I thought I would write about Spanish wines this weekend in celebration of their game on Sunday. I love Spain and have been there a fair number of times. I love Spanish as well and can make my way around in it but mostly I love Spanish wine and food. Back in February, Esteban Cabezas of The Wine Business School Madrid came to town for a visit. We toured many of the city’s Spanish restaurants and wine bars. We had great fun and I learned a lot about the market and was curious as to Esteban’s thoughts. I sent him some questions months ago and these are his responses.
1) What did you think of the US market for Spanish wines?
The US market is a huge opportunity not only for Spanish wine but for any other wine country. People’s interest in wine is impressive, especially in younger generations; there is a genuine desire to learn that I have not seen anywhere else. The wine bars I have visited in Seattle, SF, Denver and NYC have a quality level rarely seen in Spain or France. The concept of “wine flights”, for example, I had never seen before in Europe; this is a unique tool to educate consumers. On the other hand, there is not a single US market but several state markets with their own regulations, sometimes incomprehensible from my point view. If you add the three tier systems to the consolidation of distributors, and the movement from On to Off premise (with far fewer accounts and opportunities to promote)… it makes it difficult for medium and small wineries to crack this market. Anyway, I still think that regardless of these legal and logistics issues, these new consumers like to try new things and look for bargains and value, and in this context Spanish wines are much more competitive than most old world regions. The Tapas concept and the Top Chefs are really helping to spread Spanish wine culture but there are still not enough outlets like the Italians have, but I see there is a trend in this direction. I met Frederic, the owner of the Italian Restaurants´ Veloce in NYC, who spent a whole month in Spain visiting and studying tapas bars to inspire himself in order to open Bar Carrera: according to him there will be many more Spanish restaurants in NYC and across the USA.
2) How do you think Spanish wines can break into the market now that it is so competitive? Any ideas?
Not sure. My countrymen are making the best wine ever, but these are outstanding wines on the other side of the ocean. I have not seen most of the wines in the outlets I have visited, and I am afraid, as in the past, that we will lose this opportunity to enter the US market with energy and most importantly, with a long-lasting strategy. I have seen data from different reliable sources and Spain has just a small 5%-7% of Market Share, with a small positive growth, while wine regions like Argentina, and even South Africa are doing much better in general. Traditional regions like France are too expensive for this economic environment, as wines over $25 are not moving as fast as they used to; Italy keeps investing and moving their wines in what is a more familiar market for them than us. I hear “Wine from Spain” has around $1.5 Million to promote Spanish Wines, while Wines from Australia $29 Million; it is not a surprise that they are doing much better regardless of their current issues. It is surprising with the small budget that we have, that we still come to this huge market to promote ourselves region by region, instead of coming as one single country, which is how consumers read wine lists and how the wines are situated in the Off-premise.
Any ideas? We have the product at the right price point, with outstanding value and great stories to tell, but we need to move over here and work the brands, investing in the long term. There are several successful stories such as Freixenet and Jorge Ordonez, who a long time ago landed in this country and started to build their brands, step by step. Now both are big, but they started with just one bottle, and then two and now it seems that life it is very easy for them but there is a lot of work, risk-taking and passion behind those business. There are others doing well regardless of the crisis but they are exception. There are opportunities for all type of wineries who want to take the risk and hassle; for example it was a surprising pleasure to see Anima Negra, a small winery from Mallorca in a few outlets. I would suggest a winery which is seriously thinking about exporting to the US take a week and visit outlets, liquor stores and restaurants and talk to people; it is the first step to understanding what is going on here for themselves.
3) What trends are you seeing in Spanish wine?
This requires a long answer, but I would summarize the market in 5 parts according to their consumers:
1. Volume wines, which does not mean bad quality, under Spanish concepts such as Red Guitar from Constellation; Tapeña from Freixenet or Spanish Quartier from Codorniu, where the brand is more important than the regions. The best value-for-money, decent quality wine with an unbeatable price in the old world, usually playing with Spanish imagery.
2. The Classic Big Brands: The classic medium or big brands from classic regions, mainly Rioja, Ribera del Duero or other regions, such as Marques de Riscal, Marques de Caceres, Pesquera or Juve & Camps in Cava. They have access to big distribution chains but they have to struggle to sell their wines.
3. The Medium winery: The most difficult part of the market to sell. There are many new projects, some from pre-crisis real estate investment. Not big enough, they lack critical mass to afford sales and marketing people, but not small enough to have the allure of the following type.
4. Small Artisan Winery or new project. Usually a family business, two or three members, traditional wine making techniques are used and often but not always, indigenous varieties. If they find their niche and work hard and fast, they can have a profitable business to keep making the wine they want to elaborate. They can work with a second level importer who can give them all the attention they need.
5. Icon Wines: Very few, classic and expensive, such as Vega Sicilia, La Ermita or Pingus among others, which will always have a market, regardless of temporary economic crisises.
4) Is there room for traditionalists and modernists?
Of course there is space for everyone. Although a good share of the Spanish Wines are dominated by big, fruit-forward wines, there is a huge interest in classics such as Tondonias and Ardanza or Imperiales. Huge and keen fans, especially in the top, high restaurants, where close to a Bordeaux´s Cru Classe or Burgundy´s 1ºCru you will find a few of these wines. I have seen this in several Top restaurants, from West Coast Canlis´s Restaurant in Seattle to the other side in NYC´s Le Bernardin, where their expensive tasting menus only features these classic wines as recommended pairings.
5) What is the US missing about Spanish wines?
A lot. Neither trade nor consumers really know Spanish wines beyond the classics. The trade is missing enormous business opportunities because the value per money of Spanish wines is very high compared to any wine region in the world. Consumers are missing new regions and grapes such as Bierzo´s Mencias; Jumilla´s Monastrells; Calatayud´s old Grenaches; or the other non-albariño Galician white varieties such as Godello. There are many other grapes and regions that the consumer would be delighted to know about, and taste.
6) Where do you see Spanish wines in the next 5, 10 years?
I don’t know. I would like to believe that this time, we will do our homework and we will take advantage of this unique opportunity to enter the US market with good proposals, looking to the long term and creating excitement among the trade and consumers… but I don’t see things changing in Spain, with very few exceptions. We are still discussing whether brand or regions; one country or wine regions; local grapes or international ones; American or French oak; if we should write the varietal or not on the label; instead of coming over here and talking to the trade, the consumers, journalists.. I don’t see that at all, with a few exceptions.
7) What are the upcoming regions in Spain, areas to watch or grape varieties?
Some are not new at all, but I would like to go back to them see what is going on there. All the other areas in Galicia besides Rias Baixas; the new DO in Castilla – Leon such as VIno de la Tierra de Zamora and others; the Grenaches from Aragon; Monastrells from Murcia, not only Jumilla; the non-sherry wines from Andalusia; the old and new Castilla-La Mancha; wines from the islands, rarities like Listan o Manto Negro; artisan Cava´s like Gramonas, and dozens of new projects in the classic regions.
8)Do Spanish care about wine ratings?
Sure they do. Who doesn´t? Even people who don’t like ratings pay attention to them. Whether they like them or not, everyone is aware that they mean business.
9) Do Spanish wineries use social media? Why not?
Short answer. Social media? Serious project in Spain? I don’t know of any. Why? The same as any other marketing initiative they are really difficult to carry out because the Spanish Wine industry has been focused in the production part of the business, not in the sales and marketing. We will see new things comings because for many wineries it is the only way to communicate to their consumers; it is a huge opportunity, and not expensive at all. We shall see!