Flashback: Spanish Wine Challenges & Opportunities

May 31, 2022 By Mike Veseth in Spain, wine, wine markets 2 Comments

I am in virtual Madrid today to talk about the changing global wine market on a program that also includes OIV director general Pau Roca and Dorian Tang of ASC Fine Wine in China. Zoom brings the three of us together from across the global wine map to talk with our on-line audience in Spain, Portugal, and many other places.

Preparing for this talk got me thinking about the lessons I took away from a trip to Spain five years ago for an in-person wine industry meeting in Valladolid. I think the message is still relevant, so I reprint it here in a “flashback” column.

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Wine Economist (April 25, 2017). Sketches of Spain is the title of the 1960 Miles Davis/Gil Evans album that deftly walks the line between classical and jazz genres, with Davis’s virtuosity shining throughout.

Sue and I have recently returned from a visit to Spain, where I spoke at the General Assembly of the Spanish Wine Federation (Federación Española del Vino or FEV), so Spain and Spanish wine are on my mind and I have been puzzling over how to write about our experiences and all that we learned. Such a big country! So many impressions! The Miles Davis album solved the puzzle.

Davis and Evans gave us a few powerful sketches of Spain and its music, not a detailed musical portrait, which would be impossible in the context of a ’60s-era 33-rpm vinyl recording. A perfect choice! In this and the next several weekly columns I will try to provide sketches of the Spanish wine industry, which I hope you will find useful, leaving a more detailed portrait for another time and place.

Sketch 1: The Spanish Wine Supertanker

They say that it is not easy to turn around a big ship because of all the momentum it has to continue on its path and this might be a good metaphor for Spain. Spain is certainly big when it comes to wine. Spain has the largest area of vineyards of any country in the world and is the third largest wine-producing nation (after Italy and France). Spain produces nearly 70 percent more wine by volume than the United States, which is number four in the global wine table.

The Spanish wine industry has devoted enormous effort to changing wine market direction, investing in more productive vineyards planted to grape varieties like Tempranillo that are more attractive to global wine buyers, and in new or updated production facilities.

The wineries we visited have made the transition and are now sailing in the right direction. As I said to the General Assembly audience, it seems to me that Spain has all the pieces in place to succeed in the new global wine market environment that has emerged, where value matters much more than sheer volume. I am an optimist about Spanish wine. But I am also a realist …

Sketch 2: Breaking the Glass Ceiling

Improving Spanish wine is one thing (a good thing!), but achieving greater success in the global market is another because of reputational momentum. Spain’s wine reputation has not caught up with its reality in many markets. Citing data from a Nielsen Company survey of U.S. on-premises wine drinkers (thanks to Danny Brager for his help), I noted that Spain was stuck under a “glass ceiling” in terms of consumer perception.

Italy and France — these are the countries that American diners think of first when they consider imported wines. Spain, despite its status as the third largest producer, ranks far below with perception roughly on a par with Australia, Argentina, and Chile and only a bit above tiny New Zealand, which is number 14 on the world wine production table, lodged between Romania and Hungary.

Spanish producers would love to break through the glass ceiling to achieve market status of Italy and France, but — let’s face it — everyone wants to do that.

A more interesting question for Spain, I proposed, is why it does not rank higher above Argentina, Chile, and New Zealand. Do they make more wine than Spain? Better wine? Do they have better generic market promotion programs? The answer is no in each case. What do these much smaller countries have that Spain does not that allows them to punch so far above their weight? This got my audience thinking, which is always my intent.

Sketch 3: Spain at the Crossroads

Hard thinking is necessary because Spain’s wine industry is at a cross roads of sorts. A graph of domestic vs export sales of Spanish wine shows that an important line has been crossed. Domestic wine consumption continues to fall in Spain as in other Old World producer countries. The opponent is not so much France and Italy as spirits and beer and changing consumer habits generally.

Wine exports are rising and now exceed domestic sales. This is important since the industry would be in crisis if exports did not replace lost domestic purchases, but that doesn’t mean that slowly losing your most biggest market is not a cause for concern. It was rare for us to meet a wine producer in Spain who had as much as 50 percent domestic sales.

Global markets are congested and competition for high value sales will only increase when Brexit’s full impacts are finally felt. Reversing the decline of the domestic wine market is Spain’s next big challenge.

Fortunately, I think there is an realistic opportunity for domestic wine sales growth. Spain was hit very hard by the global financial crisis and the austerity policies that followed in Europe. Only now, ten years after the crisis, is Spain’s gross domestic product approaching its pre-crisis level. A lost decade! No wonder exports have been the focus.

But growth has picked up in the Spanish economy and optimism is in the air, something Sue and I could feel on the streets of big cities and small towns alike. Beer is a tough opponent, but perhaps this is Spanish wine’s moment at home as well as abroad! More to follow in the weeks ahead.

Thank You Notes

Sue and I would like to send out big “thank you” notes to Pau, Susana, José Luis, and Eduardo and everyone else at FEV and to all the people we met at the General Assembly in Valladolid.

FEV organized a series of winery visits for us in the two weeks following the General Assembly (I will report on this fieldwork in future columns) and we would like to thank everyone who took the time to meet with us and share their stories. Here is a list of the wineries we visited:

Goodbye Columbus? Three Variations on a Barcelona-Based Wine Tourism Theme

June 13, 2017 By Mike Veseth in Spain, wine, wine tourism 1 Comment

The monument to Christopher Columbus at the foot of the Las Ramblas promenade must be one of the most-viewed sights in very scenic Barcelona. Standing atop his tall column, Columbus points to the sea, an act that makes sense both for Columbus himself and for Barcelona, a city that has long turned its face to the sea and to the international influences that it provides.

Columbus points to the sea — that’s what people think he is doing. But I have another, somewhat less literal theory. I think that he is really pointing, in a vague and perhaps somewhat misguided fashion, away from Barcelona’s bright city lights and toward the not-too-distant vineyards — to the Penedés and Priorat wine regions. Tourists, he is saying, you need to visit wineries and learn about Spanish wine!

My evidence? Wishful thinking, of course (reinforced by a poor sense of direction), but more significantly this fact: if you walk down the stairs in the base of the Columbus’s column you will find not a maritime museum as you might expect but a wine tourism center, there established to help you enjoy winery visits in this region.

Visitors to Barcelona really should make time to visit wineries — and many thousands of them do. Columbus was busy during our visit, so we relied upon FEV, the Spanish Wine Federation, to organize our itinerary. Here are three case studies that show different sides of wine tourism in this part of Spain.

Arte Nouveau Cava at Codorníu

History is an important part of any visit to Codorníu-Raventos. Josep Ravenos was the first to make a Spanish sparkling wine using the traditional method and it is a leading producer of Cava wine today.

Codorní receives about 80,000 guests each year and most of them begin their visit in the extravagant arte nouveau hall that you see here (the exterior architecture is just as fascinating and unique). The tour makes good use of the beautiful gardens, which hold many delights including a fascinating wine museum in another striking arte nouveau building.

We met with the head winemaker, who was excited help us understand Cava today and to show us the lab where he experiments with micro-fermentations in a constant effort to raise quality and draw out new expressions of Cava. It was an intense and fascinating visit.

Take the Frexinet Cava Train

The architecture is distinctive and historic at Freixenet, but what’s inside the building (and underground, too) was more the point here. We walked down, down, down — deep underground — to the miles of tunnels where Cava was stored for second-fermentation in the bottle for many years.

Like most of the 90,000 visitors who come here each year, Sue and I boarded a small train to tour the tunnels — if you have visited Champagne you may have taken a similar ride there. One of our stops was at the yeast lab — Freixenet believes that their distinctive yeast variety is one key to the unique quality of their wines and so they put much effort into yeast research. Fascinating.

A special tasting was set for us with Pedro Bonet, head of the Freixenet winery family and President of the Cava DO. The goal of the exercise was to show us the enormous diversity of Cava and it was an eye-opening experience. Cava isn’t one thing or two, but a whole spectrum of tastes and aromas. Delicious!

Both Cava winery visits impressed us with the fact that while Cava is a product that uses traditional winemaking techniques, it is also constantly changing both to improve quality, develop new expressions of the wine, and to achieve more efficient production. The market for sparkling wines is very competitive — both among Spanish producers and between them and international rivals. Robots and machines now replace workers where possible for routine jobs, freeing human creativity for higher tasks.

There was much more to see and do at Freixenet, but we had to move on. Lunch was waiting at our next stop!

The Torres Experience

wineday One of the brochures we found at the wine tourist center at the base of the Columbus monument was for Miguel Torres. “Wine Day at Torres Winery” presents a number of options for Barcelona tourists including a seven hour guided bus tour with stops at Torres, Jean Leon and Saint Sadurni d’Anoia wineries for €71 (children under 8 ride free) or an 8 hour guided bus tour with stops at Torres, Montserrat (with tastings of traditional liqueurs), and a tour of scenic Stiges for €63.

Not everyone likes a bus tour so train and auto options are also on offer. Take the train from Barcelona to Vilfranca del Penendés, for example, then a shuttle to the nearby Torres winery for a visit, tasting, and return trip with a tour of the scenic village. The trip lasts about 5 hours and costs just €15. I think it would be very pleasant way to spend a day riding the train, seeing the countryside and enjoying the wine experience, too.

There are many options for Torres wine tourists with their own transportation, which you can view at the Club Torres website. Our tour of Torres began with lunch at the winery’s Restaurant Mas Rabell, which features a daily set menu of traditional cuisine paired with Torres wines, of course. What a great way to taste the wines! We enjoyed chatting with Miguel Torres, who had attended my FEV talk in Valladolid and asked the toughest questions.

Then we toured the Mas La Plana vineyard and winery with a winemaker. The vineyard, planted to Cabernet Sauvignon vines, redefined the idea of wine in this region and the Mas La Plana wine, which has its own winery, raised the bar, too. The tour stressed quality, innovation, and sustainability.

Torres, Freixenet and Codorníu are three case studies of wineries that have invested in wine tourism and are gaining the benefits, both for themselves and their communities. They are great role models for other ventures around the world.

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Goodbye Columbus and Barcelona, too. Sue and I loved visiting the city and learned a lot at our winery visits. Thanks to everyone we met for their kindness and hospitality.

Sketches of Spain: State-of-the-Art Wine Tourism Does More than Sell Wine

June 7, 2017 By Mike Veseth in Spain, wine, wine tourism 1 Comment

pagos Wine tourism is no longer about just selling wine. Wineries understand that it is a way to build or strengthen a brand and to create brand ambassadors. The United Nations World Tourism Organization Wine Tourism initiative goes further . The UNWTO proposes that wine tourism is or can be a set of rich experiences that use wine to connect history, culture, tradition, and cuisine in a way that links the global tourism market to distinctive local environments.

The best wine tourism experiences, like the best tourism experiences generally, surprise, delight, inform and sometimes inspire and transform. That’s a powerful force. I guess that’s why wine tourism is one of the fastest growing segments of the wine industry.

Sue and I encountered several state-of-the-art wine tourism programs during our recent FEV-sponsored visit to Spain. Here are sketches of three of the most memorable to give you a sense of what’s on offer in this dynamic wine nation. Come back next week for three more case studies.

More than a Museum

You travel to Morales de Toro by passing through acre after acre of century-old goblet-trained Tinto de Toro (the local variety of Tempranillo) vines. What a sight! When you get there you are drawn to the Pagos Del Rey Wine Museum, which is located in the building that once housed the local cooperative winery and radiates the sense of its utilitarian origins.

Most of the wine museums I have experienced are built around collections of old equipment, and this is true here as well. Both the garden and the museum itself have these displays. What gets your attention, however, is the main hall, which features the double row of concrete tanks (see photo above) that was the hard-working part of the winery. Interactive exhibits stand between the rows, but the real fun begins when you round the corner and enter the first tank.

A video kicks on a you quickly realize that you are actually in the tank as the grapes are loaded in and fermentation takes place over and around you (interrupted by periodic pump-overs). Each of the other tanks presents its own video that explains the vineyard and winery process until you reach the end, which immerses you in the local harvest festival.

This might be the most interesting wine museum we’ve ever visited in the way that all the senses are engaged and linked to both the wines but also local culture and tradition. No wonder so many wine tourists make there way here each year (click here to take a virtual tour right now). Congratulations to the Felix Solis group, one of Spain’s most important wine companies, for creating this small treasure, which seems to tick all the UNWTO boxes so well.

A Monastery with a Michelin Star

A completely different experience at Abadia Retuerta and its associated hotel LeDomaine, which are located just outside the Ribera del Duero zone (Vega Sicilia is just down the road, so it is a good neighborhood). This is a very ambitious luxury wine tourism project of Swiss pharmaceutical group Novartis. The hotel, with its Michelin-rated Refectorio restaurant, is housed in a restored 12th century monastery, which Spanish friends tell me was in ruins before the project began.

The careful restoration preserved a sense of the place while upgrading amenities (including a spa) to appeal to luxury wine tourists. The chapel feels like what it once was and the cloisters have that quiet sensibility that makes them special. The restaurant is in the old refectory and makes dining there an experience that is about more than food.

Sue and I enjoyed one of the set dinner menus that sought inspiration in local ingredients and traditions. We got very lucky on the wine as the Novartis board had met there the day before and we helped finish off some of the magnums that they had enjoyed with their meal.

It is hard to stop thinking about the hotel and restaurant, but the wine side is special too. The wine tourism experiences are mainly organized around the various old vineyards with e-bike, horseback and 4×4 transportation modes all available.

The total package — vineyards, winery, hotel, restaurant, and spa — is quite spectacular. A tip of the hat to Novartis for seeing the potential of this place making such an important investment in the wine tourism future of this region.

Compare and Contrast

We left Abadia del Retuerta and set our gps for Elciego in the Rioja region, stopping along the way in Burgos for lunch and a tour of the famous cathedral. Our destination was Marqués de Riscal, the oldest wine producer in Rioja, and its famous hotel, which rises above the winery at the top of the hill.

The main hotel structure was designed by architect Frank Gehry, all bright colors and unexpected angles. Most of the hotel rooms and the spa are found in a more conventional building adjacent to the Ghery structure and over-looking a vineyard block. It is quite a place and, in a funny way, its sharp contrast with Spanish tradition serves to bring out some of the features of the small village on the other side of the road (especially the church, I think).

Down the hill from the hotel you find the historic winery, which produces 10 million bottles of wine a year (65% for export) and receives about 80,000 visitors. Wine tourism is well organized here with a large public relations staff and an excellent program that takes visitors from the original 1858 building on through the winery ending at bright and colorful tasting room and gift shop area. The brief video that summarizes the main messages of the winery and tour was one of the best of its type we have seen.

We got a real sense of Rioja wine history at Marqués de Riscal, a winery that lives up very well to the goals of the UNWTO wine tourism initiative. It promotes wine, but does much more, creating jobs in the hospitality industry, drawing attention to the region, its culture and history. That’s what wine tourism today is all about.

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Thanks to Susana and FEV for inviting us to Spain and to everyone who welcomed us to Pago del Rey, Abadia del Retuerta, and Marqués de Riscal. Come back next week for three more case studies of wine tourism in Spain.

Can Sherry Be the Next Big Thing?

May 16, 2017 By Mike Veseth in Spain, The Next Big Thing, wine, wine markets 4 Comments

tio Can Sherry be the “Next Big Thing” in wine? I know what you are thinking. Sherry? C’mon! That’ll never catch fire in a big way. And you may be right, but give me a chance to make my case before you close the door on the Sherry cabinet.

One of the things that Sue and I wanted to do during our recent visit to Spain was learn more about Sherry. But the itinerary seemed to work against that. No time to jet south to Jerez de la Frontera in Andaluca, Sherry’s home. We would have to piece together our education in other wine regions. With a little luck and some helpful friends, we managed quite well.

Stumbling on Sherry in Madrid

Madrid is a long way from Jerez, but we found Sherry all around us, suggesting just how much it is a part of Spanish culture. Walking the aisles of the historic San Miguel market near the Plaza Mayor, for example, we stumbled upon a market stall called The Sherry Corner where dozens of different wines were offered by the glass at bargain prices. We had fun trying new Sherry wines and revisiting old favorites.

The Sherry Corner offers a fun self-guided audio tour of Sherry wines. For €30 you get six glasses of different Sherries in a special carrier, coupons for six matching tapas from various market stalls, and an audio program available in six languages. It is quite a bargain when you do the math and it lets you both get to know the wines, experiment with pairings, and take advantage of the amazing tapas on offer at the market.

We found a completely different experience at the restaurant Zahara de Osborne in the Plaza Santa Ana, which was close by our hotel. The restaurant is owned by the Osborne wine group that is famous for its Sherry wines (you can see the Osborne bull staring down from hilltops all around Spain).

The idea of the restaurant was to bring the food and culture of Andaluca to Madrid. We challenged our waiter to create that experience for us and he did a great job choosing the dishes and helping us with pairings. Gosh, the Fino was delicious with a delicately fried whole fish!

Indigenous Sherry Culture

Not that Madrid does not have its own indigenous Sherry culture. There are Sherry bars in several parts of the city. Friends guided us to one called La Venencia, where the Sherry is served en rama, fresh and unfiltered, right from the barrel, which is a style I like a lot. My university colleague Harry uses La Venencia as his office when he is in Madrid (which is a lot) and he made introductions to José and Gabriel who worked the bar that day.

La Venencia has as much depth and character as the wines that are served there. If you have any pre-conceptions, you must check them at the door and accept the bar for what it is, which is true of Sherry wines, too. And then, well, it is a complete pleasure. Sherry really isn’t like anything else you will ever drink and La Venencia is just the same.

I have seldom been anywhere that was so totally itself and I will always associate that strong impression with the dry Manzanilla Sherry wines we enjoyed at La Venecia. osborne

A Little Help from our Friends

We got a little help from friends at Osborne and Gonzalez Byass wineries in our quest to learn more about Sherry. Santiago Salinas arranged for a tasting of Rare Old Sherries when we visited Osborne’s Montecilla winery in Rioja. These were wines for philosophers and poets. It is stunning to discover what great Sherries can become with time. We were inspired by Santiago’s passion for the wines and, of course, by the wines themselves.

Our visit to Finca Constancia near Toledo was organized around a rather extravagant seminar and tasting of Gonzalez Byass wines ranging from their signature Fino, Tio Pepe, on to a special Tio Pepe en rama bottling, and then carefully and thoroughly all the way through the line-up to the sweet, concentrated Pedro Xeménez.

Marina Garcia, our guide on this Sherry tour, was not afraid to draw out the complexities of the wines, which is great. As I told my audience at the General Assembly, sometimes complicated things need to be understood in complicated ways. Our favorite? We discovered the Palo Cortado Sherry style and it made us think. I love it when a wine does that.

Sherry doesn’t have to complicated … or sweet either, for that matter, although many people put the wines in that category. A chilled bottle of very dry fino or Manzanilla is pretty pure pleasure and will change many minds. But you’ve got to try it yourself to be persuaded and that’s a challenge.

Sherry’s Moment?

If you look at the fundamentals, it is easy to conclude that this could be Sherry’s moment. The wines are great and well-priced. They come in a range of styles that variously make great aperitifs, pair well with food, or help unleash that inner poet. Apparently Sherry works really well as a cocktail base, too. Gotta check that out.

Tourism in Spain is on the rise and Spain’s tapas culture cuisine, which matches up so well with dry Sherry, is increasingly popular. Sherry, as much as any wine I know, is a product of time and place, and wears its authenticity proudly. Authentic, affordable, food-friendly. Aren’t these the things that wine drinkers are looking for today?

Sherry’s burden is its reputation as that sweet old wine that grandma drinks. There is so much more to Sherry for those who pull the cork. If enough curious wine drinkers pull enough corks, perhaps Sherry’s “Next Big Thing” potential can be realized!

Is Sherry going to be the next big thing? Probably not. But it doesn’t have to be. It is a timeless wine waiting to be re-discovered by a new generation of wine drinkers.

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Thanks to everyone who helped us with our Sherry research. Special thanks to Susana, Mauricio, Marina, Santiago, George, Cesar, Greg, Harry, Jensen, Gabriel, and José. Thanks to Sue for these photos of the big Tio Pepe sign in Madrid’s Puerta del Sol, the menu at The Sherry Corner, the rare old Osborne Sherries, and the many hues of the Gonzalez Byass Sherry wines.

Sketches of Spain: Spanish Wine Industry Challenges and Opportunities

April 25, 2017 By Mike Veseth in Spain, wine, wine markets 2 Comments

Sketches of Spain is the title of the 1960 Miles Davis/Gil Evans album that deftly walks the line between classical and jazz genres, with Davis’s virtuosity shining throughout. Scroll down to the bottom of this column if you’ve never heard this great recording.

Sketch 1: The Spanish Wine Supertanker

They say that it is not easy to turn around a big ship because of all the momentum it has to continue on its path and this might be a good metaphor for Spain. Spain is certain big when it comes to wine. Spain has the largest area of vineyards of any country in the world and is the third largest wine-producing nation (after Italy and France). Spain produces nearly 70 percent more wine by volume than the United States, which is number four in the global wine table.

Sketch 2: Breaking the Glass Ceiling

Spanish producers would love to break through the glass ceiling to achieve market status of Italy and France, but — let’s face it — everyone wants to do that.

Sketch 3: Spain at the Crossroads

Fortunately, I think there is an realistic opportunity for domestic wine sales growth. Spain was hit very hard by global financial crisis and the austerity policies that followed in Europe. Only now, ten years after the crisis, is Spain’s gross domestic product approaching its pre-crisis level. A lost decade! No wonder exports have been the focus.

Thank You Notes

Sue and I would like to send out big “thank you” notes to Pau, Susana, José Luis and Eduardo and everyone else at FEV and to all the people we met at the General Assembly in Valladolid.

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The Wine Economist will pause next week so that we can travel to Cyprus where I am giving a seminar on regional wine reputation and we are visiting wineries, and attending the annual Cyprus wine competition. Come back in two weeks for more sketches of the Spanish wine industry. In the mean time, here’s the original recording of Sketches of Spain. Enjoy!

Wine Economist World Tour Update: Valladolid, Spain and Paphos, Cyprus

March 14, 2017 By Mike Veseth in Shameless Self-Promotion, Spain, wine 1 Comment

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The “Wine Economist World Tour” is on the road again and I thought you might want to know about the upcoming stops.

FEV General Assembly / Valladolid, Spain

Sue and I will be in historic Valladolid, Spain on the 28th of March. I’m giving a keynote address on the dynamics of the global wine market and how they apply to Spain at the Federación Española Del Vino General Assembly.

I am honored to be invited to address this important group and am looking forward to meeting everyone and learning more about Spain and its wines during our visit. Sue and I have immersed ourselves in Spanish wine research, revisiting old friends and seeing what is new on the market here. Can’t wait to continue this work in Spain!

Cyprus Wine Competition / Paphos, Cyprus

We will attend the 10th Cyprus Wine Competition in Paphos, Cyprus on May 2-6. I will give a seminar on “Secrets of the World’s Most Respected Wine Regions” with lessons that might be useful to the Cyprus wine industry.

Many people think of Cyprus as a great place for a sunny holiday — and it is — but it has a rich culture, an amazing wine history, and a bright wine future, too. Its distinctive dessert wine, Commandaria, was once one of the most prized wines in the world. It just might be the particular wine with the longest history of continuous production.

Cyprus today is making the transition from an industry dominated by bulk wine exports to a focus on high quality bottled wine and we will be interested to learn more about the industry, meet the wine industry leaders, and taste the progress they have made.

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There are several more World Tour stops on the horizon, including Napa Valley, Romania, Colorado, and I few more I can’t talk about yet. Watch this space for details.

Marketing the Wines of Spain

November 10, 2009 By Mike Veseth in Spain, wine bargains, wine magazines, wine markets, wine price, wine taxes 3 Comments

Mario Batali famously said that there is no such thing as Italian food – there are only the diverse regional cuisines of Italy. I believe the same idea applies to the wines of Spain. Spanish wine? No such thing.

The many regions are so different and the wines, grapes and styles so diverse that it is impossible to say very much about them as a group. They are best understood individually.

Something for Everyone

This is a great advantage for wine enthusiasts who are seeking diversity. And it is an advantage for Spain’s producers too just now because their wines are seen to be good values and at time when value is so important.

Diversity and value mean that Spain can offer something for everyone and indeed sales of Spanish table wines are up 3.7 percent in the last year (same as the overall market), rising at an annual rate of 9.4 percent in the last quarter according to Nielsen Scantrak data.

The Diversity Challenge

But diversity is also a challenge because it means that you need to be both a winemaker and an educator. Spain’s regions and grape varieties are unfamiliar to many wine enthusiasts and to engage them you need to inform them. How do you establish a market identity for such a diverse group of wines? It’s a real problem and I decided to look closer at how Spain’s wine establishment is trying to solve it.

What image or images do current marketing campaigns project of the wines of Spain and how do they compare with other national or regional advertising efforts? Raphaela Haessler and Lily Chiang, two of my students, volunteered to help me find out. I loaded them up with a stack of wine and lifestyle publications (Wine Spectator, Wine Enthusiast, Wine & Spirits, Bon Appétit, and Gourmet among them) and asked them to prepare a comparative analysis of the advertising they found. Here, in part, is what they had to say.

The ads portrayed Spanish wines as new, different, fresh, and lively. In contrast, the French seemed outdated, austere, cold, and inaccessible. The Spanish ads had bright but earthy colors connoting Southern Spain, late summer and late evening parties; whereas Italy’s romantic black and white photos and France’s monotone or beige imagery did not pop out as much to the reader. The French, Italians, and even Americans based their advertising off of their reputation, family, and tradition. The Spanish, on the other hand, focused more on moments of joy and lightheartedness. While the traditional wine producers said “you should buy our wines” the Spanish message was “anyone’s invited to our party.”

I think this is a great message for the current economic climate. Wine enthusiasts don’t want to simply trade down because wine is a lifestyle product and trading down means accepting a lower self-image for many buyers. They would rather “trade over” to a different lifestyle that is more fun and relaxed (and, incidentally, less expensive to support).

Reputation versus Lifestyle

Reputation and tradition are still powerful marketing tools, to be sure, but the lifestyle message is potent in today’s market

The Spanish wine ads also highlighted the wine’s uniqueness and diversity with the national wine slogan being “far from ordinary” (and the national tourism slogan being “Smile, you’re in Spain.”) The ads mention that there is great variety and something for every taste.

Something for every taste — yes! And every wallet, too, I suppose. Good to see the diversity advantage being exploited. But there are two sides to diversity when it comes to wine.

The ads promoted a specific state of mind, but what they were lacking was a sense of place. While one ad had historical sights of the country, there were no images of vineyards, cellars, or even winemakers. There was also a lack of refinement. Most of the other advertisements presented wine as a cultured, luxurious form of leisure, or at least a family endeavor resting on tradition. In contrast, Spain’s ads came across as youthful, energetic, social, yet naïve and flippant.

Faceless and Placeless

As you can see, Lily and Raphaela really reacted quite strongly to the lack of terroir in the Spanish wine advertisements. The association with a fun Spanish lifestyle is a plus in their view, but compared with other marketing schemes Spain was surprisingly faceless and placeless. That’s the diversity challenge.

So what is my bottom line of Spain’s wine identity? First it is important to acknowledge the limitations of this study — these conclusions are based on a snapshot of Spanish wine marketing at the present moment in a small number of important publications. A more detailed analysis over a longer time frame might produced different conclusions.

I think that the current campaign is right for the times, but incomplete as an overall stragegy. I hope Spain’s wine marketing gurus are prepared a follow up program that will educate and inform about the particular wines and regions (or an orchestrated set of private marketing campaigns by the major producers and distributors to accomplish the same thing). It is important to drop the second shoe and not leave well enough alone.

That’s the message that Australian producers have learned the hard way. Their inexpensive Shiraz wines were so successful that they let them become Brand Australia. Now that they have fallen from favor, the job of re-branding Australian wine in terms of its fabulous regions is very hard. Spain should start now on this project and not wait until the fun lifestyle fad fades.

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Thanks (and a bottle of Las Rocas Garnacha from Calatayud) to Raphaela and Lily for their research assistance on this project.

Wines from Spain: Challenges and Opportunities

August 6, 2009 By Mike Veseth in Aldi, Argentina, Australian wine, brands, British wine market, economic crisis, globalization, Italian wine, Riesling, Spain, wine bargains, wine brands, wine markets, wine price Leave a comment

You know that a market niche is expanding when Constellation Brands decides to move into it, as it has done with Red Guitar, an old vines Tempranillo-Granacha blend from Spain’s Navarra DO that sells for about ten bucks.

Red Guitar is marketed as “a rich, smooth and stylish celebration of the Spanish lifestyle” — a wine for the times, I guess, when consumers are looking for products that let them trade down in terms of price while trading up to a fun, more casual way of living.

Don’t Know Much

I didn’t know very much about the wines of Spain and the Spanish wine industry, so I went back to the classroom this week to try to catch up at a three day seminar on Spain’s wines organized by The Wine Academy of Spain and taught by Esteban Cabezas. My fellow students came mainly from within the wine industry — sommeliers, distributors and retailers. I learned a lot and sampled dozens of great wines. We didn’t taste Red Guitar, but we did survey the market from $5 bottles on up to the highest levels, including table wines, Sherry and sparkling Cavas. Yes, I know. Tough work …

Education is important to the future of the wines of Spain. As I have written before, the number of unfamiliar regions and grape varieties is a challenge that must be addressed if wines from Spain are to achieve their obvious market potential. Constellation Brands’ decision to market Red Guitar as a “lifestyle” brand probably reflects the difficulty of selling wine from unfamiliar places made with unfamiliar grapes in a market where the international varietals and styles are the lingua franca. Spanish winemakers need to get the word out — to educate consumers and sellers. Classes like the one I attended are a good step in this direction.

Uncorking the Potential of Wines from Spain

It’s useful to think about Spain’s wine industry using a basic SWOT (Strengths-Weaknesses-Opportunities-Threats) framework. Wines from Spain have many strengths that go beyond their obvious quality in the glass. Spanish food and culture are hot and Spain is a popular tourist destination, factors that can be leveraged in the marketplace. Intangible cultural factors have always helped sell Italian wines, so it is not unreasonable to think that Spain will benefit from them as well. Red Guitar’s marketing strategy is an obvious attempt to do just this.

There are weaknesses, too, of course. While the sparkling Cavas are very popular, offering Champagne quality at beer prices in some cases, other segments of the Spanish industry suffer from consumer ignorance or indifference. Sherry wines from Andalusia, for example, suffer the same challenge as Riesling wines. Consumers think they know what they are (simple, sweet stuff) but they are wrong. The diversity of styles and complexity of the best wines gets lost. For those who know them Sherry wines are the great bargains of the wine world. But most consumers never find out what they are missing. That needs to change.

The amazing diversity of Spain’s table wines is a strength in this market, where consumers are unusually willing to try new products if they perceive good value. But diversity is also a weakness to the extent that it confuses consumers (especially American consumers) who are looking for a “brand” identity and can’t find it. Spain doesn’t have a distinct regional identity that would draw in consumers initially and then encourage further experimentation as some other wine producing areas do.

In Search of “Brand Spain”

New Zealand has “brand” Marlborough Sauvignon Blanc, for example, which put that country on the wine map and gave millions of wine drinkers an excuse to try NZ wines. Oregon has its Pinot Noir, which has helped make it a wine region of international note despite its surprisingly small total production. Spain (like Washington State wine in this regard) produces so many different types and styles of wine that no one of them defines it. The regional identity is unclear. This is a barrier when trying to break into new markets, but a strength once a market beachhead has been established.

Although my terrioriste friends cringe when they hear me say this, I think it would be great if Spain had a Mondavi or Antinori who could define a “brand Spain” in the global market. I think that a number of quality producers are trying to achieve this, but the industry is still pretty fragmented. Perhaps the consolidation that is sure to accompany the current economic downturn will move this process along.

The continuing economic crisis is a great opportunity for Spain to expand export market share, especially in the United States where the market for wine is till growing in the mid-market segments. Spain, like Argentina, has a reputation for good value and distinctive wines and this is very useful right now.

Catch-22

It is important, however, to avoid being defined by low price alone. Spain’s first and fourth largest export markets (Germany and France) buy mainly low cost wines to stock the shelves of Aldi and similar discount sellers. Spain needs to focus on the UK and US (numbers two and three on their export table) where higher prices and margins are possible.

Another threat to Spain’s success in the international market is the temptation to conform too closely to the international market style (Pancho Campo, Spain’s leading wine authority, called this “the Australian style” in a Skype-dialogue with my class). Wines that are all alike become commodities at some point and it seems to me that Spain, with its already huge lake of surplus wines, wants to get out of that part of the market.

But there’s a Catch-22. It is easier, perhaps, to break into the market with a good value me-too wine. But it is hard to build upon that foundation (hence Australia’s current wine slump). Better to be yourself, distinctive, even quirky, it you can get consumers to give you a try.

As you can see, the prospects for Spain are as complex and multi-dimensional as the wines themselves. I am optimistic that Spain’s wine industry will navigate this complicated passage successfully. Look for more on this topic in future posts.

Note: I would like to thank the Wine Academy of Spain and Catavino for allowing me to participate in the seminar on wines of Spain. Special thanks to my professor, Estaban Cabezas, and to Simone Spinner.

Tasting Note 8/11/2009: We tried the Red Guitar with dinner tonight and it was completely lacking in distinguishing qualities. It is hard to imagine that anyone who was introduced to the wines of Spain by Red Guitar would try another Spanish wine. Last night, however, we had the Borsao Tres Pichos, an Old Vines Granacha that sells for only a few dollars more, which was completely enchanting. You need to try Spain’s wines to know if you like them, but quality varies (and not just with price), so choose with care.

Wines of Spain: Not Lost in Translation

June 13, 2009 By Mike Veseth in emerging wine regions, EU wine market reforms, EU wine reforms, globalization, Spain, wine markets, wine price Leave a comment

Spain has the largest area devoted to vineyards of any country in the world and has achieved considerable international success, both critical and commercial. But it also confronts the many challenges typical of Old World producers. As I write The Wine Economist blog and work on my new book^*I am increasingly convinced that much rides on the ability of Old World wine producing countries like France, Italy and Spain to adjust to and succeed in changing market conditions.

Spain is an especially interesting case study in this regard. On one hand Spain faces many of the problems we associate with Old World wine. Although overall production has fallen in recent years it is still well above consumption (which has fallen, too). The surplus — poor quality wines with no market — have been sent to the distillery in recent years, but this is about to end as the new EU reforms kick in. These reforms will benefit wine regions and producers that increase quality and are able to adapt to the new more competitive global market environment.

Map of Spain’s Wine Regions

The Spanish wine industry is well positioned in some ways to take advantage of this situation. Consumers are looking for good value in wines today and I have found a number of interesting and distinctive wines from Spain in the competitive sub-$14 price range, where demand is still relatively strong as buyers trade down from more expensive products. White wines from Spain are attractive options for the growing number of consumers who have lost interest in Chardonnay and the reds would be a good choice for those who’ve grown tied of Australian Shiraz. Jaded ABC (Anything But Chardonnay) and ABS (Anything But Shiraz) buyers are up for grabs and Spanish producers are making their case.

Today’s market, for all its economic discontents, is a good opportunity for Spanish wines to move deeper into the American market, but there are problems that must be addressed. American wine buyers have learned to speak Italian, French and, well, Californian when it comes to wine in terms of varietals and appellations. They have trouble, both literally and figuratively, translating Spanish wine.

Spain has an unusually rich heritage of native grape varieties, which is both an advantage and an obstacle to be overcome. Unfamiliar varietal names are not an insurmountable barrier, although you won’t know if you like Tempranillo, Albariño and Garnacha and other native grape wines until you try them, so getting consumers to take that first taste or make the first purchase is very important. Appelations are a bigger hurdle. Spain has more than 50 regional appellations – Denominaciones de Origen or DOs – and mastering this system and understanding the differences is a challenge – an educational challenge.

The Spanish wine industry has wisely decided to confront this problem directly this summer by organizing a series of 3-day educational seminars around the country organized by The Wine Academy of Spain in association with Catavino. Wine professionals and enthusiasts will meet in Denver, Houston, Chicago, Boston, New Haven, Atlanta, Seattle, Portland, San Francisco, San Diego, Cleveland, Washington and New York (click here to see dates and registration information) and learn about the wines of Spain. Three days? Well, yes. Looking at the schedule it seems to me that it will take at least three days to learn the basic of Spain’s regions and their wines, appellations, terroirs, varietals, history and production and market structures.

Mario Battali once said that there is no such thing as Italian food, there are only the regional cuisines of Italy, which is why Italian food is endlessly interesting. I suspect that the same can be said about Spain and its wine. There is no Spanish wine, only the wines of Spain – and American wine enthusiasts have a lot to learn about them.

Mastering the Spanish wine vocabulary will take work, but it should be pleasant work. I am hoping to be invited to participate in the Seattle workshop (Chateau Ste Michelle and Dr. Loosen invited me to the Riesling Rendezvous last year and I found that experience very valuable) so that I can report on it here and write about the Spanish industry with more authority in my book. I hope to gain a better understanding of the wines of Spain and where they fit into the future of wine.

^* The working title of my new book is The Future of Wine: Globalization, Two Buck Chuck and the Revenge of the Terroiristes.

Special thanks to Steve De Long of delongwine.com for alerting me to this interesting and ambitious program.