Rafael del Rey, OeMv (Spanish Wine Market Observatory)
With the harvest only recently completed in the northern hemisphere, there's every indication that Spain could be the world's leading producer this year and the global leader in export volume in 2014. With production in Spain totaling around 48.5 million hectoliters, our wines have a chance to expand their market share around the globe.
Although the harvest in central-northern Spain was in line with previous years, the southern half recorded notable growth. This was attributable to the greater impact from vineyard restructuring, good sales performance, the massive outflow to international markets and less control of production yields and, as is always the case in agriculture, the primary driver of growth was the weather. Moreover, the fact that Spanish producers have more wine than their leading rivals also represents a major opportunity.
After a difficult recent harvest, Spanish grape juice has the chance to return to growth, which has remained steady in recent years despite the elimination of COM (Common Market Organization) subsidies. The goal is to leverage this opportunity, especially wine, which suffered after the loss of financial aid from Europe and which even left the brandy industry floundering.
This is also an opportunity for Spain's food sector to return to growth. If sales from the hospitality and catering segments seem to be more dependent on Spain's general economic performance, those obtained from household spending are even more price sensitive. After dipping slightly in 2013, they may return to positive territory in 2014, from the combined effects of the general economic recovery and appealing offers for consumers.
Once again, growth possibilities lie in international markets. Spain's exports are already more than twice domestic consumption figures. The question is what are we selling, to whom and how. We still sell considerable amounts of bulk wine (almost half of total volume), though this area slipped last year due to the weak 2012 harvest; nevertheless, a recovery is expected in the coming months. Moreover, bulk wine isn't sold to consumers or international distribution chains but, rather, to our own rivals. Bulk wines sales of this kind will begin to decline considerably and disappear completely in the medium term.
However, the scant harvest by our neighbors and Spanish wineries' focus on internationalization favors growth in our bottled wines, DOs and brands. More wineries exporting, better sales networks and even new investments in offices, distribution and bottling are driving the improvement in sales of higher-value wine. Spain's packaging segment can also improve with more stable sales relations, a better image and a larger offer. With regard to all of these factors, the competition lies in Spain.
Improvement opportunities for Spanish wines in various markets, which will increase sales considerably in 2014. In this context, it's essential to remain calm, maintain value growth strategies, enhance brand image, better adapt our products to market needs, and strengthen dedication to sales. Sales is a tough business, but Spain's wine sector is continuously improving and 2014 is replete with great opportunities.