Rioja’s second largest co-op to become a limited company
Bodegas Sonsierra, the second largest bottling cooperative in Rioja, will become a Limited Liability Company (LLC) in a move it says will “allow us to compete across more demanding global markets”.
Bodegas Sonsierra, founded in 1961 by a group of growers from San Vicente de la Sonsierra, was the first cooperative in Rioja to market bottled wines and has since risen to become the second biggest wine cooperative in the region. Sonsierra was also one of the first wineries in Spain to incentivise growers to keep old vines in the ground by paying double for grapes from these parcels, in recognition of their increased quality, but reduced yields.
Now the coop is set to undergo a major change.
Agile and competitive
According to general manager Luis Del Águila Rodríguez, 87% of members have approved the decision for Sonsierra to become a limited company, a step Del Águila said will “help the company become both more agile and competitive across global markets.”
Members will remain shareholders in the new company, though the previous board of directors will be dissolved.
“The decision to transform the cooperative stems from the need to be more agile in decision-making and attract investment to modernise the winery and strengthen its brands in a rapidly changing wine market,” explained Del Águila.
“The winery will continue to be owned by the vine growers, but the new structure will give us access to tools adapted to the times. The transformation will allow us to compete across more demanding global markets with a focus on quality, adapt to the reduced volume of sales across traditional markets, and consolidate a stable and sustainable long-term project.”
Two benefits
Speaking exclusively to the drinks business, Del Aguila shared that while the move will not mean “a huge change in the day-to-day running” of Sonsierra, there are two key benefits to leaving the cooperative system.
“Bodegas Sonsierra was already an unusual co-op as the members gave the management team a certain amount of freedom in terms of commercial decisions,” he told db. “But cooperatives are obliged to hold a plenary meeting at least every two months in which all members are given the opportunity to vote on key decisions. As a Limited Company, we will not have to do this, although we will still act in a way that benefits all our stakeholders, and give the growers, as shareholders, a say on major investments and new staff hires.”
Younger generation
Secondly, in the current situation “with the younger generation less interested in taking on their parents’ vineyards when they retire” is the legal obligation that a co-op has of returning a share of the capital stock to each member when they leave.
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“A shareholder of a limited liability company can simply sell their shares,” he said. “But a cooperative member’s equity has usually been invested in its entirety into assets: machinery, tanks etc, and paying off members when they retire is both complicated and costly.
“In the past, this wasn’t such an issue as vineyards and cooperative membership were handed down through the generations, but as this occurs less and less in Spain, we are sure to see many cooperatives struggle with this issue.”
Indeed, the winery’s intended switch from cooperative to limited company reflects a wider trend across Spain, where the number of cooperatives related to food and farming fell by 8.8% from 2006 to 2018.
Economically viable
Del Águila confirmed that following the move, production at Sonsierra will focus on its Viñedos de Sonsierra Viñedo Viejo (old vine) and Viñedos de Altura (high altitude) parcel wines, which he says “combine high quality with sufficient volume to be economically viable and strengthen our brand positioning.
“Through them we can achieve that perfect combination of exceptional quality, reasonable volume, and economic sustainability.”
Sonsierra members own 500 ha of vineyards spread across 1,400 small parcels of bush vines, all harvested by hand, and located between 420 and 750 metres altitude in the village of San Vicente de la Sonsierra in Rioja Alta, known for its high altitude chalky clay soil vineyards. The vines have an average age of 40 years old, with some parcels as old as 123 years.
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