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SPAIN: Will it sell?

d=”standfirst”>For a country with one of the most diverse wine offers in the world, Spain remains remarkably undiscovered by UK consumers, writes Gabriel Savage

With 67 DOs and the largest area under vine, albeit third behind France and Italy in terms of actual production, it seems perverse that Spain’s reputation is so often limited to Rioja, Cava, Sherry and, perhaps more recently, regions such as Ribera del Duero. Moreover, as margins tighten and consumers look for more competitive deals than ever, Spanish wines, particularly those from less well-known regions, are often providing the solution.

The question now is whether there is much real export potential for these regions, not to mention how Spain can strike the balance between exciting and confusing the consumer.

For Natalia Posadas-Dickson, wine buyer for WaverleyTBS, there is a growing recognition of the breadth and depth offered by Spain. “We are seeing renewed interest in Spanish wines, white as well as red and rosé, from entry level right the way up to super-premium,” she comments.

While acknowledging the continued dominance of Rioja in the UK market, she adds, “We firmly believe that a strong, regional Spanish offer is the way forward.”

Despite such support, there are concerns that Spain’s image among consumers still does not fully reflect this versatility. As Jeremy Rockett, UK marketing director for Gonzalez Byass, sees it, “One of the challenges is for Spain to overcome a ‘cheap’ image.”

This situation is further complicated for Rockett on the basis that “Spain has a split personality when it comes to prices”. He explains how, thanks largely to Rioja, Spain is also “the second biggest country by share for wines of over £10”. While Spain’s ability to serve both ends of the market is certainly a positive factor, Rockett fears the establishment of a damaging polarisation in the country’s image.

In the longer term, Rockett fears this could “make it hard to sell any wines that are not either entry level or Rioja”. This situation is also of concern to Graham Fortune, managing director of Freixenet DWS, who believes a key challenge for Spain is “to educate the UK consumer about the great quality and value that Spain has to offer in the mid-market and at higher price points”.
Even Rioja has seen its premium positioning threatened in recent months. Nick Blair, wine director for Pernod Ricard, expresses concern about “the confused messages being sent out recently with lots of half-price activity for reservas that runs counter to their traditionally higher price point”. Fortunately he acknowledges that this approach now “seems to have backed off a bit”, averting potentially damaging consequences for Rioja.

Follow the leader

On the subject of Rioja, consensus stands that the region maintains its preeminence among the nation’s wines. However, elsewhere a belief is emerging that, in the words of Félix Solís Ramos, CEO of Félix Solís SA, “with the right support, other regions are more than capable of following this lead”.

Indeed, across the trade, there are hispanophiles quick to recommend regions they believe to be worthy of greater recognition. According to Andrés Pérez de Herrasti, sales director for United Wineries, “Ribera del Duero, Rueda, Jumilla, Arribes del Duero and Rías Baixas are definitely on the rise”. Marcelino Piquero, commercial director of Sanchez Romate, adds Navarra and Campo de Borja to the roll call, adding, “In the very near future we’re going to see dramatic offers outside Ribera del Duero and Rioja.”

This progress is further explained by Andrea Ochoa, winemaker at Bodegas Ochoa in Navarra. “Now Spain is awakening,” she says, “while other countries have invested in marketing and publicity, Spain was investing in improving the wineries and making better wines.”

Despite these moves to improve the quality of Spain’s wine, it is clear that there remains a good deal more work to be done. Anne Vallejo, PR and marketing manager for Marqués de Cáceres, believes “there are too many bodegas, undeveloped brands and wines, with too many individualist strategies based on short-term policies”. This problem of business strategy is far less amenable to regulation than any of Spain’s remaining issues with quality.

Across Spain, there is evidence that generic bodies are stepping up their activities abroad. Last year saw the first promotional efforts in the UK from Vinos de Madrid, whose export manager Alicia Orden Rueda comments: “For us, it is really important to work in a personal way and build momentum in markets outside London, where we can create more ‘noise’ about our wines.”

The scale of this challenge does not escape Rueda, who explains: “We’re very aware that there are many people in the UK trade who are Spanish specialists, but don’t know much about Madrid at all. For us, the next couple of years are about getting our story across to these people and giving them the opportunity to taste the great wines that we produce.” In terms of the region’s offer, there is certainly a small but diverse range of producers.

Rueda highlights the Arganda sub-region, which currently contributes 60% of the area’s production “and could attract big brands”. This raises the issue of how important these brands are to the growth of less well-known regions and, indeed, how interested the brands are in developing in this direction.

Of the larger players, Grupo Codorníu is certainly making strong moves to build a Spanish portfolio that extends beyond its flagship Cava brand. This already includes projects in Costers del Segre, Rías Baixas, Ribera del Duero and Priorat. According to Carolyn d’Aguilar, the company’s still wines brand manager: “There is currently a lack of strong Spanish wine brands in the UK market and this is another opportunity for companies such as Grupo Codorníu.”

In particular, d’Aguilar highlights Raimat from Costers del Segre, which, at a production level of half a million cases, she describes as “the group’s most successful international still wine brand”. In addition, Codorníu has recently launched The Spanish Quarter brand, using grapes from the Raimat estate, which aims to “balance Old World tradition with an understanding of contemporary tastes and trends”.

Summarising the group’s strategy, d’Aguilar stresses that the key to success lies in “introducing fresh and contemporary brands to the Spanish category that encapsulate the spirit of Spain that’s so appealing to UK consumers”.

A similarly opportunistic approach is evident in the Freixenet camp. Fortune reveals: “Freixenet is actively investigating the possibilities of sourcing wines from Alicante and Murcia”. As the company explores the potential of these less recognised wine regions, Fortune outlines the road ahead: “Two to three years’ production will allow us to gauge whether a certain wine is suited to launching on the UK market.”
While the Penedès-based producers seem to be embracing Spain’s regional diversity, those who have built their reputation in Rioja tend show a more conservative attitude.

Vallejo explains that progress “has chosen to follow a cautious policy, concentrating on our business here in Rioja”. However, she adds, “we are open to making the right decision at the right time”.

In some camps, there are signs this time is close at hand. Latas, export director for Paternina, comments: “We already make wine in Ribera del Duero and are looking at these wines more seriously as we’ve had a good response from our consumers.”

Brand building

If there is some hesitancy from Spanish brands, then Pernod Ricard with its global portfolio is even more concerned to keep a tight focus on its Spanish interest, Campo Viejo. “It’s our intention to focus very singularly on Rioja at the moment,” states Blair.

Explaining the region’s appeal, he points out: “Traditionally, the Old World countries have not been about building brands. That makes Rioja an important opportunity as it’s a brand in its own right. For us it’s about driving the message through that Campo Viejo is a brand from Rioja. We are very, very single minded in our intent to strengthen that brand.”

This analysis strongly suggests that, if Spain is looking for big names to make some real impact on the profile of its lesser-known regions, this will need to come from homegrown talent rather than foreign investment.

Meanwhile, Wines from Spain is working to highlight the strength and diversity of the country’s offer for the UK market. Its director, Maria José Sevilla, highlights key plans for this year, saying, “In June of this year a panel of 15 or so top UK palates will assemble to blind taste through around 1,000 Spanish wines to find the 2009 winners of the New Wave Spanish Wine Awards.”

In addition to the opportunities offered by competitions, Sevilla also endorses Spain’s establishment of new DOs, the most recent of which were created within Castilla y Léon. “These new DOs help improve and further Spain’s quality image and it is an ongoing positive process as producers seek to excel themselves and gain DO status,” she explains.

Among the latest DO creations is Tierra del Vino de Zamora, notable for the fact that this region was largely untouched by phylloxera. Largely unknown, even within the trade, the region’s eight producers will no doubt be hoping this new assurance of quality and provenance will provide a boost for their historically significant wines.

However, elsewhere in the trade there are those with reservations about the value of this focus. For de Herrasti, the responsibility for quality is best placed elsewhere. “The more DOs, the more fragmentation in the offering, the more complicated it is for the consumer. Brands, not DOs, should be the guardians of the quality of their wines,” he asserts. It is hardly surprising that opinions on Spanish strategy can prove as diverse as the country’s wine output.

For the moment, despite some contrasting opinions on strategy, the Spanish wine industry’s most immediate bugbear is the economy, which may well affect its activity abroad. “The UK is in crisis and Spain is in an even bigger crisis,” says Piquero.

As a result, he believes, “It’s not that we must do nothing in the UK, we’re probably not doing enough, but that’s a strategic decision for individual wineries at the moment and I think many will want to focus on the domestic market.”

While this forced introspection may well deter producers without a UK presence from launching a campaign in this direction for the moment, there are tempting opportunities for those already here.

Certainly there is evidence of strong demand for Spain from the UK trade, with its increasing appreciation of how well Spanish wines cater for every type of consumer.

Posadas-Dickson is emphatic about the importance of Spain to Waverley’s offer, commenting, “One glance at our new portfolio will show how much we believe in Spanish wine and its diverse and amazing regional offer.”

With such support and energy behind Spain’s regional wines from so many quarters, it seems only right that this message of diversity should begin to rub off on consumers.

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