Rioja drinkers ‘shifting back up quality scale’

Producers of aged expressions of Rioja have a big opportunity to profit as consumers return to higher quality categories of the wine, according to one leading Rioja producer.

Around 70% of Bodegas Riojanas’ Rioja production is in the reserva and gran reserva categories (Photo: Bodegas Riojanas)

A shift from young, lower priced Rioja wines, which has occurred as markets have emerged from the global economic crisis in recent years, has renewed consumer emphasis on crianza, reserva and gran reserva categories, Bodegas Riojanas director-general Santiago Frías Monje said.

Some Rioja producers have expressed concern that Rioja has become a “victim of its own success” in recent years, with a focus on volume keeping prices unsustainably low. However Monje said he was confident that as consumers moved back up the quality scale, producers that are focused on selling high-quality aged expressions at a sustainable price could ensure the long-term health of ‘brand Rioja’.

While most big Riojan brands have most of their volume in crianza, Bodegas Riojanas focuses on the reserva and gran reserva categories. The company produces around 4.5 million bottles of Rioja per year, 70% of which is in these two categories.

While this is in contrast to the approach adopted by the majority of Rioja producers, Monje said it was clear that consumers were beginning to refocus on quality over price.

“If you look back to the start of the recession, there was a big swing of crianza dropping sales to joven,” he explained.

“Over the last three or four year you have begun to see that swing back, so people are moving back off the joven wines back into crianza, and as that as happened, the reserva and gran reserva increased because people are going back up the system. They’ve stopped going for price point; now they are going back on to the quality.”

Monje said that the shift in consumer appetite presented a big opportunity for company’s specialising in aged expressions of Rioja, particularly considering how competitive it could be on price compared with similarly aged wines from other established wine regions.

Bodegas Riojanas director-general Santiago Frias Monje

“For me, France and Italy has been doing well for many years – not just with wine, also with marketing and distribution,” Monje added.

“Spain has not been doing as well as them. But we have some strengths. People that try Spanish wines usually repeat – the quality and the price convinces them to continue drinking Spanish wines – mainly Rioja. And for us that is an opportunity.

“We are not saying ‘Don’t drink the crianza’, we are saying to our consumers ‘Our reservas and and gran reservas are some of the best that you can buy, and at the same time they are at a very competitive price’.”

Monje was speaking to the drinks business on a visit to the UK alongside Bodegas Riojanas Group international director Josetxo Soria, who said big brands were more important in achieving customer loyalty and keeping prices regular for Rioja than wineries with a focus on terroir, vintage and site specifics. 

“Rioja needs big brand that make it easy for the consumer because sometime we make things difficult,” Soria said.

“Something very important for us is the consistency every year. We don’t try to evaluate this vintage compared to the last one or to the next one. When you are talking about current vintages, our strategy is to have the same quality of wine every year.

“Our winemakers have the facilities enough to work with the grapes to obtain what our consumers have been expecting since many years ago.”

A debate between so-called traditionalists and moderniser has been raging in recent months over whether the denomination system in Rioja is helping or hindering the region.

The drinks business reported last month how a group of more than 150 Rioja winemakers, merchants and wine writers had signed a manifesto in opposition to governing bodies in the country’s top DOs, which they accused of hampering the Rioja region’s full expression and obscuring its winemaking heritage.

The group, led by Spanish winemaker Telmo Rodriguez, is seeking to combat what it describes as the close-minded nature of many of the regulations enforced by the governing bodies such as the Consejo Regulador in Rioja.

In December 2015, Juan Carlos Lopez de Lacalle of Artadi quit the Rioja DOCa in protest against what he saw as the restrictive nature of the conesejo.

However, Soria insisted big brands were vital to the success of the region and that the consejo was working to improve conditions for producers.

“There is nothing new about this conversation,” he said.

“Rioja, of course, has different wines, different wineries and different styles with a big umbrella that is Rioja. And each one has to explain to their clients what wines they are producing. I think there is space for everyone.

“Of course thing change and Rioja has to move and it is moving, but sometimes it is not easy to explain how Rioja is moving to the consumers.”

“If someone wants to go out from Rioja, it’s their decision. What I can say is that Rioja is moving, is doing things in order to improve things, but I’m sure that the brand Rioja is more important than any of its wineries alone, so we are happy in Rioja. We think the appellation gives to the consumer a guarantee.”

Remelluri’s Telmo Rodriguez has accused Rioja’ governing body of hindering the region’s winemaking potential

On the issue of terroir, Soria said there was no conflict between big-brand Rioja and the concept of terroir.

“Rioja and terroir are perfectly complementary,” he said. “One thing is not the opposite to the other.

“We are very proud of being in Rioja. In our vineyards we have some very special terroirs and we make good use of it with our winemakers and we can transmit it to the consumer.

“We have to work with the terroir, also the grape variety, but also, if you have to work in a world like this one, you can’t make 2,000 bottles of a brand and sell across the world because you are doing nothing.

“There are some consumers who are really interested in small production, who know exactly what their wine comes from, but 95% of people are just interested in enjoying their dinner with a good wine, a good product – that’s what they want.”

Speaking about the business focus for Bodegas Riojanas in 2016, Bodegas Riojanas director general Monjes said that exports had become a key priority.

“Mainly our focus this year is going to be export,” he said. “In the past three or four years we have been increasing our foreign sales by more than 20% per year. We started from a very small quantity – because 93% of our sales three or four year ago was in Spain.

“Actually, now we are around 80% of sales in Spain. The rest is in market like England, Ireland, the US, Mexico and China.

“The situation in Spain is not easy for wines,” he added. “Consumption per capita is continually going down. It’s true that it’s mainly in the entry-level wines. Wines with appellations are working a little bit better than the entry-level, but that doesn’t mean that it’s easy.

“With the [financial] crisis, consumption has been dropping by more than 7% per year in restaurants and bars, and with a small increase in supermarkets. [2015] has been the first one that things have started to change.

“That’s good news, because 60-65% of the quality to wine is sold in restaurants and bars in Spain. It’s a big difference from here, where it’s more like 50%.

“So our focus in Spain is to start to develop the market again. In foreign terms [it’s the], US, Mexico, UK, Germany, Ireland and China.”

Monje said that a second key focus for Bodegas Riojanas in 2016 would be the development of business in other appellations than Rioja, in particular regions specialising in white wines. Twenty per cent of the company’s sales come from other appellations, mainly Toro and Rueda, where last year it invested €1.5m in the building of a new winery.

“We have just finished a new winery in Rueda, in March,” Monjes said. “Last year we increased our facilities in Rias Baixas.”

“One of our biggest focuses is to increase our sales in these appellations. Because all over the world the sales between red and white wines are more or less 50/50. In our case it is 90% red wines and just 10% white wines, and we have to balance that.”