SPAIN: Regions to be cheerful…

08 April 2008 By db staff writer

d=”standfirst”>Rioja still rules the roost in the Spanish wine category. However, other areas, such as Ruedo, Ribero del Duero and Navarra, are now receiving increased investment, giving them hope for a larger share of Spain’s export market. By Clinton Cawood

It is almost unfair to talk about any other Spanish wine region alongside Rioja – its presence so significant that it is usually seen as a brand first, and a Spanish wine second (if at all). Other regions may be receiving significant investment, but so is Rioja. The country’s exports to the UK are growing, as is the average bottle price, but this is primarily driven by exports from this dominant region.
Crispin Stephens, marketing director at United Wineries, confirms: “Rioja continues to drive the growth of Spanish wine and is gaining even more market share in the UK. Reputation is at its peak. Rioja now represents 46% value share of Spanish wine in the UK and has been in double-digit growth for some time. This is against a wine market, particularly in red wine, which is flat.”
Verde Marte managing director Mark O’Neill agrees, saying: “Rioja is still booming. There has been a huge amount of investment in the region, quality has improved, and sales have been extremely strong.”
The investment and development in Rioja is characterised by a number of factors, according to Marqués de Cáceres’ PR director Anne Vallejo. “New generation producers have added diversity to the wines on offer. Rioja now combines tradition and modernity and there is a great disparity in the wines on offer. Apart from its tradition, Rioja is benefiting from modern and dynamic trends that further boost its image by exploiting wine culture within a larger context.”

Attracting interest
In terms of investment, as Félix Solís Ramos, export manager, Félix Solís Avantis, puts it, “Rioja continues to be interesting for every group that is not there yet.” Paternina’s export director Carlos Latas confirms this: “In the end, the flagship is still Rioja. A lot of big groups are landing there now.”
Torres is one of them, as brand manager at JE Fells, Rob Buckhaven, confirms: “In 2007, Torres invested in land in Rioja Alavesa, where they intend to build a winery and a cellar. Obviously Rioja is firmly entrenched in the minds of the consumer and, reasonably, is not likely to be dislodged from their affections anytime soon.”
For Codorníu, with its various wineries throughout Spain, this region remains an important one. As MD Bill Breen confirms, “Rioja is crucial.” Latas adds: “It’s a well-established DOC – that’s the key. Most of the DOCs in Spain were established 25 years ago. Rioja has established a very successful system over 75 years. It has never been in fashion, but has grown step by step, not making as much noise as some other regions. Rioja is a wine that is well accepted by consumers, and it’s a long-term consumer.”
The region’s success is not undeserved. As Enotria’s director of buying, Tim Sykes, puts it, “As a region, it does produce value for money – compare cheap Rioja to cheap Chianti or Bordeaux – it comes up trumps.” Bodegas Rasgón sales and marketing director Guillermo Arce adds: “Rioja has always led the way in terms of technology and product promotion. The strategy has been clear for them for a very long time, and they have helped other regions enormously.”
Bottle Green director Dave Gill disagrees: “The opposite effect has happened in the UK. The more that Rioja is successful, the less market there is for other regions. The Spanish wine market has always been polarised between Rioja and entry point.”

Where else?
Significant investment suggests a degree of hope for other regions, however. As Myliko Wines’ marketing director Nish Kotecha says, “There is a lot more to Spain than Rioja, despite its abundant qualities, and there are some excellent winemakers out there making an amazing range of wine styles of stunning quality.” Dinastia Vivanco representative Robert McIntosh comments: “It’s mostly Rioja, which is a shame because there are lots of good wines in the rest of the country.”
As Ehrmanns chairman Peter Dauthieu explains: “There has been major development and investment throughout the Spanish wine regions in the last 10-15 years. Investment has centered principally in the winemaking and handling facilities, both by cooperatives and privately-owned wineries, and also at the vineyard level.” Moreno Wines’ sales and marketing director, Alex Canetti believes that investment into aspects such as bottling lines is essential. “With a delicate wine like Albariño, you have to have a good bottling line.”
A good indication of areas showing promise is where money is being spent, particularly by bigger players. Ramos explains: “The most important wineries are diversifying their activities in two ways – the acquisition of established businesses with well-known brands, in order to take advantage of their distribution and brand recognition, or establishing wineries from scratch, in order to build brands and add them to the existing portfolio of the investor company.” Félix Solís Avantis has taken the latter route, with wineries in Valdepeñas, La Mancha, Rueda, Ribera del Duero and, of course, Rioja.
Ribera del Duero is a clear contender for the next major region from Spain. There has been major investment in the area, such as Grupo Faustino’s much-publicised Bodegas Portia, designed by Norman Foster. The investment, according to Cellar Trends marketing director, Terry Barker, “will promote easy-access tourism to Ribera del Duero, and certainly help to further boost understanding of the region’s wines on an international basis.”
Pernod Ricard’s wine development director Adrian Atkinson agrees that “Ribera del Duero is an up-and-coming region in the on-trade, and a premium alternative to Rioja.” This is significant, as Rioja moves to more premium price points as well. As Dinastia Vivanco’s McIntosh points out, however, “The Spanish category as a whole has room to grow. Growth won’t be at the expense of Rioja.”

Rueda awakening
Rueda is an interesting position in terms of providing white wines to the UK. Enotria’s Sykes believes that “Rueda, in the last few years has been coming into its own.” Exports of Spanish white wine in general are a particularly interesting case. As Suzanne Strain, González Byass’s wine director, explains, “Consumers tend to come into a category from a white wine, but not in Spain. There’s an opening for white Rioja.” A rise in exports of white Rioja, young and reserva in particular, suggests that this is an opening already being targeted by producers. As Vallejo explains, “The increase in reserva white confirms that there still exists in the UK a very small percentage of consumers who still appreciate the traditional oak aged whites from Rioja, although the volumes here are very small compared with the shipment of young white wines.”
Sykes, however, believes that the opportunity here is not for Rioja, but for Rueda. “To be honest, I don’t think Rioja produces particularly interesting whites in general. Rueda in the last few years is coming into its own. In terms of branded Rueda, the wines are so much more interesting than what’s coming out of Rioja in white.”
Norrel Robertson MW, winemaker at  Guy Anderson Wines, believes  that “there have been major developments in recognised DOs for white wines. Many large companies have invested in Rueda, for example. Despite the great quality of Verdejo and Sauvignon Blanc from Rueda, the end consumer still has a low level of recognition of these, something that is further exacerbated by poor historical acceptance of the Spanish white wine category.”
For Latas, however, the opportunity for white Rioja is there. “People are looking for a different style of white wine – they want not so much flavour, and want acidity. Also, people discover red Rioja, and then want to know what Rioja white and rosé are like.”
Speaking about Rioja in general, Mike Wakefield, director of Besós UK, explains: “Rioja finds itself with a shortage of wine at entry level. This will affect crianza and reserva pricing in years to come, and this will maybe open the door to other regions offering similar styles at better price points.”
And if a number of those in the Spanish wine trade are to be believed, there are increasing amounts of these wines from other regions. Kotecha explains: “While the wines of Ribera del Duero, Rioja, Rías Baixas et al have displayed excellent quality for some time, areas such as Toro, Ribeiro del Guadiana and La Mancha have been quietly going about their business, making excellent quality wines from the classic Spanish varieties that offer superb value. La Mancha was once viewed by many as being synonymous with characterless bulk wine, but recent improvements and continued investment in grape handling and winemaking technology mean that this is definitely no longer the case.”

Navarra on the rise
Navarra is a region that is currently making a concerted effort to improve its perception in export markets. Bodegas Ochoa’s owner, Javier Ochoa, acknowledges that “Navarra has problems with its image, which is a great shame because the quality is there in the region. One of the big problems we face is that the price of wines is not set on their quality. We are, however, on the cusp of change.” President of the CRDO Navarra, Pilar García-Granero, agrees, saying: “The renovation of the Navarra Consejo Regulador, the potential to launch active campaigns in export markets later in the year, and a very real move on the part of the bodegas within the region to start to work together means that as a region we have the opportunity to turn over a new leaf.” Canetti adds: “Navarra is one area in Spain that really makes wine suited to export palates.”
Castilla la Mancha is another region showing particular promise. As Dauthieu explains: “Castilla la Mancha has invested in cellar-ageing facilities for barrica wine, as well as installations for bottle-aging reservas and gran reservas.” Toro is yet another region consistently mentioned by those in the trade as one with promise. Torres, in addition to its recent investment in Rioja, has also invested in Ribera del Deuero, Priorat, Jumilla and Toro.
United Wineries’ Stephens believes that the entire Castilla y Leon region (which includes Toro, Rueda and Ribera del Duero) “is particularly active with various DOs gaining reputation and attracting investment from significant players”. Thierry’s deputy buying director, Lindsay Talas, agrees, saying: Castilla y Leon is buzzing at the moment.” Stephens adds: “Priorat, although niche, continues to attract attention and investment.”
Spain is well known in its export markets for providing good value, entry-level products, a reputation that is not without its pitfalls. Gonzáles Byass’s Strain confirms that “Spain has become very famous for providing good value-for-money wine”. Bodegas Rasgón’s Arce believes that one way that Spain has improved its situation in a number of export markets is “careful avoidance of being regarded as the cheap product with standard (or even poor) quality and defending a very interesting price-quality ratio”.
As Freixenet UK’s wine manager Philip Rowles puts it, it is important to move “Spain away from the dreadful £4.99 price point it’s stuck in. Spain probably shot itself in the foot 20 years ago selling cheap and with investment in quantity and not quality, but they’ve recognised the error of their ways.”
In the UK, at least, Spain does seem to be overcoming this reputation for low-priced wines, with average prices in the UK rising. As Paternina‘s Latas explains, however, pricing is seldom deliberate. “It depends on the market. If demand is growing, that means that prices will rise. 1997 is the only time the price changed artificially – otherwise it’s just the market.”
Fortunately, the market is clearly promoting value growth. Rioja may be the dominant factor behind this, but there is undoubtedly more going on in Spain’s other regions. The wines and the investment are clearly there – the challenge that remains for these regions is to gain the distribution and recognition they deserve.

Varietals: Local or International? Spain’s regions strike various balances in their use of international and indigenous varietals, and in promoting the country’s wines and its various regions, opinions are divided on the relative merits of these varietals. For example, Enotria’s Tim Sykes simply states: “I’m very much a proponent of indigenous and local varietals.” Peter Dauthieu, chairman of Ehrmanns, confirms that “despite a move 15-20 years ago to international varietals, latterly the attention is increasingly on Spanish varietals. Notably, Tempranillo and Garnacha for reds, and Verdejo, Viura and Alberino for whites.” Myliko Wines’s Nish Kotecha comments: “Tempranillo is clearly the key red grape of Spain. It is definitley the way of the future for Spain, and it is up to the marketing people to make people aware of the name.” Felix Solis Ramos points out the varied growing conditions and styles throughout Spain when dealing with this varietal, saying, “Some people like the style of the easy-drinking, fruity and soft Tempranillo from Valdepeñas and some others like the structure, power and body of a Tempranillo from Ribera. It is a question of tastes and likes of the consumer.” Crispin Stephens, marketing director at United Wineries, explains: “On the one hand, certain regions are increasing in popularity as a result of the high quality and flavour profiles of their indigenous grapes, like Albariño from Riax Baixas, and Verdejo from Rueda. On the other hand, Spain is starting to see more experimentation with international varietals, which will enable the country to target a broader wine drinking audience.” Somontano’s Bodegas Olvena’s export manager, David Robinson, comments: “Our aim is to offer wines representing the best of Spain along with international varieties, using modern winemaking whilst reflecting our special micro-climate.” Dinastia Vivanco’s Rob McIntosh comments: “I think people in general in Spain are experimenting more with single varietals – even in Rioja. For Lindsay Talas at Thierry’s, there is another consideration, however. “I think it is the style and quality of the wines which is key, rather than the image of particular grape varietes.  There is still very little consumer recognition for Spain’s grape varieties beyond Tempranillo.”

© db April 2008