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NEWhor izons

Spain is the world’s largest exporter of wine. While a lot of that success comes from

bulk sales, Rioja and Cava, Adam Lechmere finds winemakers are turning their

attention to new varieties and new markets

THIS IS an exciting time for Spanishwine. Not only is the country the world’slargest exporter of wine, but never beforehas Spain seemed so open and dynamic,and its producers so willing toexperiment with a wealth of indigenousvarieties that are perfectly adapted to itsancient terroirs. Albariño and Godellofrom Galicia may long have had adevoted following (though their

ageworthiness has only recently beenrecognised by consumers), but nowBobal, Xarel.lo, Monastrell and a dozenother grapes feature on sommeliers’ andbuyers’ lists as interesting – and sellable –Spanish varieties. “In the past three yearsthere has been an amazing change,” ToniSarrión of Mustiguillo in Utiel-Requenasays. “At tastings in countries such asGermany and Austria people would be

asking for Tempranillo and not much else.Now they’re saying: ‘Tell me about Bobaland Merseguera’.”

Sarrión is typical of a generation ofdynamic artisanal bodegas findingincreasing interest in export markets.Around 20% of his 250,000 bottles are soldlocally, in Valencia, Alicante and Murcia.The rest of Spain is more difficult – exceptfor the major centres of Madrid and

spain report 2016

Spain is the world’s biggest wine-exporting country

Barcelona, it’s hard to find a market foranything but Tempranillo, he says. But hisexport market is wide and varied.Another 20% goes to the US and Canada,and a further third to Germany, Belgium,Austria, Switzerland and theNetherlands. Then there is Asia – theJapanese are enthusiastic consumers ofEuropean gourmet products, and latelyhe’s had success in Hong Kong andChina. And finally, “the Australians love Bobal”.

Sarrión stresses that he’s sending smallquantities – “a couple of pallets a year” –to most of these markets. The biggestgrowth market, he says, is the US, where“sommeliers are always on the look-outfor something new”.

“The US is definitely the most excitingexport market at the moment,” saysMaria José Sevilla, head of food and wineat Wines of Spain in London. Spanishexports to the US have risen by 40% in thepast six years, from 46.9m litres in 2009 to65.7m in 2015. Sommeliers and importerscite a variety of different reasons: thehuge Hispanic population, especially in

the western US; the increasingsophistication of the millennial market,which is looking for authenticity andregionality in its wines just as Spanishproducers are promoting their single-vineyard terroirs; and Spain’s reputationfor value and quality.

“The US has tremendous potential forus,” says Félix Solís Ramos, internationaldirector of the 400m-bottle Félix SolísAvantis, Spain’s third-largest winecompany. “Our biggest single market isthe UK, where we sell 23m bottles andthat’s not even 10% of our production.Compare that with the US, where we only

sell five million bottles. The problem is,the Spanish are not very good atmarketing and Chile and Argentina werethe first to take advantage of the hugemarket in the United States.”

Indeed, the enormous and thirstySpanish market has meant there has nottraditionally been the imperative toexport. “When I started out in thecompany 18 years ago, Spain was centredon the domestic market,” Solís Ramossays. “It’s only in the past eight or 10years that people have started to lookoutside. I used to go to Germany, Austriaand other European countries and therewas no real competition from Spain. Now,wherever you go you see other Spanishwineries trying to sell their wine.”

WORLDWIDE EXPORTSIt’s now a crowded market. In 2014, Spainbecame the world’s biggest exporter ofwine, with 2.28bn litres going abroad,compared with France’s 2bn litres. Spain’sbiggest companies export worldwide. Inany small- to medium-sized Spanishbodega with an international reputation,

the export section will be dealingwith dozens of countries. Theultra-premium Cava producerGramona, for example, citesChina, Finland, India, Portugal,Indonesia, Thailand, Malaysia,South Korea, Peru and Bermudaas growing export markets.Bodegas Protos, the formercooperative in Ribera del Duero,which is responsible for 10% ofthat DO’s output, exports to 95countries, an export marketworth €6m (£5.16m). “The US,

Mexico, Germany, Panama, China and theNetherlands are our top markets,” saysinternational marketing managerAlexandre Llados, “and we continue togrow, especially in Mexico, Puerto Ricoand the Dominican Republic.

“We have other new markets such asColombia with a promising future, andother Asian countries like Vietnam,Singapore and Korea where wineconsumption is raising year after year.” InRioja, Marqués de Cáceres exports 53% ofits production to “more than 120 marketsworldwide. Our top markets are the US,UK, Norway, Germany, Mexico, France,

Belgium, Holland, Sweden and Ireland,”says export director Anne Vallejo.

The UK and the domestic Spanishmarket continue to be hugely important,but they are dominated by the long-established powerhouses of Rioja andCava. Rioja bestrides Spain like acolossus. In 2015 its marketing budgetwas €10m; and its most dependablecustomers the UK, Germany andSwitzerland. The US is its third-biggestimporter, while China has grownexponentially, Wines of Rioja says.

In the domestic market, Rioja is theleader with 25.5% of sales, followed byCava with 9.9%. Cava has the biggest sliceof exports with 23.9%, followed closely byRioja with 22.4%.

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> Spain is the world’s largest exporterof wine, with 2.28bn litres goingabroad, compared with France’s 2bn litres.

> Spanish wine is particular popularin the United States, for reasonsincluding the huge Hispanicpopulation, millennials’ interest inSpanish single-vineyard terroirs and Spain’s reputation for value and quality.

> In the domestic market, Rioja leadswine sales, followed by Cava. Whenit comes to exports, however, thepositions are reversed.

> Sommeliers are driving the interestin new grape varieties such asMencía, Merseguera or Bobal.

> Because of its hot and arid climate,the Levante is well suited to theproduction of organic wines.

overview

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In 2014, Spain became theworld’s biggest exporter ofwine, with 2.28bn litres goingabroad, compared with France’s

2bn litres

Feature findings

While Rioja and Cava continue todominate the export market, thelandscape looks different to a generationago. “Twenty years ago, if you weredrinking Spanish wine, it was Rioja orplonk,” Matthew Kaine of the SpanishWine Company, a wine export businessbased in Alicante, suggests. Now, he says,things have changed. While the UK, Spainand more conservative Europeancountries like Switzerland continue tofixate on the established regions,imaginative sommeliers and importersworldwide are pushing new regions,grape varieties and styles. “The classicregions are the ones that clients recognise– Rioja, Ribera del Duero, Montsant,Priorat, the whites of Rueda,” says DanielVarela, who co-owns Spanish specialistretailer Viniberica in Ettlingen in Baden-Württemberg, Germany. “But in the pastfive to eight years there has been arevolution, particularly in white wines.”

Varela says the new wave is beingdriven by sommeliers – “mostly when a

client comes in and asks for Mencía orMerseguera or Bobal, it’s because theyhave tried it at a restaurant”. Therevolution is even pushing into

Switzerland. Carlo Wismer of Casa delVino in Zurich admits the Swiss arestill sticklers for “hearty red wines –anything with a bit of barrel age”, buthe sees growing interest in the Levante.“Monastrell from Jumilla is the next hotgrape. Everybody’s talking about it.”

Scandinavia is a particularlyimportant market but one that needscareful nurturing. “It’s a very difficultmarket to enter and to retaindistribution in,” says Paul Dunn at

Cosme Palacio in Rioja. “The monopoliesare constantly on the lookout for newregions, new varieties, lower alcoholwines, lighter rosés.” Norway andSweden are high on the list of top exportdestinations for wineries in Spain (asVallejo said, Norway is Marqués deCáceres’ third largest market after the USand the UK). The peculiar nature of themonopolies means that “they can more orless dictate what people drink”, Kainesays. Valencia might be a hard sell in theUK and Switzerland, but Sweden’sSystembolaget considers it “one of themost successful regions after Rioja”, aspokeperson said.

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‘In the past five years therehas been a revolution,particularly in Spanish

whites’

spain report 2016

JAVIER PAGÉS, CHIEF EXECUTIVE, CODORNÍU“Some of the most important markets for us are the UK, US, Belgiumand Japan. In Asia we have enjoyed 54% growth. In general, thecompany has experienced an international market growth of 16%due to implementing our strategy based on prestige and value, andbuilding brands like Anna de Codorníu and Viña Pomal. Our

strategy has been based on reaching new consumers and bringing Cava to newmoments of consumption. We have also increased our still-wine business, allowingus to obtain a growth of 60% over the past six years. This is clearly the year of marketrecovery, and Codorníu has benefitted from widespread acceptance of theinnovations implemented over the years.”

NICOLAS BERTINO, INTERNATIONAL SALESDIRECTOR, GONZÁLEZ BYASS“We are seeing growth in all the markets we’re investing in, such asthe US and Far East, and are seeing good growth across the boardwith our premium wine and spirits brands. Rioja continues to boomin export and we’ve had tremendous results in the US and Germany

with +45% and +11% growth respectively. With Beronia we’re having particularsuccess with the recreation of the Basque Txoko traditions. In the UK we have abranded food van that visits all the country’s major food festivals, and in the US,Germany, Belgium and Switzerland we have held successful cookery classesintroducing the Beronia Txoko concept to trade and consumers.”

ENRIQUE PASCUAL, PRESIDENT OF THECONSEJO REGULADOR, RIBERA DEL DUERO“Switzerland is our number-one market in terms of value andvolume. We are aiming to export more volume to the Netherlands,Denmark and Mexico. The UK continues to be an importantdestination and is our fifth-largest market in terms of volume. This

year our campaign has focused on reaching clued-up consumers, which is why we’vetaken part in London Wine Week and events like The Wine Show Chelsea. We’ve alsoorganised two trade masterclasses with Tim Atkin MW to illustrate new trends inRibera del Duero.”

Trade talk: What are your fastest-growing export markets andhow are you reaching new customers?

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overview

There are good reasons why the DOs ofthe southeast – Valencia, Alicante, Utiel-Requena, Jumilla and their neighbours –are being namechecked as some of themost exciting in Spain. Many of thegrowers here are working land that hasbeen cultivated for over a thousand years.Enrique Mendoza in Alicante has Arabwells on his vineyards that are ofinternational archaeological significance.There are artisan producers in this part ofSpain working with native varieties likeMonastrell and Bobal that are catnip tothe new generation of sommeliers.Another important consideration isavailability of land – the arid, semi-desertvineland of this region is vast andunderpopulated, and little exploited.There won’t be a shortage of grapes. Aregion like Rías Baixas has a fraction ofthe volume potential of Alicante.

ORGANIC MARKETThen there is the issue of organics.“Because the Levante is so hot and aridthey can produce grapes organically at noextra cost,” Kaine says. Mainland Europeis a keen market for organic wines (theBrits aren’t so bothered). “People areasking for biodynamic, organic,handcrafted wines,” Varela says. Hiscustomers are part of a burgeoning baseof consumers for whom sustainability is akey consideration when buying wine.Miguel Torres, whose commitment to theenvironment is a matter of record (thePenedès bodega was awarded GreenCompany of the Year 2010 by the drinksbusiness, among other green awards), hassaid that the future for Spanish wine liesin organics, and in regionality.

This is commercially sound. Spain has tomake its wines distinct – by being aleader in organics or promoting itsregions. When it became the world’slargest wine exporter in 2014, anycelebration was somewhat dampened bythe fact that it is nowhere near the leaderin value (in 2015, Spain earned €2.6bn

Rioja: Riojanos have reported an “exceptional” vintage this year both in terms ofquality and quantity due to favourable conditions. The wet spring and early summerleft water reserves, which helped the vines – especially old ones with deep roots –through the hot, dry summer. Acidity and tannin levels are normal, especially in thehigher, cooler vineyards. Roberto Rodriguez at Cosme Palacio is delighted withabundant compact berries with good soft skins. “It would be hard to make bad winewith this material,” he said. A classic vintage with very good yields across Rioja.

Ribera del Duero: Like Rioja, a mild winter was followed by a cool and wet spring.Summer arrived late and was hot and dry, but Ribera del Duero’s limestone-clay soilshelped retain water. At Bodegas Protos, export manager Daniel de Manuel said theearly-October weather, with hot days and cool nights, promised a vintage that couldbe “as good as the excellent 2015”. Bodegas Mauro reports “high-quality grapes thatare balanced with fine tannins, lower alcohol and good acidity”.

Cava: The grapes are generally healthy, despite the worst drought in Penedès sincethe 1940s. Some grape varieties are 50% down on last year; Xarel.lo fared best, withChardonnay, Pinot Noir and Macabeu hardest hit. The grapes are small, andGramona considers it a difficult harvest for growers and winemakers, “and not easyfor the winery as we will produce less wine at a considerably higher cost”.

Jerez: The 2016 growing season started late after a drier year than usual, but withheavy late-summer rainfall, followed by hot sun, creating ideal conditions formildew in some regions. Vineyards situated near the coast, where humidity isnaturally higher, were the most affected, and yields will therefore be lower there.González Byass reported: “Due to their privileged location in Jerez Superior and theinfluence of the dry Levante wind our vineyards were not affected. Yield predictionsfor 2016 are lower than 2015 but it is shaping up to be a healthy vintage.”

2016 harvest report in key Spanish regions

overcome all, including the plummetingpound and the inevitable rise in prices.There are silver linings in currencyfluctuations, Solís Ramos says. “Americawill have a worse exchange rate with theUK – the dollar has appreciated againstthe Euro, and so in many ways we arebetter placed to deal with Brexit thanthem. So it’s not all bad, and whateverhappens, Spain will continue to producethe best-value wine in the world.” db

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from exports, while France, exporting lessvolume, earned €8bn). More than half ofSpain’s exports in 2015 were bulk wines, avast lake of it going to France, which isSpain’s biggest customer. “I don’t likebulk-wine sales,” Solís Ramos says. “Thereal value comes when you bottle thewine, not when you sell in bulk.” Heresents the fact that France can bottle thewine and take all the profit – not tomention that a reputation for being one ofthe world’s foremost bulk wine producersisn’t conducive to selling premium wines.

Spain remains a formidable producer ofbulk wine. The sector’s engine room is thevast region of La Mancha, whichproduces half of all Spanish wine, andsells 20m hectolitres in bulk, about 70% ofits production. Almost all of it is Airénand Tempranillo, and it fetches about€0.35 a litre at current prices. “Spain isvery, very successful at bulk wine,” saysDaniel Murphy of the Murphy WineCompany, a multinational broker. “It canmake quantities per hectare no one cankeep up with.” La Mancha is dry and hot,

so it’s easy to produce organically.“There’s a lot of demand for organic wineout there, and for branded wines, whichare fed by bulk wines.”

FASHIONABLE REGIONSSpain, it seems, can cover all the bases.The vertiginous slate slopes of Galicia andthe handkerchief-sized single vineyardsof Rioja and Priorat feed a global demandfor artisanal wines, while newly-fashionable regions like Yecla, Jumilla,and Mallorca satisfy sommeliers’ endlesssearch for esoteric expressions. Then thereis the powerhouse of La Mancha churningout its millions of litres of bulk wine foran insatiable worldwide market. Nowonder a recent article on Spain’spromotion to world’s largest producerwas headlined, ‘Spanish wine: the mostpopular on the planet’.

But there’s one great spanner in theworks: Brexit. Spanish producers arethinking hard about the implications ofthe UK leaving the EU, and nonepretends to be able to predict the

outcome. Many people areoptimistic, however. RichardCochrane, the UK-basedmanaging director of Félix SolísAventis, notes that Spain enjoyedits greatest success after thecollapse of Lehman Brothers in2008 and the worldwideeconomic downturn. “It ispossible to row against anadverse market.” There is alsothe sense that, as far as the UK isconcerned, the specialrelationship with Spain will

Spanish producers are thinkinghard about the implications of

the UK leaving the EU

spain report 2016

García Carrión – €698 millionFreixenet – €510 millionFelíx Solís Avantis – €263 millionMiguel Torres – €263 millionOsborne Group– €241 millionCodorníu – €233 millionGonzález Byass – €211 millionUnited Wineries Iberia – €150 millionPernod Ricard – €119 millionBaron de Ley – €92 million

Top 10 Spanish wine producers byvalue in 2015 (source Alimarket)

Cava is Spain’s most successful export in terms of volume sales