Drinking outside the box: Spanish wine at retail

While volume sales of Spanish wine are down in the UK retail sphere, merchants are fighting back by diversifying their Iberian offerings, finds Arabella Mileham

Polarisation still appears to be the name of the game when it comes to Spanish wine on the UK high street. At retail, the country is characterised by sales of cheerful bulk on one hand and a growing appreciation of fine wine on the other. There is also the domination of Rioja and the new diversity emerging from Spain’s many other regions to add to the mix.

Meanwhile, tradition competes with more modern styles on the taste front, with a growing appetite for fresher wines running in tandem with demand for the full-on fruit-and-oak experience that denotes classic Spain.

Nielsen data shows Spain has taken a beating recently, with volume sales falling by 8.3% in the year to 10 September 2016, a trend that rose more steeply in the last 12 weeks. Value was also down by 6.1% to £466.9 million – nearly £36m lower than two years ago.

But retailers report healthy sales of Spanish wine – and a number have refreshed and added to their ranges over the past few month as Spain gains ground.

“The category is divided into Rioja and everywhere else, but Spain as a whole is doing very well,” Ed Betts, wine-buying manager at Asda, argues, noting that there is a new strength and depth coming out of Spain, and Brits are more willing to expand their wine horizons.

“We are seeing more interest in Bobal, Cigales, Priorat and Ribera del Duero. There are some interesting wines coming out and some very modern techniques that customers are really responding to,” he argues. “It’s not just about cheap La Mancha liquid anymore, but giving a sense of provenance and inspiration.”

This is borne out by the data that showed generic and bulk blends that suffered most. The ‘unidentified’ Spanish generics fell 11.9% by value, according to Nielsen, which, when considering it makes up around 25% of the category by value, or 32% by volume, is a considerable drop. The category lost around £15.2 million or nearly 300m 9-litre cases, representing around 58% of the overall change last year by value.

Sales of private-label wine fell by around 9.8% by value on volumes down by 11.4%, while the average price of a bottle rose by 2.5% in the year to more than £10, a jump of 25p that shows Spain is slowly becoming more premium, even though volumes sales suffered.

Trading up in Rioja

Rioja still rules the roost on the UK high street

This trend is reflected through Spanish wine’s most famous region, Rioja, whose love affair with British consumers shows no sign of abating, even though its leading grape variety, Tempranillo, showed a modest 0.9% by volume and flat-value growth. However, leading Rioja brand Campo Viejo saw volume growth of 14%, which head of marketing Toni Ingram said followed sustained long-term investment in brand communication and experiential activity.

There is, however, a discernible shift up the value ladder in Rioja, according to Richard Weaver of Majestic, as sales at reserva and gran reserva level grow – even though this can still hit the £6.99 price point.

“Customers understand the value benefits of trading up to those categories, whereas what is less successful are the generic and entry-level Riojas,” he notes, adding that there is a “strong value connection in the mind of consumers”.

As a result, Majestic, along with Oddbins, Sainsbury’s, Lidl and others, have all added to their reserva and gran reserva tiers.

However, the truly top end of Rioja, where boutique producers are bringing out “interesting single-vineyard cuvées” or old-vine Garnachas are likely to remain beyond the experience of ordinary wine consumers, Oddbins buyer Ana Sapungiu notes, and the debate about the merit of terroir versus the tradition of ageing has yet to filter down to UK consumers.

Meanwhile, old-vine Garnacha seems to be stealing a march on Tempranillo – Nielsen data shows it grew 7.2% by volume and 14.8% by value in the past year, and producers in Rioja Baja swear the grape is better acclimatised to the soils in the sub-region than Tempranillo. Garnacha from DO Cariñena also rose 112% by value and 125% by growth – the largest gain across the board, albeit from a smaller base. These “gnarly old vines” from Aragon have distinct characteristics and typicity of the region, which is “of the moment”, according to Waitrose’s Spain buyer Nick Room.

There was also, he added, a big opportunity in inland Spain clustering around Campo de Borja and Calatayud, as well as Cariñena.

Reds beyond Rioja

Priorat is seeing growth on the UK market

Further north, however, Navarra hasn’t benefitted from sitting cheek by jowl with Rioja. According to Julián Chivite, CEO of Navarra’s Chivite Group, diversity and variety are both the strengths and weakness for Navarra. “There are many styles, varieties and terroirs on offer – but that can leave the consumer wondering what is the region’s true identity. Until the real essence of Navarra is defined, the region will not be able to prove its true worth,” he believes. However, he notes the group’s Colección 125 was gaining some traction at premium retail.

Ribera del Duero and Priorat are also seeing growth, according to Lisa Rogerson of Sainsbury’s, as people look beyond Rioja, although distribution largely remains through the on-trade and independent merchants, and less through the multiples’ core range. “If they buy Rioja every week and see the Priorat next to it, they will try that. And once people start buying them, they continue to, as the wines are brilliant quality,” Rogerson notes.

While Araex’s customer support manager, Mikel Sáez de Vicuña, argues that Cataluña will go from strength to strength, not only in Priorat but also in Montsant and Terra Alta, Aldi buyer Mike James points out that Priorat, which the discounter sold last year, or Toro, offer great value, but can be on the heady side and were therefore not as fashionable.

Berry Bros & Rudd’s Spain buyer, Catriona Felstead MW, points out that Priorat tends to be bought by more “knowledgeable drinkers”, and because of the price point was not going to be found in everyone’s homes, with consumers looking more towards the structure and dark fruit of Ribera del Duero instead.

“The fact that it is predominantly the same grape as Rioja but offers a different expression of Tempranillo means it is something else to try at a dinner party,” Felstead notes.

Improving quality in the region has provided a boost, and both producers and the Consejo have become keenly aware of the UK consumer shift towards fresher wine styles, with bodegas adapting their approach to offer younger, fresher styles that focus on vibrant fruit.

“Producers in Ribera del Duero have worked hard – the wines used to be oaky and alcoholic,” Sapungui notes, “but they’ve dialled that back to produce fresher, more balanced wines.”

Fresher styles

Fresher styles are coming from Bierzoa and Ribeira Sacra

This trend for freshness can be seen at the top end and in the on-trade, as fragrant and accessible Mencía begins to break into the consciousness of the knowledgeable diner and, as Albariño has proved, where the on-trade sees growth, the off-trade is sure to follow.

“It is in the early- to mid-swing in restaurants, but in the sense that consumers are drinking at home, it’s still at an early stage,” Felstead admits. “And there are different types of Mencía – you’ve got Bierzo, Ribeira Sacra and the lighter, more fragrant styles. It shows the diversity of Spain but it’s a challenge for people to get their head around.”

This may explain why mainstream retailers have found it a hard sell – as Room, Rogerson and Majestic’s buying and merchandising director Richard Weaver all agree.

Weaver argues that the mixed success with reds such as Mencía from Bierzo comes due to this lack of consumer recognition but coming from small volume producers is unlikely to help it find more sustained shelf space. Majestic has worked around this by offering small parcels rather than adding them to the core range, he explained.

“What works is finding a cracking wine with good value that we can tell a story about,” he explains. “If we can find the right wine, get customers to taste it, get the staff talking about it, then it will be sellable.”

Vibrant Bobals from Valencia and Cataluña are also ripe for exploration, Waitrose says

Sizeable parcels

“Spain is a great place to go shopping for parcels of wine because of the pattern of ageing wine longer before release – and not everyone gets their sums right. We’ve been successful in sniffing out sizeable parcels that have real value, often from regions that are less well-known,” he continues, mentioning Toro, Yecla and Alicante in particular.

Toro’s trickiness in the core range may be due to it being a big structured wine that demands food, one retailer suggested. “They love it in the US and Switzerland, but people in the UK fine it more New World in style, and I have certain difficulties getting people to like it,” admits Sáez de Vicuña of Araex.

Waitrose is putting its faith in Andalucía because of the fresher, crisper style. “It is southern Spain, but mountain fruit, which gives a different take on the wine – the market is moving towards fresher, lighter styles that give a different proposition for Spain,” Room explains.

Vibrant Bobals from Valencia and Cataluña, although still outside the mainstream, are also ripe for exploration.

It is, however, white wines that many argue provide Spain with its biggest opportunities. Nielsen saw an explosion in sales in Albariño in the last year, rising 44.8% by volume and 53.6% by value, followed by Verdejo, which rose 12.1% by volume and 7.9%, albeit of a lesser base.

The key areas for these varietals, Rías Baixas and Rueda respectively, are gaining consumer awareness as well as recognition for improving quality.

Developing new styles

Vineyards in Rias Baixas

“New technology, winemaking, yeast and grape selection have been key in developing some different interesting styles,” Kirsty Loftus of Bodegas Ramón Bilbao notes. “Both areas are experimenting with winemaking techniques to produce complex, fresh attractive styles.” Its Mar de Frades winery in Rías Baixas has adopted the Ganimede method of maceration, which is capable of extracting aromatic flavours from the grapes more gently than the traditional punching method.

So well has the fresh salty tang of Albariño taken off that some retailers argue it is not only setting the pace, but constitutes a sub-category in its own right.

“It has reached a market penetration that is recognised by consumers, which has been driven by the specialist sector and the on-trade,” Weaver argues, noting that it built this reputation by offering a good quality trade-up a few rungs above house white.

One reason is that Albariño delivers similar things to a consumer as a Marlborough Sauvignon Blanc – but the price is a drawback, Oddbins buyer Ana Sapungui points out. It is for this reason that the high street retailer is investigating blends with lesser-known varieties from areas in the Duero Valley that will trade on the grape’s recognition, but offer “a more attractive proposition”.

But can the success of Albariño shine a light on other fresh Galician wines such as Godello or Treixadura, and will areas like Valdeorras, Ribeiro and Ribeira Sacra gain similar recognition to Rías Baixas?

These smaller sub-regions may prove trickier, despite increasing quality – and Sáez de Vicuña of Araex argues that they are best served through the on-trade and premium independents and specialists

Ribeiro (primarily with Treixadura), which can potentially produce more volume than Rías Baixas, has suffered from a reputation for uneven quality, he notes, while Valdeorras (for Godello), although fashionable, is small and therefore more challenged to extend its reach outside the independents.

But Godello is potentially on the rise, Felstead argues, with blends also becoming trendy, even though it is still at an early stage of adoption. This may go some way to explain why, although there was initial interest in Godello when it was launched on shelf in the multiples a few years ago, early enthusiasm has yet to transform into big sales.

“Godello is already knocking on the door of Verdejo and Albariño and there are producers doing a great job,” agrees Victor Sanchez of Cordorníu. “But there are other regions such as Montsant and Campo de Borja in Cataluña, Bierzo and Costers del Segre that will soon be on everyone’s lips.”

Outside the north-west, there are interesting things happening with Tempranillo Blanco in Rioja, he argues, which offers a huge area for growth, as well as Garnacha Blanco and Xarel.lo, particularly from Cataluña.

As Richard Weaver of Majestic attests, one of the reasons Spain is working well is that within it lies a broad spectrum of modern and traditional styles. “There’s something for everyone – an element of variability that gives it a breadth and enables consumers to find something they like,” he argues. db