Spain Report 2006

Published November 2006

SPANISH REPORT 06

RIOJA – DRIVING THE MARKET

BRANDS – CREATING POTENTIAL

SHERRY – BREAKING THE CYCLE 

CAVA – RAISING THE BAR

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Once again Rioja has got it right. Like a load-bearing wall, the region is supporting the weight of Spanish wine in the UK market. How? It has adjusted the style of its offering to suit the UK palate, it has developed some of Spain’s strongest brands, it has diversified into whites and rosés, it hits almost all price points, and benefits from a high level of recognition among British consumers. Not only does Rioja now account for almost 30% of all Spanish wines sold in the UK market, but it is growing in volume at 5% and has an average price of £5. The region sells over 1.8 million cases in the UK off-trade, which, to put it in perspective, is more than New Zealand.
However, the situation for Spain overall looks less positive. Sales are beginning to dip and your average bottle of Spanish wine costs a lowly £3.68. Without Rioja’s solid performance, that picture would of course be much worse.
So what’s holding back the country? For a start, the UK market for light wines as a whole is beginning to stagnate, reducing the opportunity for growth, while it must be remembered that Spain’s offer in Britain is still fairly narrow.

Most of it is centred around low-priced wine, packaged as supermarket exclusives, and little of that is white – just over 20%. And while sales of Spanish rosé may be on the up, it still only accounts for 4% of Spain’s sales in the UK (and rosé makes up over 7% of the total market).
What can be done? Most suggest the solution must come in the form of brands – and £5-plus ones at that. Campo Viejo is the most commonly cited success story, and rightly so, as it has taken the UK market by storm while retaining a high average price.
In fact, this Pernod-owned example, and the current dearth of mid-market brands from Spain, is encouraging several UK importers to have a crack at their own brightly-branded Spanish wine for a fiver. Some of these, Spain hopes, will stick.
In the meantime, although many lament the fact that Spain so often supplies the cheapest on shelf, the country should perhaps be applauded for its ability to do high-volume, low-cost wines so well.

Patrick Schmitt
report editor