RIOJA: Roads less travelled

In these uncertain economic times, Rioja has chosen to continue to concentrate on its key markets, rather than on emerging nations. However, some producers are reducing their use of oak and are putting more of an emphasis on white and rosés, discovers Alan Lodge.

Wines from Rioja were without doubt one of the biggest success stories of the last decade. Steady growth in its key markets such as the US and the UK continued unabated from 2000 until 2007, when the global recession inevitably brought a levelling off.

Now, faced with a choice about its immediate direction, the northern Spanish region is choosing to stick to what it knows best before branching out into the unknown.

With economic uncertainty still providing an obstacle to long-term planning, Rioja’s Consejo Regulador has chosen to concentrate this year’s efforts on the US and UK markets in an effort to reap the biggest rewards for wineries which themselves have not been immune from the pressures of recession.

Indeed, if wine sales suffer, the whole region feels the pinch. Diego Pinilla Navarro, head winemaker at Bodegas Bilbaínas, explains: “As a region there is absolutely no doubt that wine is the most important part of the economy. If it doesn’t sell well then the whole region doesn’t do well, because almost everybody here lives and works in wine.”

The Consejo has pledged to invest $4 million (£2.4m) in the US and £1.5m in the UK over the course of this year, with marketing campaigns focused on point-of-sale opportunities. Ricardo Aguiriano, director of marketing and communication at the Consejo, says: “In these times of economic difficulty we feel the best way to help our wineries sell more wines is to focus on our strongest and most established markets. 80% of our total export sales come from our top six markets, so we think these represent our best chances of generating profits for the wineries.

“In the US and UK this year we will be running a huge programme of promotions in both the off-trade and on-trade as well as trade events and promotions in order to highlight the wide range of wines that come from Rioja.

“Consumer loyalty to Rioja is still strong, according to what we’ve seen in our market research and surveys, so we need to actively target our existing consumers. Our challenge is to create greater visibility at point of sale because supermarkets are decreasing their listings.”

So while other categories seek to look for emerging markets to counter contractions in their key markets, Rioja seems to be doing quite the opposite, for the next couple of years at least. That’s not to say that some new markets have not been identified, however.

“In four or five years time we will start looking at emerging markets in Asia, northern Europe and the former member states of the old Soviet Union, but this is very much a long-term view and for now we are focusing on the short-term,” says Aguiriano.

His view is backed up by Anne Vallejo, PR director at Marqués de Cáceres, who says: “Markets that we are hoping to develop towards the future are Eastern European countries such as Russia, Estonia, Latvia, Lithuania, Slovenia, Croatia, Far Eastern markets such as China and Korea, Africa and Arab countries such as UAE. However, all will depend on how the current economic climate evolves and the situations and possibilities existing in each market.”

Confidence in the UK market is based not only on previous sales figures, but also on the nature of the British consumer and their perceptions of Rioja. Even though they may not be the most educated of wine markets, UK drinkers hold the Rioja name in high regard.

Adrian Atkinson, wine development director at Pernod Ricard UK, explains: “Many UK wine drinkers do not think of Rioja as a Spanish region because they have little knowledge of the geography of northern Spain and are much more familiar with the southern Spanish regions which are popular as ‘sun, sea, sand’ holiday destinations. To combat this, the Spanish tourism industry is working to promote Rioja and other wine regions as tourist destinations.

“Consumers do, however, see Rioja as the quality benchmark for Spanish wine. We expect Rioja to continue to drive the success of premium Spanish wine, as it has done for the past five years. Recognised brands are best positioned to drive this growth and we think that more progressive and approachable styles, such as Campo Viejo, will be key to fully realising and driving this shift.”

In the US, meanwhile, Rioja is seeking to adopt a more aggressive approach to the on-trade after struggling so far to oust traditional favourites. Aguiriano accepts that the category has not performed as well as it could in the face of competition from the likes of Tuscany, Bordeaux, Chile and Australia.

“We will be heavily investing in promotional activity in the US this year,” he says. “Again, we will invest in point-of-sale marketing and we now have regional sales ambassadors in Chicago, Florida and New York, our three key focuses, in order to push home the quality of our wines to consumers.”

Promotional Reserva-tions

The UK strategy for Rioja over the coming year has been built on the lessons learned from the recent leaner years. Many retailers were running promotions on reserva and gran reserva in 2007, but the advent of the credit crunch saw more promotions on lower-priced crianza wines, which affected sales at the top end.

Growth does indeed seem to be strong in the £5-5.99 category, with latest Nielsen statistics showing an increase of 26% for the price range compared with overall light wine growth of 10%.

The danger is that, by consistently discounting high-quality wines such as gran reservas, their quality is undermined and consumers do not appreciate them as much as they should.

“The commercial reality is that the public wants promotions and while we mustn’t undermine the category it’s a question of finding the right balance,” says Andrés Perez de Herrasti, managing director of United Wineries. “The average unit price of Rioja is significantly ahead of the market and we know that people are prepared to pay a premium for Rioja.”

However, Robert McIntosh, brand ambassador for Carlos Serres, feels that consistent discounting and promotions are harming the Rioja category.

He says: “Deep price cuts are neither sustainable nor beneficial to the future of a region or brand, and can only serve ultimately to lower the value of Rioja. However they are a result of the impact of the global economic crisis rather than any changes in the region itself.”

Vallejo adds: “Originally, reserva and gran reserva wines were usually quality wines selected from relevant vintages and were not labelled as such due to merely having fulfilled the stipulated ageing periods in barrel and in bottle.

“By making reservas and even some gran reservas more popular through deflationary prices, one tends to lose the essence of their unique character and, at the same time, their prestige.

“High quality has to be based on a strict choice of grapes, very special vintages, professional know-how and appropriate investment based on extracting maximum quality. Discounting in these wines is difficult to understand, bearing in mind the considerable investment that is necessary to achieve something relevant, such as reserva and gran reserva.”

Over a barrel

Recent years have seen an increased level of experimentation among wine growers in Rioja, particularly when it comes to barrels. Traditionally, American oak has been used to create lighter wines in the typical Rioja style, while French oak has been used to create more full-bodied wines, but it seems that the UK market in particular is now looking for less oak influence and more fruit expression, which is better delivered through French rather than American oak.

French oak tends to produce wines more refined spice and adds a slightly sweeter nature with softer tannins, while American oak delivers more hard-hitting spices and a coconut vanilla character.

Many winemakers in Rioja are experimenting with the type of oak they use, with some sticking to the traditional American oak and others converting entirely to French barrels. A combination of French and American oak barrels is also not uncommon, while some producers have recently been experimenting with the use of Russian and other Eastern European oaks.

“The use of French oak in Rioja has increased significantly in the last decade, and it is something that we incorporate at Carlos Serres,” says McIntosh. “We are experimenting with barrelling techniques as we identify this as a future trend, including wines with less time in oak such as our ‘Old Vines’ Tempranillo.

“However, with tradition at the heart of our philosophy and a key driving force to the expansion of Carlos Serres, American oak does remain key for us. Our winemaker makes the decision each vintage as to exactly what combination of oak to use to suit the wine that is being made.”

Navarro, however, is a believer in the traditional methods. “The evolution to French oak was seen as a way of developing more modern styles, but I feel it is more important that the wine has balance and is identifiable with the terroir, so good American oak is best for Rioja as it’s part of the terroir and tradition.”

Vallejo is of a different school of thought. It’s her belief that consumer tastes are changing to such an extent that Riojan wineries need to alter their approach in order to cater for the new breed of consumer.

"There are many bodegas in Rioja and each has its own style so the consumer has an array of wines to choose from,” she says. “Some consumers prefer more traditional Riojas whereas others are on the lookout for more fruit. Here at Marqués de Cáceres, we have progressively reduced the time that our wines spend in barrel to meet with new trends that would suggest people are looking for more fruit in their wines.”

With the demands and desires of consumers changing, perhaps its time for the region to embrace white wines as a staple part of its output rather than an afterthought, which it is commonly perceived to be.

Indeed, the Consejo is pushing through new plantations in order to beef up the quality and volumes of white wines produced in the region.

Aguiriano confirms: “Rioja has traditionally always focused on reds, but recently we have approved new varieties such as Sauvignon Blanc in order to improve our whites.

“In fact, developing our whites is part of our strategic plan for the next few years. Our goal is to improve the sales of both our whites and our rosés, but to do this we have to improve our grapes and the new wines will not be released for at least three or four years because many of them have still to be planted.”

For the year ending October 2009, 90% of Rioja exports were red, 4% rosé and 6% white. The Consejo has authorised the planting of an additional 1,750-2,500 hectares for white grapes to encourage the growers to plant the newly authorised white varieties – Maturana Blanc, Tempranillo Blanco, Turruntes, Chardonnay, Sauvignon Blanc and Verdejo – that may be blended with the current varietals permitted by the DOC  – Viura, Malvasía and Garnacha Blanca.

Vallejo believes it will be a long time until we see results from the newly planted grapes. “With regard to the additional 1,750-2,500ha authorised by the Consejo Regulador, the growers will be allowed to plant this year, 2010, but the majority will probably not do so until 2011,” she says. “We then have to add another 5-10 years that these vine stocks will need to age so as to produce better quality grapes. This is a long-term strategy and the effects will be seen from year 2020 onwards.”

Much as with his views on barrels, Navarro does not agree that exploring new avenues is necessarily going to be a good thing for the region. He says: “As a region we are much more focused on reds and that is where our identity comes from. To open it up to other varieties could be difficult, and not everything is always good for everywhere.”

Primitivo Gurpegui, owner of Bodegas Gurpegui Muga, agrees: “Rioja’s success has always been with red wines. We’ve also seen a degree of success with rosé, but nowhere near as much as with reds – it’s what the region is known for and is famous for.”

It appears that, although the appetite for change is indeed there, a lack of confidence among wine growers over the introduction of new white wines, particularly Sauvignon Blanc, could temper efforts by the Consejo.

Gonzalo Lainez of Bodegas Roda says: “We have not produced white wines so far, but that said I think it could be interesting to explore indigenous varieties such as Maturana Blanca Tempranillo Blanco. However, as a consumer I think you can find more interesting examples of Sauvignon Blanc in other regions.”

The overriding message coming out of Rioja is not one of concern. Indeed, many seem perfectly happy with the current offering from the region and optimism over the 2009 vintage has brought back the feel-good factor. It must also be taken into account that the 12.5% decrease in exports from the region in 2008-09 was set against a record year for the region in 2007-08, in which 85.56m litres were sold across all export markets.

Drives to enhance the visibility at point of sale, as well as experimentation with new styles and grapes, must not be perceived as panic measures. Rather, they are merely looking forward and seeking to take the region to new heights. db

Alan Lodge, February 2010