Richard Cochrane, managing director at Felix Solis, which has wineries in La Mancha, Ribera del Duero, Rueda, Rioja and Toro, told OLN: “The UK for Spain dropped about 10% in the last 12 months. For the first time ever Rioja has come a little bit off the boil as retailers have moved away from half-price promotions. Rioja Reserva was one of the stalwarts for it and switching that off has seen volumes drop.
“But we are quite upbeat. We think Spain will go back into growth over the next 12 months, from 10% decline it will flat-line and then back to growth, because all the ingredients are there.”
He believes Spain is the most competitive country on the planet for wine production because it has the largest area under vine and has ideal conditions for growing grapes.
“The average altitude is 600m above sea level,” he said. “You are away from the sea so you don’t have that maritime humidity and risk of disease, you’ve got bush vines, low intervention and virtually knocking on the door of organic. We are now getting certification for a lot of vineyard area for very little extra money.
“The engine room of Spain is very low intervention, and that means low cost, because every time you add chemicals it costs money. You have a wonderful viticultural environment, and it also gives great value for money.
“If you look at price and the way it has changed over the last few years, Spain has maintained its competitive position against all other countries. It will remain a key player for value and entry-level.
“Normally if you do that you are pigeonholed, but look what’s happening in the on-trade: the Spanish food scene is exciting and sommeliers are really excited about Spanish wine. Spain has these two things going on, with Rioja sitting in the middle, and that’s great. We are quite upbeat. We think Spain will go back into growth over the next 12 months.
“If you look at the UK economy, in times when it goes less well people still want a bottle of wine, but they have to consider how much they spend, and with exchange rates and duty all going against the industry, Spain is one of the few islands where you can do stuff. The value end will grow and premium will also do well, so there’s a really exciting combination. Chile, we’re working down there, but it hasn’t been able to claim that niche premium in the same way, nor has South Africa.”
Felix Solis has built a 50 million litre winery just south of Santiago and aims to pioneer a new approach to bulk shipping that removes one complete cycle of wine preparation, so you do not lose as much quality.
“If you are in the New World rather than ship loads of glass round the planet you ship it in bulk and package it in Europe,” he said. “Normally the producer filters the wine down to 0.45, they put the sugar in, they load it into a big bag-in-box and ship it to the UK, because the ownership transfers to a UK bottler.
“You really introduce an entire bottling process before it even arrives in the country. When it arrives in the UK you open it and stick it through the same process again and bottle it.
“If you do that twice, with the best will in the world you are not helping quality. Every time you handle a wine you take a little bit out. If you are not at the upper end of quality, where you are starting from may not be the greatest place to sustain quality. If you are spending £100 on a bottle of wine that’s great.
“If you knock a little bit out that’s still going to be a tremendous wine. If you are thinking about the average price of a bottle of wine in the UK from the New World, somewhere between £5 and £6 depending on the country, it’s very difficult to be investing in that much fruit quality.
“We were looking at that and thinking it’s structurally an issue we would like to change. We built an international winery in Spain, and we investing in Chile. That allows us to crush and vinify in Chile as we would in any wine region with an expert local team, and rather than filter down to 0.45 and all the rest we can treat it as an inter-winery transfer. We ship it dry. It’s coming from this tank in this winery to that tank in that winery. We then do all the finishing stuff when it’s about to be bottled. We take out one complete cycle of wine preparation, so you don’t lose as much quality.
“You get all the gains of bulk shipping but you get a winemaking benefit. No one would choose to go through a double round of filtration, and yet half the wine coming into the UK is facing that. That’s not great.”