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21/01/2016

Bodegas Riojanas, a united century-old winery

Vidal Maté. @trigolimpio_VM

Maintaining a united family-run business for several generations—and a winery at that—is generally considered to be a success. For the fifth generation to take over the business with more than 50 heirs is truly a miracle. But that's what happened with Bodegas Riojanas group, which was founded in 1890 by a group of partners who initially sold bulk wine in the Riojan town of Cenicero. The company celebrated its 125th anniversary in 2015.

Bodegas Riojanas is one of the dozen winemaking groups that is more than 100 years old in the DO Rioja. Although the two wineries in the Riojan towns of Cenicero and San Vicente de la Sonsierra account for the bulk of group's activities and are responsible for four of the five million bottles sold annually, the commitment to Rioja wines has not been an obstacle for having a presence in some of Spain's leading DOs. Currently, the Riojan group has gone one step further to expand its presence beyond the DO where it was created, acquiring a majority share in a winery in Rías Baixas and opening its own winery in Rueda.

The Riojan group expanded into other DOs in 2000, starting in DO Toro, where it opened the Torreduero winery. That was its first and only investment in a proprietary winery. In other parts of Spain, the group's strategy has been based on renting select wineries to produce its wines, where Bodegas Riojanas controlled everything, from the vineyard through production. According to the General Manager, Santiago Frías, "It's a system that has worked for us, because it hasn't been about someone preparing a tank for us. We were in charge of the entire production process, albeit in others' facilities. We continue to use this strategy in part, although now we are also committed to proprietary wineries".

Under an agreement with a winery in the area, Reina de Castilla, the company started to make young white wines in DO Rueda under the Viore brand, which will currently be applied to all of the group's wines in Rueda and Toro. Under the same system, the group sells the wine it produces in the Muñoz and Bazón wineries in Ribera del Duero under the Azuel brand, although the Riojan company's technical inspectors collaborate on the production process, from the vineyard to the winery. In the DO Rías Baixas, the group has produced young white wines at the Vega Naium winery, where Bodegas Riojanas' technical inspectors also monitor and control the entire process and where they have increased production, from 80,000 to 170,000 bottles. The company also owns Cum Laude cava, which is made at another Catalan winery, and it's the distributor for Pierrel champagne in several countries.

Experience gleaned in recent years has enabled Bodegas Riojanas to implement its previous strategy. In recent months, it acquired a controlling stake in the Rías Baixas winery where it produces its wine, investing 0.4 million euros and obtaining 54% of the company. In Rueda, the group is building its own winery, with an initial investment of 3.5 million euros, and it also increased capital by 1.5 million euros. The group will maintain the same production system in Ribera del Duero. It's not considering an immediate move into other DOs and, if it does, it would most likely choose Priorat in Catalonia. Aside from these actions, the group is planning ordinary capital expenditure of 2 million euros over the next two years.

The group also sells body lotions made with wine products, and remains committed to enotourism, with around 3,000 visits per year and average spending of 18 euros per person at the winery.

The strategy outside Spain is solely and exclusively focused on commercial activity, with the creation of Bodegas Riojanas USA, which also operates in Canada. It has offices in Mexico, the UK, Germany and Hong Kong, which are strategic locations in areas of influence. Japan is one of the company's target export markets, as it accounts for 15% of sales and registered growth of 40% in the last year.

The group's revenues amount to 17 million euros, of which 75-80% are attributable to sales by the wineries in Rioja. It also has a workforce of close to 100, and net profit of slightly more than one million euros.

Bodegas Riojanas' policy is part of a philosophy which combines traditional artisan activity with the introduction of new technologies, from the vineyard to production at the winery. According to Frías, "The objective is to produce quality wines that pair perfectly with food. We don't want our wines to steal the show but, rather, to match well with the meal".

Frías is uncertain when it is suggested that the winery use techniques such as precision viticulture to monitor the vineyards and check the status of the soils, vineyards and grapes. "We're starting with plots that are, on average, smaller than one hectare. Our job is to know every single inch of each plot and monitor them on an ongoing basis with a view to obtaining the best grapes on the family's 300 hectares of land, as well as the wine produced by around 400 winemakers who are long-standing suppliers".

In addition to analyzing each plot, the group is considering using groundcover plants in some of them. In the wineries' production phase, the casks are cleaned at 65 degrees using steam, which is very effective, and testing is under way to clean them with ozone. The group allocates 0.4 million euros annually to R&D, and spends a similar amount on the annual purchase of 3,000 American oak casks.

Frías feels that the group has always had a strong commitment to producing quality and fairly-priced wine, and the brand Viña Albina accounts for 30% of sales, Monte Real for 30%, Puerta Vieja for 20%, and the other brands for 20%. Sixty percent of the group's products are Reserva and Gran Reserva DO Rioja wines, 30% are Crianzas and the remainder are young wines, especially those from Rueda and Rías Baixas.

Bodegas Riojanas is one of the few companies in the sector that has been listed since 1997. Individually, or through various companies, the family heirs —more than 50 people— own more than 65% of the company. In contrast with other companies, and with a view to ensuring that they maintain control, there is no protocol among the group's founding families which aims to maintain that majority, nor is there any obligation where, in the event that someone was to sell their shares, that they offer them to other members of the families. To date, the group hasn't had an aggressive external policy aimed at the purchase of the company's capital stock with a view to holding a controlling stake. According to Frías, "We know who wants to sell and who might be interesting in buying, and we have a stable situation".

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