Today, wine is a religion for people of all conditions who do not give up pairing a meal with a good broth and even travel half the world if necessary to see in situ how their favorite bouquets appear in so many wineries open to tourism. But the viticulture it is also a business. And a way of life. And the roots of the tree in so many areas of the rural world.
Indispensable in the libations of the protagonists of the Decameron, Boccaccio’s work where ten young people are secluded on the outskirts of Florence fleeing from the Black Death, another pandemic, that of the coronavirus, has made a dent in this activity with many branches, from farmers , cooperatives and wineries to appellations of origin (DO), distributors and, of course, consumers. The covid has caused a drop in sales of 18% in 2020. On average, because many “small wineries, which only sell in the national market and sometimes in their proximity area, they have had a bad time», Unlike those that have been supported abroad, which are usually the largest.
Sales fell on average 18% last year due to the health crisis
As the general director of the Spanish Wine Federation adds, Jose Luis Benitez, the total or partial closure for so long of the hospitality industry, particularly restaurants, has caused a 40% decrease in turnover in that channel. It is true that household consumption increased by 30%, but this rise has been insufficient to compensate for the losses in the horeca activity.
Jose Luis Lapuente, general director of DO Rioja, whose 576 wineries account for 30% of the production of Spanish bottled wine, assures that this territory “has endured without serious injuries. Let’s say you came out of the accident alive and it’s a good starting point for 2021, which is not being easy at all. We are having a hard time starting “, due to the new waves of infections and restrictions. Without forgetting the sinkhole in the visits to wineries -the so-called wine tourism– which fell by 76% in 2020: from 860,000 to 226,000.
Spain could be said to be a wine paradise. With 940,000 hectares, it is the number one country in the world in vineyard area. Only Ceuta and Melilla do not have vines. Conditioned by the climate, wine production is variable and, on average, is between 42 and 44 million hectoliters (between 4,200 and 4,400 million liters), but, as Benítez points out, it may touch 46 in 2020 or go down to 39, as in 2019. If the rain is generous, it can reach 52 in 2013. If the countries that buy the most Spanish wine have also had good harvests, a collapse in prices is inevitable. It is the problem of the overproduction. Hence, last year a rule was approved to limit it in areas not covered by any of the 97 appellations of origin (DO) and 42 protected geographical indications (PGI) that exist in the country, some demarcations, by the way, that already they set their own performance limitations primarily to enhance quality.
Javier Gandia He is the general manager of the Vicente Gandía winery. Founded in 1885, it is the largest in the Valencian Community, with 150 employees, a turnover of 40 million euros and a production of almost 30 million bottles. It insists on the overproduction of “certain areas”, a circumstance that occurred in 2020 due to the good harvest and the drop in consumption. Of course, France and Italy suffered frosts in April, at the worst time, and that could release the surpluses.
The territory with the highest volume of Spanish wine is Castilla la Mancha, which concentrates half of the hectares of the sector. In this territory, as in all the others, DO and specialized wineries that produce quality wines have emerged, but the bulk of their production is sold in bulk, which in Spain represents half of the 44 million hectoliters that are produced. Gandía recalls that bulk “is what we all originally made. Then it began to be bottled. Those from Rioja were taught by the French and that is why they were ahead of us ». That non-bottled wine is mostly sold abroad. To Germany, as a base for sparkling wines, and especially to France and Italy, who bottle and market them as their own.
With 427,000 direct and indirect jobs and a gross added value (GVA) of more than 23,700 million euros per year, wine exports reached 4,600 million in 2020, of which 2,012 correspond to bulk. The data of the Spanish Wine Federation show that March 2021 has been historic, with sales of 210 million liters equivalent to 263 million euros. The native wines are already sold in 189 countries.
The DO Rioja Last year, it raised its percentage of sales abroad from 37% to 44%, but its CEO considers it to be a “temporary” rise caused by the greater penetration of these wines in the food channel than in the horeca in countries such as the United Kingdom , also very affected by the covid. However, in the sector they believe that internationalization is one of their pending issues. Benítez, from the federation, says that “Spanish wine has an image of being cheap abroad, even the best quality ones, compared to the French and Italians. It is difficult for us to market for what it is qualitatively worth.
Javier Gandía, who highlights the evolution that the country has had in the last three decades “towards the top” – it is already the third largest exporter in the world by value – and the wickers it has for that scale – variety, soils and diversity – points out that France “dominates by the image of the country and its link with luxury, while Italy does very well in marketing.” “You have to go to bottle as much as possible, because that is where the brand, the added value and the quality are,” he concludes.
Once again on the internal borders, although they are so diffuse in the online world, the Spanish wine sector has been activated on the internet as a formula to help overcome the effects of the pandemic and has registered significant percentage increases. The federation places them at 200% and DO Rioja at 70%. Of course, the starting point was very low. In both cases it was around 2% of sales. Jose Luis Benitez He believes that this channel will continue to progress and that it will do so at the expense of distribution. Javier Gandía does not believe that this boom will end up eating away at the traditional marketing market, although it will rise “because large supermarkets and specialized stores have also entered there”, and he predicts that it will have the longest run in high-end wines.
If the digital world is a challenge, an even greater one is climate change. Benítez is not afraid of the appearance of new competitors in areas where wine was not produced before, but the consequences in Spain itself, where effects such as wines with higher degrees of alcohol, lower productions and quality imbalances are already noticeable.
There are not too many experts who predict a return from the happy twenties of last century to the twenties of this century as soon as the crisis passes. As if history repeats itself. It is the hope of all the victims of this pandemic. Also from wine, but there is no unanimity. Javier Gandía, optimistic by nature, assures that the “economy is a state of mind”, and predicts the arrival “of a significant increase in spending, because there is desire. We’ll see how long it lasts.
José Luis Benítez prefers not to opt. Already see a consumption rebound, but he fears an economic crisis around the corner that will twist everything. From La Rioja, José Luis Lapuente believes that “there are internal wounds in society that have not surfaced. Society will have a hard time shaking off the pandemic, but wine is a social drink. We need that joy, although I fear it will cost us more than it seems. Be that as it may, everyone would sign this wish: that the Days of wine and roses.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.