Why Spanish wine could benefit from rising living costs
The UK director of a major Spanish wine producer has suggested that Spain could benefit from a fall in people’s real disposable incomes, but warned that “tough” times are coming for the trade.
During a discussion with db at ProWein earlier this month, Richard Cochrane, who is the managing director of Félix Solís UK, said that the drinks trade was going to have a difficult year, but that good-value wines, which Spain specialises in, could see increasing demand.
“The UK wine market has had a tough journey,” began Cochrane, who heads up the UK subsidiary of Spain’s Félix Solís Avantis.
Continuing he said, “We had the collapse of the on-trade due to Covid, and then we’ve seen inflation in the last 12 months on the back of rising energy costs, and, as a result, a huge increase in the cost of glass – which is outside the control of anyone in the industry.”
Consequently, he recorded how we are now starting to see these rising costs reflected in the price of wine on shelves and lists, and, as a result, a decline in demand, which Cochrane said “is not going to disappear: I expect to see challenging numbers over the next 12 months.”
However, he noted that Spain is the source of some of the “most affordable” wine in the UK, commenting that “whether it’s entry level or from a DO, it is great value”.
He added, “Spain’s value at all prices remains hugely relevant during the cost-of-living crisis… so you might find that Spain fares less badly [in the coming 12 months].”
By way of example, he said that Félix Solís, “which tries to bring some of the best value wines in the world,” had enjoyed growing sales last year, against an overall decline in volume sales in the UK.
“We grew again last year in volume and value,” he said, adding, “People see us as affordable and reliable.”
Commenting that the wines of Félix Solís “win lots of medals”, he commented that wines such as Mucho Mas, The Guv’nor and Viña Albali “offer reassurance at a price that’s not out of reach, and that’s going to be more critical than ever as people feel the squeeze.”
Concluding he said, “Of course we are concerned, but we are trying to get our strategy right so we are in a place that people will turn to.”
As part of that, as previously reported by db, Felix Solis Avantis has made a €70 million investment in a fully-automated barrel-storage facility at its headquarters in central Spain to make efficiency savings in the long term.
With the new building, which is 18 stories high, Félix Solís Avantis can hold as many as 130,000 barrels in one place, while significantly improving efficiencies, including staffing costs, with the whole operation requiring just two people to manage it, down from 12 before.