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Bulk Experts Call for Reform of Spanish Wine Industry, but Producers Cite Strong Performance

SpainSpain’s bulk wine industry is in crisis, as the country still has massive overstocks from the 2013 harvest, no longer has EU subsidies and needs urgent reform.

 

While experts say Spain’s bulk wine industry is in dire need of reform, producers say it is delivering strong results.

 

While that’s the opinion of bulk brokers and independent experts, Spanish producers have a more optimistic view.

 

Anya Robson, of wine broker Murphy Wine Company, said that the “life support system – or bailouts from the EU and Spanish state – has been turned off”.

 

“Previously Europe allocated a budget for up to 9 million hectolitres in European or government subsidy. The Spanish producers were clearly hooked on this drip feed, when they should have been adapting or restructuring their business.”

 

She called for a major restructure of the Spanish bulk industry, saying vineyards need to be ripped out and older growers encouraged to retire early.

 

She also called for an overhaul of grape varieties planted – saying these urgently need modernising in line with international bulk demand. “The grape Airén cannot match Colombard and Chenin for the consumers demand for the fruity and crisp flavours. Airén does not produce base wines that have high and stable acidity over the year.”

 

She also said “professionalistion” of the business was essential and should include reducing production costs, structured five-year business plans with winery directors who are “adequately trained and informed in international business, able to speak English and understand that their partners are not necessarily the French”.

 

She added that the “situation is Spain has not sent shock waves but it should. This is a country left behind in the modern bulk wine explosion.”

 

Rabobank International’s executive director of its Food & Agribusiness Research and Advisory service Stephen Rannekleiv, told Harpers.co.uk: “Spain is sitting on large volumes. The challenge is that the market for the style of wine they produce is somewhat limited. They’ve got to pick a path. They’ve been increasing production capacity and efficiency fairly notably in La Mancha, which is positive, but there’s a need for the wine industry to be more market driven.”

 

“I understand there’s a lot of tradition around producing Airén and Tempranillo and others, but they have a limited market to the rest of Europe and Russia, and there’s not strong demand in the New World either. Even at the right price demand is soft.”

 

Rannekleiv said the Spaniards are trying to “sort this out”, but that it’s “not a process that will happen overnight”. He said some new co-ops and companies were making “great strides” at targeting new and expanding markets.

 

But Richard Cochrane, managing director of Felix Solis UK, disagreed: “Many are describing the Spanish wine industry in crisis, with surplus from 2013 clogging up the wineries facing the arrival of 2014 fruit. I agree this may be true of parts of the industry, but not market led producers and those with a strong export agenda.

 

Frankly the statistics challenge the pessimists view.”

 

Cochrane cited the latest Observatorio Español del Mercado de Vino (June 2014) export statistics which describe Spanish wine exports up 11.1% MAT (volume). June increased 20.8% reflecting the 20.1% growth January to June 2014. Bulk is up 25.8% MAT and 35.5% so far this year, with June showing a 46.9% jump.

 

“The main growth has been driven by IGP and varietal wines, many of which have doubled volumes year on year. These are hardly the statistics of an industry failing to reach global markets,” added Cochrane.

 

“Felix Solis has played an important role to help underpin these numbers as have other strong producers. Seeing the first 7 million kilos of fruit arrive at our winery in Valdepeñas last week, 2014 looks to be of good quality and average size, although it is still early to judge properly. If Spanish exports continue to grow at this rate, we may be thankful for 2013 by this time next year as demand grows and production falls year on year, supply and demand are rapidly getting back in step,” he said.

 

Source: Harpers