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The Bierzo Formula: Same Cultivars, Fewer Vines, More Bodegas

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Amidst the Old World vineyard restructuring, Spain stands out as the country that has lost most vineyard in the 21st century (Anderson, 2013).  Most of Spain’s losses have occurred outside of Denominación de Origen (D.O.) regions. Yet with high labour costs and pressure on prices, the more remote D.O. wine regions have had no option but to change the way that they operate.

Bierzo-Harvest-Composition-D.O. Bierzo is located in the far northwest of Castilla y León, with vineyards adjoining Galicia’s Valdeorras wine region.  The 2013 harvest in Bierzo totalled 13.2 million kg and is notable for the large percentage of Mencia (75%) with the next largest cultivar being Palomino (15%).  Although there is a trend for replacing (low quality) Palomino with (now fashionable) Godello, this does not seem to be occurring with particular haste.  This is somewhat surprising given the success that the likes of Rafael Palacios and Valdesil have had with Godello in Valdeorras.  Although Tempranillo, Merlot and Cabernet Sauvignon have been planted here since at least 1997 (González-Fernández et al., 2012), they are permitted only on an experimental basis and to date have had no significant impact.  Bierzo remains very much a Mencia-based wine region.

Bierzo-Grower-NumbersAlthough there has been little change in the cultivar mix, there has still been considerable activity in restructuring Bierzo’s vineyard.  In 2002 the total vineyard was 4,100 ha, but this had shrunk to 3,045 ha by 2012 – a reduction of 26%.  The number of growers has declined even more rapidly from 5,186 in 2002 to 2,634 in 2012. As a result holdings per grower has increased from an average of 0.8 ha/grower to an average of 1.2 ha/grower over the same period.  No doubt to management consultants this represents much needed efficiency savings, but these changes of necessity must also have had an associated human cost.

Bierzo-Wine-ProducersOn a more cheerful note, Bierzo has seen a considerable increase in the number of bodegas during the 21st century.  Whilst a considerable amount of fruit is still sent to co-operative ventures, a fast-growing trend is the establishment of small bodegas being developed by younger enthusiastic entrepreneurs.  This is evidenced by the number of wineries which undertake their own bottling, which has risen from 27 in 2002 to 57 in 2012.  Domain Tares (2000), Bodega Peique (2001), and Bodega del Abad (2003) are examples of quality-orientated wineries established this century which have already made something of a name for themselves.

Bierzo-Export-VolumesSo will Bierzo’s approach of producing less wine of higher quality from smaller wineries using an established grape cultivar mix prove to be a long-term success?  It’s by no means guaranteed but, for wine lovers interested in trying something different, Bierzo offers unusual often delicious wines at attractive prices.  Although export volumes are small, the growth of exports suggests that Bierzo wines will soon become more widely available at independent wine stores.

 

America’s Love Affair with New Zealand Wine

Image © New Zealand Wine

According to an interview with Philip Gregan (CEO of New Zealand Winegrowers) the US will become the number one market for New Zealand wine within two years.  Is this prediction likely to come about, and what of their traditional markets of Australia and the UK?

Looked at in terms of export volumes, in 2012-13 Australia, the UK and the US were the three largest makets and were each importing 40 – 50 million litres of wine (the vast majority of it Sauvignon Blanc).  The UK had been the largest market by volume for New Zealand wine since 1990, a position it has just given up to Australia.  The recent sharp drop in exports of New Zealand wine to the UK is entirely due to a reduction of bulk wine exports from 27 million litres to the UK in 2011-12, down to 17 million litres in 2012-13.  Over the corresponding period, bulk wine exports from New Zealand to Australia dropped by 4 million litres while bulk wine exports to the US increased by 1 million litres. The overall decline in bulk wine exports was a consequence of the smaller 2012 vintage (194 million litres produced, compared with 235 million litres the previous year).  With 2013 providing the largest harvest ever, and a production of 248 million litres, some producers are likely to again turn to bulk exports rather than increase inventories.  UK supermarkets’ own brand Kiwi Sauvignon may well still have life left in it and the UK could return to being the largest importer country by volume in 2013-14.

When looked at from the viewpoint of revenues, the export story is a little different.  The UK and US each accounted for ca. NZ$280 million of revenue in 2012-13, while Australia’s market was worth NZ$373 million.  The Australian market is showing clear signs of saturation (if not backlash) for Kiwi Sauvignon and looks set to plateau around the NZ$400 million mark.  The UK market also looks to be reaching saturation and may well plateau around NZ$300-350 million.  By contrast, exports of high-value packaged wine to the US have doubled by volume in only seven years and show no signs of slowing.  The total revenue from the US looks set to easily break through the NZ$400 million mark, taking the no. 1 spot in the process, but without an increased promotional programme it might require three to four years rather than two.

Yet for all the upbeat talk of volumes and revenues, it shouldn’t be forgotten that New Zealand wine producers have had their fair share of backruptcies and liquidations in recent years.  Export values (expressed as NZ$/litre) to the three largest markets have declined significantly, even ignoring the effects of inflation, over the past five years.  While this is only one factor affecting winery profitability, it remains an important one.  Until this downward trend can be reversed, further consolidation within the New Zealand wine industry seems highly likely.

The Increasing Commercial Success of Rias Baixas

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Rias Baixas is already one of the most important white wine producing regions of Spain. Only Rueda and La Mancha have significantly larger white wine sales and much of La Mancha’s sales are derived from low value bulk exports. According to figures published by Spain’s Ministry of Agriculture, Food and Environment, in 2011-12 the average revenue for Rias Baixas’ wine was €5.7/litre, compared to Rueda’s average revenue of €3.0/litre.

Located within Galicia in northwestern Spain, Rias Baixas is bordered by the Atlantic Ocean to the west and by Portugal to the south. The highly indented coastline with many headlands and inlets (rias in Galician) has come about by the drowning of river valleys.  Deeply dissected metamorphic rocks and granites, which give rise to steep slopes and coarse-grained alluvial soils, underlie the vineyards.  This topography has led to the Rias Baixas vineyard being highly fragmented.  Since the beginning of the 21st century the Rias Baixas vineyard has almost doubled in size and now stands at 4,048 ha.  This total is made up from 23,232 separate parcels of vines, so the average vineyard parcel size is a mere 0.15 ha.

 

Wine production has more or less increased in line with the increase in vineyard area, though vintage variation can have a marked affect on yields.  There was a particularly low yield in 2012, which has been attributed to unusually low temperatures and heavy rainfall in June resulting in very poor fruit set.  Winemaking facilities tend to be small with only four of the 177 bodegas producing more than 5,000 hl in 2012.  Domestic sales of Rias Baixas wines currently account for ca. 80% of total sales, though this figure was down to 74% in 2011-12 as supplies tightened.

Exports have continued to grow and appear to be an increasingly important priority for producers. The Americas account for the majority of exports by volume, of which the US is by far the largest market. Europe has shown
steady, if less spectacular growth. The largest markets by volume in Europe are the UK, Germany and Switzerland.

More than just Icewine: Canadian Production Growth

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Canada produces both table grapes (chiefly Vitis labrusca) and wine grapes (Vitis vinifera and hybrids).  Approximately 80% of the grapes produced in Canada are used for wine production.

Wine grape production by province

Wine grape acreage has been increasing steadily over the past twenty years. From a country total of 4,555 ha in 1993, this figure had risen to 11,139 ha in 2011.  The majority of wine grapes are grown in Ontario and British Columbia, with smaller amounts being produced in Quebec and Nova Scotia.

Broadly speaking, Canadian wine grapes are used to produce two types of products.  About half are blended with imported bulk wine or must to produce an International Canadian Blend (ICB).  Confusingly, these products are labelled as “Cellared in Canada” even though the local content of ICB wines in Ontario varied from 60% in 2009 to only 1% in 2005.  Because the Canadian wine industry is small and costs compared to international competitors are high, there is a strong financial incentive for blending.  Pronounced vintage variations in Canadian grape production have also supported proponents of the use of imported must and wine. Ths is especially true for the larger wineries who are looking to produce a “Canadian” brand in the sub $10 price category.  Currently an ICB wine must have a minimum content of 25% Canadian grapes.

The second product class consists entirely of Canadian grapes and meets quality criteria designated by the Vintners Quality Alliance (VQA).  These are the wines which are of interest to wine enthusiasts and which make up the Canadian export market.

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Ontario Grape Production

Just over half of all the Canadian vineyard area is located in Ontario. Grape production here shows a strong vintage variation with 2005 being a particularly poor year due to a late winter freeze.

Of the ca. 60,000 tonnes produced in 2012, approximately one third was white vinifera, one third was red vinifera and one third consisted of French hybrds.  The most important white vinifera varietals are Chardonnay and Riesling.  Smaller quantities of Sauvignon Blanc, Pinot Gris and Gewurtztraminer are also produced. Red vinifera varietals in order of produced quantity are Cabernet Franc, Merlot, Cabernet Sauvignon, Pinot Noir and Gamay.

British Columbia

French hybrids constitute less than 3% of the wine grape acreage of British Columbia and hence make only a small contribution to its grape and wine production.  In the late 20th century British Columbia both expanded its vineyard area and changed from predominantly whites to a more even mix of black and white varietals.

The 2011 harvest was evenly split between red and white varietals.  The five most important red varietals by production were Merlot, Cabernet Sauvignon, Pinot Noir, Cabernet Franc and Shiraz.  For whites, the largest producing varietals were Chardonnay, Pinot Gris, Sauvignon Blanc, Gewurtztraminer and Pinot Blanc.

Exports

The growth of the national vineyard and production has meant that wineries are increasingly looking to the export market.   Exports have increased from 7.8 million litres in 2008 to 26.2 million litres in 2012, but value has risen from Can$20.3 million in 2008 to only Can$41.2 million in 2012.  Much of the dilution in terms of $/litre is attributable to sales in the US, which is by far the largest export market by volume.  As a high cost producer, Canada will need to ensure that it does not devalue its products by discounting heavily as production rises.

 

 

Indian Wine: Production, Imports and Exports

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The Indian wine market – for both domestic production and imports – has expanded considerably over the past decade. Precise industry figures are not easy to come by as there is, as yet, no official compilation of wine statistics for India.  Not surprisingly, different sources seem to quote slightly different figures and sometimes appear to interchange production with sales.

Arguably the most reliable published information is that produced by the United States Department of Agriculture (USDA) as part of their Global Agriculture Information Network (GAIN).  Their 2012 Wine Market Update for India (pdf) was compiled utilising state excise data and combining this with various local industry reports and estimates.  While not perfect, this compilation has the advantage of having produced historical figures on a consistent basis.  It ought, therefore to reasonably accurately show the overall industry trends.

Indian wine production, imports and exports

The growth of Indian wine production, imports and exports is shown here utilising the USDA GAIN compilation. Production appears to have peaked in 2010 at about 130,000 hl.  Until then farmers had been increasingly setting aside land for the production of wine grapes. A poor harvest in 2009, coupled with a buildup of inventory at the wineries, caused many farmers to give up on wine grapes altogether as the industry underwent a painful period of restructuring. Exports have struggled to exceed more than about 10% of production as Indian wines compete unfavouably price-wise with New World competitors.

Wine imports into India, 2010

Wine imports into India dipped sharply after 2008 due to the combined effects of the gobal financial crisis and a drop-off in tourism following the November 2008 terrorist attack in Mumbai. Since 2009 wine imports have continued to rise, reaching a high of 44,000 hl in 2011, despite the prevailing 150% federal tariff. France, Italy and Australia are the main wine exporters to India and together constitute over 50% of wine imports. The EU is attempting to negotiate a Free Trade Agreement with India which, if successful, would radically favour imports of EU wines over other producing countries.  It would also put enormous pressure on domestic wine producers who are still dealing with their own problems of oversupply and disttribution.

Sherry Sales are now Greatest – in Spain

Image © sherry.org

Given the amount of Manzanilla and Fino shifted in the tapas bars of Andalucia, it might seem natural that the largest sales market for sherry producers would be Spain. Yet until recently, their largest market was the UK largely through its imports of Cream Sherry.  Most of this is sold just before Christmas.

Sherry sales (Data source sherry.org)

The extent of the decline is clear from the graphic produced from the data sets at Sherry.org.  Since 2002, sherry sales by volume to the UK are down by 45%.  A similar rate of decline is evident in exports to Holland. Total sherry exports were 552,000 hl in 2002 but only 302,000 hl in 2011.

This fall in sales since the sherry boom of the late 1970s is having a dramatic effect in Jerez itself. Vineyards have been abandoned, vines have been uprooted and unemployment has risen sharply.  Yet sherry quality remains high and prices have rarely been more competitive.  So apart from that Cream sherry, why not pick up a few bottles of Fino or Manzanilla the next time you’re at the wine store?  Not only will your wallet and tastebuds be grateful but you’ll be assisting a great wine region as well.