RIOJA: A rosé future for Rioja?

Known, of course, for its robust reds, the Rioja region also produces a number of rosé wines – but these are not seeing the same growth as other rosés. Fionnuala Synnott finds out why

The word Rioja conjures images of powerful red wines but a number of brands from the region are also producing rosé, in keeping with rising consumer demand for this style of wine.
Yet, despite the growing number of rosés coming out of Rioja, Riojano rosé is not growing as fast as total light wine sales of rosé. According to Nielsen, total light wine sales of rosé are up +30%, whereas rosé from Rioja is only growing at +13% (MAT we 01.12.07). Riojanos’ apparent slowness to capitalise on the new pink pound is partly down to consumers’ lack of knowledge about rosé wine from the region. Rioja has founded its reputation on producing red wines, which makes it difficult for consumers to associate the region with rosé. As Ricardo Aguiriano San Vincente, marketing and communications director for the Consejo Regulador DOC Rioja, puts it: “The main Rioja brands are selling rosé but this is not changing the perception of the region.”
However, according to Adrian Atkinson, wine development director for Pernod Ricard UK, Riojano rosé’s low profile in the UK is largely due to poor distribution: “The big challenge for Rioja is increasing the visibility of its rosé. At 3% (compared to 90% for the US and 83% for Australia), distribution of rosé from Rioja is pretty poor.”

Limited supply
Supply is also an issue. Rather surprisingly, given rosé’s popularity, the style still accounts for just 5.2% of overall production from Rioja. Elena Sánchez, from Lealtanza, thinks this is because the demand for rosé is still fairly new: “Until recently, there had been little demand for Rioja rosé. The domestic market is very limited and only Germany and the UK are asking for rosé. Producing rosé is a risky business unless you have specific demand from a client as the wine needs selling quickly.”

The obvious explanation for producers’ reluctance to produce rosé is that they can charge more for a bottle of red than a bottle of rosé. Red wine may be the stylistic flagship of Rioja but it is also the wine that producers can charge the most for. However, closer analysis reveals that the cost of a rosé from Rioja is considerably higher (£4.87) than the average price of a 75cl bottle of rosé in the UK (£3.93). Although producers cannot charge as much as for a bottle of red (£5.18 on average), the margins to be made from making rosé, coupled with the new consumers it may bring to the Rioja category, cannot be dismissed. But it seems that rosé is more vulnerable to the vagaries of the market. “Many bodegas are focusing on premium wines and rosé is price sensitive so it doesn’t fit their strategy,” says Sánchez. This has made producers reluctant to invest in what may be a passing fad when compared with the longevity of reserva, for instance. Lindsay Talas, buying director, Thierry’s, adds: “Rioja has such a strong reputation for red wines and their market is buoyant, so they haven’t needed to take the financial risk of investing in rosado production.” Anne Vallejo, Marqués de Cáceres, agrees:  “Many of the traditional bodegas prefer to continue to focus on red wines alone or are not willing to invest in the facilities required for the production of rosé wines.”

The region’s strict regulation may also have something to do with the limited amount of rosé on the market. Pernod Ricard’s Atkinson explains: “The region is fully planted and growers are restricted in the amount of Tempranillo they can grow. If you can use all your grapes to make red, where is the incentive to produce rosé ?”

Competitive landscape
The rosé offer from other regions, often at a lower price point, also explains why Rioja has not been quick to up its pink production. Sánchez says: “Other areas in Spain are better equipped and more competitive when it comes to producing rosado.” Talas agrees: “Rioja’s neighbour, Navarra, specialises in good rosé at competitive prices so many Rioja producers have been reluctant to compete.”
But Felix Benito, MD, C&D Wines, thinks that the limited amount of rosé produced in Rioja is the result of a lack of consumer demand: “It [rosé from Rioja] tends to be more expensive and drier than New World Grenache or Shiraz rosés.”
Stylistically, it appears that rosé wine from Rioja may need some adjusting before it is ready for the UK palate. Marqués de Riscal, for instance, has ensured that its latest vintage is more approachable by making it lower in alcohol, less deeply coloured and a little less powerful, following market feedback.
Atkinson, however, feels that the wine’s stylistic shortcomings may have been due to technical limitations: “Assuming that people start drinking medium rosés with 10/15g of residual sugar, then Spanish regulation makes it difficult to produce these kinds of wines.” Unlike other regions, wines from Rioja have to be approved prior to bottling. But adding sugar before bottling makes the wines  too volatile, making it hard to produce this easy-drinking style. But, according to Atkinson, developments in technology have enabled producers to obtain sweetness from ripe fruit in the vineyard. He adds: “Making rosé is different to making red wines. Unless technology is geared up to it, Riojano winemakers may not be making a style that the market is looking for.”

Buying pink
From a retail perspective, it seems that brand Rioja coupled with the popularity of rosé would give consumers twice the incentive to buy the wine and would therefore be a relatively easy sell. Damian Carrington, head of marketing, Enotria, comments: “In theory this is a double sell but in practice it isn’t. Rosé from Rioja tends to throw the consumer a bit and there is still work to be done stylistically. Once producers get the product right and get into the consumer’s psyche, then there will be the potential to create a double whammy.”
Shelf space is also an issue. “From a retailer point of view, there is an element of pressure on the number of rosés you can have within a range. If you only have a small number of rosés, you have to make sure you are stocking the right ones. If retailers have a slot for a rosé from Rioja we push Campo Viejo because the brand offers consumers reassurance,” says Atkinson.
Carlos Latas, export director, Paternina, thinks that labelling limitations have held rosé sales back in Rioja: “Some consumers have started drinking rosé the same way as they drink red wine, by varietal. However, Rioja regulation forbids the mention of the varietal on the label. But as soon as the consumer discovers rosé from Rioja, this style of wine will become a driver for sales in the category.”
Despite these commercial disadvantages, there is some evidence that rosé Rioja has been well received by UK consumers. According to the latest Rioja shipment figures, sales of rosé are rising 32%, which suggests there is a demand for this style of wine. San Vincente reports: “The end consumer associates red wine with Rioja but our native Grenacha and Tempranillo grapes make good rosé. Rioja is making appealing fresh fruity rosé wines at competitive prices. ”

Atkinson, meanwhile, thinks that branded growth is driving the category as consumers move out of own-label wines into brands. “Rosé has become a part of consumers’ repertoire and they have responded positively to rosé wines from Rioja. Campo Viejo is growing at a rate of 42%.” Vallejo has reached a similar conclusion: “If we look at the UK market alone, sales of Marqués de Cáceres are up by 115% from 2001 to 2007, which would suggest that British consumers are turning to pink wines at a greater pace than in other export markets.”

The path to pink
San Vincente is upbeat about the future of rosé from Rioja: “Our position at point of sale is really good. We have a good position and a wide range of wines at different retailers and are asking supermarkets to allocate more shelf space to rosé. New consumers who are not used to drinking Rioja may be attracted to the region by our easy to drink rosé wines.”
Although red wine will remain the flagship of Rioja, we are likely to see more rosé coming out of the region in the near future. Thierrys’ Talas says: “As the market demands more rosé, an increasing number of Rioja producers are starting to make good rosé.” Atkinson agrees: “I can’t see any reason why we wouldn’t see more rosé coming through as the category develops. The Rioja region has become more innovative and is taking a more contemporary view of what Rioja should mean to the consumer. Rosé can add value to the Spanish category as Rioja is just behind New Zealand in terms of its pricing.” But Paternina’s Latas thinks that supply will continue to be an issue: “Of course we will try to open new markets for rosé, but meeting demand is a problem because production is limited.”

But San Vincente remains confident: “Rosé wine consumption has increased worldwide and we will adjust our strategy to meet this demand. The end consumer trusts in the Rioja brand. This will help us to develop our rosé offer.” 

 © db February 2008