actually experienced a drop, from 2002’s €30.2m to 2003’s €29.1m.

Finally, on the figures front, other countries experiencing impressive increases in sales of Rioja included Mexico, where volume sales of the Spanish wine grew by almost 8.8%, and France, where an increase of 20% was noted, but from a rather small 1.1m litres in 2002.

Furthermore, Forner, from Marqués de Cáceres, records particular growth in Eastern Europe as well as the Far East.  Notable decreases, though, were logged both for Sweden, down 17% in volume and Denmark, which took a dive of 32.5% in volume sales.

A new style

Beyond a slowly emerging background trend of increasing sales for aged styles of Rioja, all too often masked by the volatility of young wine production and export, is another change occurring in the region.

"This is materialising," according to Perry, "in the creation of different labels/brands which are marketed as more modern, alongside traditional styles.  "The new lines act as a complement to these traditional style wines," he adds.

And often these are used to break into a new market.  Hence, for instance, Codorniu’s launch of a more modern style of Viña Pomal into the UK, or United Wineries’ latest Rioja project, Marqués de la Concordia. And Codorniu has actually produced an outline classification for "classic" versus "modern" Rioja which makes for interesting reading.

While the former is usually made with a combination of Tempranillo and Graciano, Mazuelo  or Garnacha, the latter is 100% Tempranillo. 

Further, "classic" styles usually undergo a maceration period of around seven days, "modern" Riojas on the other hand will probably experience maceration times of up to three weeks, to extract higher levels of colour and tannin.

Other differences include the type and age of oak, and the ripeness of grapes at harvest.  The end results from this so-called "modern" approach are of course a wine that is slightly more "New World" in character, more fruitdriven, but still with the stamp of Rioja due to the distinct nature of Tempranillo and the presence of oak.

The point of such wines is to encourage a younger drinker to try Rioja.  "The young tend to go for New World wines," comments Jo Maclean, Codorniu’s marketing manager.  "They are more modern in style and offer a type of lifestyle.

Rioja, on the other hand, is a bit old fashioned." Furthermore, as Maclean continues, "Rioja is a very hard market to break into with a new brand because it’s so mature.  You need to find something different to break in."

And just looking at Codorniu’s Pomal for the UK one can tell it’s a fresh proposition for Rioja. "It doesn’t have a metal cage or curly writing," says Maclean. In fact, it’s even minimalist. Certainly Marqués de la Concordia will be different.

It may not have experimental status like United Wineries’ Hacienda de Susar – the only Rioja with Syrah in the blend – but Concordia is exceptional as its vineyard, in Rioja Alavesa, is located 680m above sea level, at the very edge of vine growing for the area.

In fact, Rioja’s Consejo Regulador does not advise the planting of any vines above 600m, but the United Wineries team believe in "pushing the boundaries" and the wine will be marketed using the strapline "extreme viticulture".

The idea is, according to Bill Rolfe, international marketing director, United Wineries, "It could be that in some years a particular vintage is not good enough for us to produce a wine but in others the wine will be exceptional."

And, according to Perry, "It makes no sense to launch a new winery in Rioja using a classic oak-aged wine."  Further, as he adds, "the market seems to accept both of those styles." There is one other change occurring in Rioja worth mentioning, although of a rather more specialist and top-end nature, and that is the creation of single estate wines.

This is due to the fact that in the future, certain Spanish wineries with their own vineyards will be able to label their wines as being from a single estate, something that has been allowed by the new DO law.

"Whether lots will jump on the bandwagon, it’s too early to say," says Perry. Furthermore, as Carlos Latas, export director for Federico Paternina comments, "if someone has 20 hectares and wants to make an estate wine then that’s perfect, why not? But, you must keep in mind Rioja is 60,000ha and there are over 3,000 growers, so there will always be teamwork between wineries and growers."

Finally…

"Growth in Rioja is mainly focused on aged wines," according to Virginia Almagro, international sales director of Bodegas y Bebidas. Meanwhile, the region overall is experiencing what Perry calls "a diversification of styles", adding that, "Wineries, while maintaining their roots are pursuing different avenues."

Of course, not all will agree that the latter trend is good for Rioja. As Daniel Brennan, marketing manager at Laurent- Perrier says, "The selling point for Rioja is a classical style and the new character is diluting what Rioja is famous for."

He believes, in any case, that tastes are becoming more sophisticated, hence the growth of Rioja at the upper end.  On the other hand, United Wineries’ Rolfe believes Rioja should be sticking with tradition, but also generating a bit of "excitement" and although Rolfe wants United to work with the Consejo Regulador for Rioja, he doesn’t "want it to dictate our future strategy".

Latas sees the situation slightly differently however.  He compares Rioja’s range of wines to Mercedes, a manufacturer with every level of car, from A to S-Class. "To be in all markets wineries must have standard to premium wines," he comments.

Similarly, as Forner believes, "Rioja offers an extensive variety of wines. Whereas the traditional Reserva and Gran Reserva wines may attract an older drinker, there are many young red, white and rosé wines with lighter, fruitier styles that usually appeal more to younger drinkers."

But, if Rioja does have an Achilles heel it is not the emergence of more fruit-driven styles to appeal to today’s drinker.  Rather, it is the practice of selling Rioja too cheaply, undermining the image of quality for the region as a whole.

"A lot of commercial decisions are based on ‘I want to have the word Rioja at the lowest possible price’," despairs Rolfe.  And as Almagro says, summing up the situation, "Rioja is a region people associate with aged red wines.

What we need to develop is an image of Rioja as a region producing premium wines, and get out of the area of young and cheap wines, wines that are taking advantage of the name Rioja."

It seems that while Rioja has reached a classic state of market maturity, perhaps the consumer and buyers are a little behind.