Fine wine in focus: Spain

The failure of Spain’s many excellent fine wines to catch on with collectors and investors in the way Bordeaux, Burgundy, Champagne and Barolo or the Super Tuscans have or are doing is a perplexing situation.

Dawn-harvest-in-Rioja-AlavesaWhen one considers how many strengths and similarities they share with wines from other regions it’s downright odd.

Like grand cuvée Champagne the top reservas and gran reservas spend time in bottle before release and are then sold through various agencies. And they do very well, merchants described the release of La Rioja Alta’s 2005 ‘904’ as a “gift” after struggling to sell various en primeur allocations earlier this year.

Yet the release of a Rioja or Ribera gran reserva never seems to be hailed with as much excitement as Dom Pérignon or Cristal.

Then there are the Super Tuscans which are driving the Italian category, like them the top Spanish wines have strong brand awareness, a good following and are consistent but again, Ornellaia and Sassicaia will grab more headlines.

Is Spain’s problem that it is too consistent? A bit like the Rhône which year after year turns out lovely wines but is likewise struggling to excite much secondary market activity as buyers see no reason to rush out and buy any one vintage over another.

Scores are no issue for Spain, the wines seem universally loved and regularly garner 90+ points from The Wine Advocate and other highly regarded magazines and critics.

Trade in Spanish fine wines is generally so low that the only label Liv-ex can reliably track is Vega Sicilia’s ‘Unico’ which features on its Liv-ex 1000 index in the ‘Rest of the World 50’ charts.

Part of the problem is the volume produced. Spain may vie with Italy as one of the biggest wine producers in the world but at the top level it produces very, very little. Vega Sicilia only produces some 7,000 cases a year of Unico on average, Pingus just 500-600 cases and La Rioja Alta’s 2001 gran reserve 890 was just 16,520 bottles which is a little under 1,400 12-packs.

Another obstacle is the limited number of top names by comparison to Italy, Bordeaux, Burgundy, Champagne et al; in addition to the names mentioned above one might conceivably add Lopez de Heredia’s ‘Tondonia’, Pesquera, Marqués de Murrieta’s ‘Castillo Ygay’, Alvaro Palacios’ ‘L’Ermita’, Contador and Numanthia in the category of truly collectable and sought after fine wines from Spain and even a few of those would be new to some people.

The Spanish share of trade by value on Liv-ex is pitifully small (even if it has risen of late). In 2010 it was a measly 0.1%, rising to 0.2% in 2011 and 2012, sinking back to 0.1% in 2013 and then, in the grander scheme of things, launching itself to 0.4% and then a mighty 0.8% in 2014 and 2015 respectively.

Probably the biggest problem for Spanish fine wine is that they’re not really that expensive for what they are. With the exceptions of Unico or Pingus which come out at over £1,000 a case and are therefore immediately in a certain bracket, a bracket where buyers feel what they are buying is special and needs laying down and opening on special occasions, most of the best Spanish wine can be ludicrously affordable (or “compelling” as it is often referred to). La Rioja Alta’s 2005 being under £300 for a six-pack for example or less than £50 a bottle, not cheap-cheap but tending more towards the sort of wine one would feel happy opening at a week night dinner party for example.

As Liv-ex director Justin Gibbs explains, at this level it means that, unlike some other fine wines, buyers feel they can not only buy it but, crucially, “they can afford to drink it.”

Although Spain’s tiny production should be a catalyst for driving prices in the secondary market as it is with Burgundy for example, currently the buzz around most labels is so low this advantage has no time to manifest itself.vega sicilia 2004

“If you can’t get hold of it, you can’t get hold of it so people don’t talk about it and move on to other things,” says Gibbs.

So with limited production, low starting prices, immediately declining volumes, consistent vintage quality and strong scores Spain should be among the most sought-after categories going.

But if it’s yet to come into its own on the secondary market, in terms of actual performance Gibbs continues, “you’d probably find they hold their value pretty well. It’s not a tale of woe by any means.”

As it’s the easiest to get figures on, consider Unico. The 1994 vintage in 2011, the height of the fine wine market, was £2,200 a case, it’s now around £3,150 – a rise of 43% which, over the same time period, means that wine has outperformed the entire Burgundy category which has risen 40% (while the first growths have declined 40%). Over 10 years it has appreciated 103%.

Again over the 2011-2015 period the 1998 has gone from £2,000 to £2,750 p/cs, while the 1995 was one of the best performers in the Liv-ex 1000 between 2012-2014, rising 37% and 104.5% since 2006.

Whether other labels can boast similar results is hard to pin down but it seems likely. The results may not be gangbusters but they are steady, sensible and people seem to be putting these wines away to drink, which is something the fine wine market desperately needs at the moment.

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