Vidal Maté. @trigolimpio_VM
An ongoing slide in domestic consumption during the last four decades and sharp growth of exports with inexpensive bulk wines taking center stage. Those were two of the wine sector's most negative data, with clearly adverse effects for winemakers, who watched as grape prices slipped season after season, which led to the abandonment of large areas of vineyards, leaving 950,000 hectares at present. This situation also led to reconversion and restructuring of land, which drove a sharp increase in production due to the lack of limits on yield per hectare in many areas. According to data from various sector analysts, today there are signs that suggest this is the beginning of a new era, starting with production and wineries with a greater focus on quality, presentation and variety, and including a response by consumers, even though there's a long road ahead.
Demand in the domestic market has tumbled, from annual per capita consumption of around 70 liters in the 1970s to 17 liters currently, reflecting a downward trend. According to the Wine Institute, per capita consumption is 21 liters. Still, that's in sharp contrast with the 53.8 liters per person per year consumed in Vatican City, 46 liters in Andorra, 44 liters in Croatia and Slovenia, 42.5 liters in France, and 33 liters in Italy.
Data managed by the Spanish Wine Market Observatory suggests, for the first time, a slight improvement from 2.5% to 4% as a result of a larger selection, a greater focus on packaging and better service in the foodservice sector, among other reasons, although two lingering problems include price and lack of information. According to research by the Interprofessional Wine Association regarding consumption compared with other beverages, such as beer, in many cases consumers opt for another beverages, regardless of price at a bar or restaurant since, in the case of beer for example, they know exactly how it will taste. The same isn't true of wine, since consumers don't know for certain that they'll be served a wine with DO status.
This slight improvement in wine sales is attributable to several players, although there's no reason to celebrate when the volume still falls short of 10 million hectoliters. Sales have increased at supermarkets due to direct purchases by consumers, greater consumption in the foodservice sector, and through other avenues such as online sales and sales at wineries as a result of wine tourism. Sales of wines with Geographical Indications and Designations of Origin have also increased.
Interestingly, in the case of domestic consumption, and compared with the average of just 17 liters per person per year, the average is higher—19 liters—in tourist areas such as Catalonia, Levante (Spain's east coast) and the Balearic Islands, while it's just 15 liters in producer regions such as Aragón, Castile-La Mancha, Castile-León, and Rioja, and 17 liters in Galicia. This data doesn't mean that these areas consume less wine but, rather, that there's a high volume of consumption which is not reflected in the various analyses.
The Interprofessional Wine Organization has proposed a strategy to boost demand, having consideration for the fact that young people aren't really part of that demand, as sales remain afloat mainly due to older people, especially consumers over 50, and specifically men as opposed to women. The goal is to encourage young people to drink wine responsibly by changing its image to make it seem more like a party drink, the ideal beverage for fun or cultural activities, etc. To that end, it's important for wineries to make products in line with demand and for the foodservice segment to serve each wine in the appropriate circumstances for consumption.
Low demand for wine clashes with the official beer consumption figure of almost 50 liters. This datum contrasts with demand in other producer countries, such as France, where people consume 42 liters of wine compared with 31 liters of beer, or in Italy, where consumers drink 33 liters of wine vs. 31 liters of beer per year. In Spain, the sector has asked the government not to complicate the situation further by imposing taxes or creating other obstacles.
Although Spain's domestic wine market has hit rock bottom, there's also positive data to suggest that the sector's situation outside Spain is looking up.
With average sales of between 22 and 23 million hectoliters in recent years, bulk wine volumes have traditionally exceeded those sales by 50%, at prices which, in many cases, didn't exceed 0.35 euros per liter. During the last campaign, total sales amounted to 22.26 million hectoliters, i.e. 7% less in volume terms than the previous year, while sales slipped by just 0.2%. in terms of value. This decline in sales was basically the result of slashing bulk wine exports by 15.9% and by 1.8 million hectoliters. Despite that decline, packaged wines grew overall by 0.3%. However, it's worth noting sharp growth by semi-sparkling, varietal wines and DO wines in the packaged wine segment, reflecting the sector's hard work and interest in expanding its offer to include new types of wine in demand by the markets, although there's a long road ahead in which rival countries have been working both in and outside the EU.
Another interesting datum from the last year is the increase in average prices of liters of wine exported, by 7.3%, to an average of 1.18 euros per liter, strengthening their position in mature markets like those in the EU and in northern Europe and the US, while entering others, such as Asia and Central America.
The head of the Observatory, Rafael del Rey, has no doubt that this is the beginning of something new, although real change is still a long way off, given the negative performance over the years in the domestic and foreign markets.
Since 2010, the wine industry has received almost 1.500 billion euros for actions focused on land restructuring and reconversion, which have affected around 435,000 hectares. The Program to Support the Wine Sector (2014-2018) included 1.194 billion euros in aid, of which 418 were for reconversion and restructuring programs, implemented on around 100,000 hectares; 224 were for investments; and 250 for single payment schemes. The Ministry of Agriculture recently presented a new 1.051 billion euro program, until 2024, of which 250 will be for international promotion, 326 for restructuring and reconversion, 280 for investments and 159 for distillation.