Sherry is going through a rough patch. Domestic consumption slipped by 1.7% in 2013. That decline would have been greater, if not for sales of rebujito (Manzanilla sherry with soda).
In addition to these poor results, exports tumbled by 10% in the last year. Nevertheless, Jerez's designation as European Wine City 2014 could help drive a recovery.
This initiative, and many promotional opportunities which will arise over the course of the year, may help the segment put the bad times behind it. A large number of vineyards have been uprooted in the last 20 years with a view to adapting production to sales, which declined in Spain in particular, and many traditional wineries, such as Domecq, have been sold, and mutual funds have replaced families in family-run businesses.
Since sales peaked in the 80s, the Sherry Triangle (the area where Sherry, including Manzanilla de Sanlúcar de Barrameda, is officially produced) has shrunk, from close to 23,000 hectares of top-notch albariza soil to barely one-third of its former size: 7,000 hectares.
Moreover, both vine growers and wineries have recently had to address a loss of market share, as Sherry consumers are getting older and young people prefer other, less traditional drinks.
Although there are efforts to make mixed drinks with Sherry fashionable and incorporate Sherries into the gastronomy scene (they have had slightly more success in wine and food pairings), the segment has had to resort to rebujito (Manzanilla with soda) to remain afloat in the domestic market.
However, last year, when the sector expected a good financial performance following a period of adjustments, results were far from positive. According to the Jerez Regulatory Council, 52 million bottles, or 40 million liters, were sold in 2013.
As for the 10% slide in exports, the Council maintains that the decline was most notable in the Netherlands and Germany, major retail markets, where Sherry exports fell by 19.7% and 7.2%, respectively.
Sherry exports to the UK, its main foreign market, also declined considerably in terms of volume, to close to one million liters.
The good news is that the segment has increased sales to the US, as well as to Asia, and Japan in particular, where revenues have expanded by 15%.