NB.: Any prices, vintage ratings and drinkability expressed are those current at the time this article was published, and may have changed in the meantime. This article is Copyright ©

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JR's notes:

Each year HARPERS WINE AND SPIRIT WEEKLY publishes a supplement on Spanish wines, and they asked me to gather some trade opinions and get a 'snapshot' of where Spanish red wine was after a year of massive price-increases and consequnt falling exports. It was published in November, 2000. The HARPERS website is at www.harpers-wine.com

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WEATHERING THE WHITE WATER

Two years ago, Spanish wine was 'Riding the Red Wave' (Harpers Spanish Supplement, 1998) with red wines increasing their share, not just of Spanish wine exports but also of the red-wine market in general. Then something happened. John Radford investigates why importers are feeling 'bullish' after a difficult year.

THAT RIOJA BUSINESS

Spain is down 12% on last year, and Rioja is to blame: let's get that one out of the way right at the start. For as long as most of us can remember, people in the trade have been complaining about the high price of Rioja, and yet it seldom seemed to have much effect on overall sales - until the harvest of 1999. Part of this was probably due to the fact that the top names - new ones as well as old - have almost become 'copper-bottomed' in the market. One consensus view in a straw poll amongst the major importers is that if people want top-class Rioja they will buy it and the price has little effect. They'll grumble, of course, and they may even reduce their order slightly, but they'll still buy. John Hawes of Laymont and Shaw (L&S) expresses horror that the price of Reserva 904, for example, is now over £20 a bottle at retail in some places, but he can still sell his allocation without any trouble at all. The other reason for the drop is the sudden death of the £3.99 p rice-point for Rioja wines. Supermarket buyers are unsentimental about dropping wines from a range if they don't fit into the right bit of the jigsaw and there are, still, sadly, some Rioja producers whose wholly-admirable regard for their product blinds them to the reality of commercial life in the outside world.

This is how it happened: after poor-quality vintages in 1992 and 1993, the low quantity but excellent quality of the 1994 induced a kind of euphoria amongst some Rioja producers (though not all, of course). When you look at production and export figures from that time (see box) it's understandable that many people thought that growth would continue ad infinitum, especially when, in 1997, Rioja overtook Sherry to become Spain's biggest wine-exporting region.

In 2000 the major difference in the UK seems to be the £3.99 price-point: the main losers have been bodegas which were turning out joven wines to fill this price bracket as the major buyers turned away. The worldwide stardom which seems to be attaching itself to the Tempranillo grape seems to be the culprit. Even though the 1999 vintage was only heading towards a 'Buena' classification, grape prices rose to the point where the best Tempranillo was costing 400 Pts/kilo and those bodegas which relied on contract growers were tearing their hair out trying to meet foreign buyers' price-point demands. In the event. most failed to do so and those buyers are even now in the depths of Argentina, Uruguay and even Venezuela and Brazil, looking for the next generation of £3.99 bargains - many of which will, ironically, also be made from Tempranillo. Charles Elms of Pechiney puts it picturesquely when he says that 'Tempranillo prices - particularly from Rioja - have caused the market to draw breath.' Some would say that they've drawn blood, but John Atkinson of Scatchard's believes that a temporary drop in exports is not necessarily a bad thing - 'it can stop the runaway train which is Tempranillo prices and, in any case, Rioja shouldn't be in the £3.99 bracket in the first place. It does nothing for the market'.

In the short term, the only winners in this have been the small growers who got a premium price for their grapes. The main losers have been bodegas - mainly co-ops - who decided to bottle and sell for themselves rather than selling wine on to the bigger exporting bodegas. There are those, however, who are not displeased with this: the major bodegas rely on co-ops and contract growers to supply them with ready-made wine or grapes and they like to be in control of what they make - and the price they can charge for it. There are even more who welcome the realisation that Rioja is now no longer a supermarket staple but has finally completed its evolution into an international fine wine with the main demand being for better and better quality wines and a willingness to pay the price for them - a view upheld by the revelation that although exports to the UK are down in quantity they're up in value, which means that the trade is buying less but better wine; and better wine means more real istic margins for all concerned.

HEIRS AND GRACES

When Rioja takes a beating everybody wants to know which regions are rushing in to fill the vacuum. Top performers in recent years have been Navarra, Ribera del Duero and Priorato amongst the premium categories, with Penedès, Somontano and Toro on their heels, and Aragón and just about anything south of Madrid - with La Mancha, Valdepeñas, Utiel-Requena, Bullas and Ribera del Guadiana prominent - in the 'price-point' bracket.

To take the premium areas first, Navarra has probably had the most difficult time. John Hawes (L&S) reports price increases from £3.95 retail to over £5 within 15 months, with a subsequent loss of mass-market interest (that £3.99 price-point again); Philip Rowles of DWS reports that obscure areas such as Benavente are cleaning up in the space left by Navarra. Indeed, as Rioja prices started to tumble in the spring of 2000 Richard Hall of Vinexports saw them dip beneath those of Navarra, with an opportunity lost. On the other hand Navarra has scarcely room to complain - exports in 1999 are still 221% of what they were in 1993 even if they have dipped below the peak year of 1997.

Meanwhile Ribera del Duero seems to have been insulated from any of these worries: Nicholas Burridge (Burridge's of Arlington Sreet) reports 'stability' in the area in terms of both price and quality, and Mike Hothersall of Codorníu confirms that his principals have already invested in new vineyards in the area, as an act of faith that even today's prices are only a step on the way to future profitability. Priorato is another area which seems to be immune to the market - the heady prices for wines made by the 'wunderkinder' in Gratallops continue to reach ever more astonishing levels. Somontano and Toro have held their own, with spill-over business from Ribera del Duero helping Toro - prices still rising according to Carlos Read of Moreno Wines and share increasing according to Helen Sykes of C&D Wines). Somontano, inching towards Penedès in style and marketing, is showing growth in the £4.99 market (Philip Rowles, DWS; Richard Hall, Vinexports). Lorne Gray o f John E. Fells (who handle only Torres wines) sees the dip in Rioja's fortunes as a big opportunity and reports growth especially in that under-a-fiver market. In addition to growth in the budget Sangredetoro market, Torres has maintained its share in the premium bracket with such as Mas Borras, Mas la Plana and Atrium, but Gray sees the major competition as being California, the sleeping giant which has finally woken up to the fact that the European market isn't interested in $30 Cabernet-Sauvignon but is very much interested in value-for-money red wines at £4.99, and he believes they have the economy of scale to mount a major attack on that sector of the trade. Others (including John Hawes and Helen Sykes) are looking to south America, with its reliable climate and rock-bottom labour-costs, to fill the supermarket slots. But some are looking elsewhere in Spain.

THE CONTENDERS

Astonishing work has been done with such as the Garnacha in Aragón, the Monastrell in Murcia and the Tempranillo almost everywhere, and regions which, even five years ago, might have been considered as little more than bulk-wine suppliers have asserted their individuality and their enthusiastic willingness to fill that £3.99 price point on a regular basis.

Some names crop up more than once: Utiel-Requena seems at long last to be losing its reputation as a maker of nothing but 'doble-pasta' wines for blending. Almansa - still a bit of a one-bodega DO - is doing great things for Nick Burridge; Andrew Bickerton of A&A Wines reports a big upsurge in interest for wines from Extremadura, Jumilla, Cariñena and Calatayud, and notes that La Mancha has speeded up its replanting of Airén vines with Tempranillo (which they call Cencibel, of course) to take advantage of the market's new love-affair with the grape. In addition Helen Sykes (C&D) is looking at Cigales, Almería and vinos de mesa in the classic 'oaky-Tempranillo' style; Moreno wines is having success with wines from Calatayud, and Pechiney is eyeing the emergent (soon-to-be DO?) region of León, where they grow the Prieto Picudo and can make something very classically oaky out of it.

One name crops up almost everywhere, however, and that name is Valdepeñas. Decades of quietly building a reputation for classic, oaky reds made from the Tempranillo are paying off now for a region which has always offered value for money. Charles Elms of Pechiney (who handle the region's biggest producer - Felix Solis) is almost cock-a-hoop at the performance of the wines in the market. Tempranillo prices have risen here as well, naturally, but not anything like as much as they did in Rioja, and Solis' economy of scale (it's the biggest winery in Spain) together with traditionally-low prices has allowed the company to snaffle a great deal of export supermarket business. Scatchards, A&A, C&D and Private Liquor Brands also mentioned Valdepeñas as being an important combatant in the fightback for Spanish red.

TOWARDS 2001

So, is Valdepeñas 'the new Rioja'? No, indeed not. Rioja is the new Rioja as some sanity gets back into the market. By mid-season this year when it became clear that the second flowering had been very successful and that, barring accidents, Rioja was on course for a large and probably good vintage, quite a few bodegas realised they still had full tanks of wine with high prices chalked upon them. Prices began to fall, and then a big crash happened in June. At this time, many of the major multiples in export markets were only just running out of wine they'd bought a the previous year's prices and, although their requirements for next year are already on the water, some Rioja houses are hoping to get back with the 2000 vintage in 2002. Whether the price-drops will follow through to the top-line producers is a moot point. Mostly unaffected by the débâcle of the past year and still able to sell every bottle they produce, the likes of La Rioja Alta, Contino, Riscal, M urrieta and Remelluri may be unwilling to drop their prices. The 'enfants terribles' of the region - exemplified by such as Roda and Allende - are even less likely to be affected, insulated as they are from the European market by massive and unquenchable demand from America. So, even given the cuts in price, the best Rioja is unlikely to be as cheap as it was before, and not a lot of mainstream wine seems likely to get back into the £3.99 supermarket price-point. However, as we have seen, there's no shortage of Spanish regions only too ready willing and, indeed, able to fill those gaps. They will unquestionably be the better for it, and the general feeling amongst UK importers is that Rioja will also be the better for it, and should concentrate on making the best possible wine rather than hitting supermarket price-points.

In spite of - or perhaps because of - the way in which Spanish red wine has weathered the white water of price rises and corrections, nearly everyone in the trade is bullish about the future. Lorne Gray of John E. Fells says 'consumers enjoy Spanish wines and if they stay affordable they will sell. We need a basis of good, affordable wines to allow the big names to flourish and the market to grow.' Carlos Read of Moreno Wines says that if we can get stable prices for the rest of this year then he predicts a big boom once the 2000 vintage gets to market.

Certainly, Spain is in for big changes in the next year, with the new Vino de la Tierra de Castilla, province-wide classification for Country wines and the 'Pagos de Castilla' project which will bring together individual 'pagos' in Castilla-León and 'Castilla-La Mancha' under one 'umbrella'. Regulation will have a light touch and we may be assured that a whole new generation of maverick winemakers will turn out something new, good, and probably made from the Tempranillo.

RIOJA - 1995-1999

*This is the figure for the campaña (season - vintage-to-vintage)

+This is the figure for the calendar year (Jan-Dec)

Source: ICEX-UK, CRDOCa Rioja

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