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Spanish wine export

Spain is the world’s leading wine exporter measured in hectoliters, but sell their products so cheap that both France and Italy have significantly more revenue.

wine-cropsIn 2015 Spain set a new record with an export of 24 million hectoliters, which resulted in a turnover of 2.6 billion Euro. These numbers easily beat Italy’s 20 million hectoliters and France’s 15 million hectoliters.

But the Italian income was 5 billion euros and the French 8 billion Euro. There are several reasons for the difference, but the key is that the average selling price of Spanish wine is only 1.10 Euro per liter, which is a decrease of 2.9% compared with 2014. By comparison, the average price of French wine 5.37 Euro per liter.

Rafael del Rey

Rafael del Rey

The manager of the Spanish wine market Rafael del Rey, says the drop in prices in the industry is something that must be overcome by increased focus on export of bottled wines with designation of origin, or by using specific grape varieties like the Italian wine producers. Today millions of liters of wine is being sold in tanks, mainly to France, Germany, Portugal and Italy.

France is the largest importer of Spanish wines and bought 6.5 million hectoliters last year. Germany bought 4.2 million hectoliters and Italy 2.7 million hectoliters. Some of these wines are sold as table wine labelled that it comes from the EU and some is being sold as Spanish wine, but large amounts are mixed with local wine and changes citizenship and become more expensive.

Is your French or German wine made in Spain?

Rafael del Rey, director of OEMV (Observatorio Espanol del Mercado del Vino) explains that part of the Spanish wine exported to France “can be re-exported as Spanish wine, be turned into liquor or be mixed with French wine, whereas in Germany is used for making sparkling wine. “Last year, the price of Spanish bulk wine in tank was 0.40 Euro per liter, while the corresponding bulk wine from other countries had a significantly higher in price.

Spain produces a number of very good wines, but is bein sold for the price of bad wine. The same product is then commercialized in France and Italy, but at much higher prices.

Part of the explanation for the Spanish wineries inability to get the prices that as all experts agree that they deserve is partly lack of good sellers with language skills, weak distribution networks and large crops. Another explanation is Spain’s focus on bulk wine instead of bottled wines.

Virgen de las Viñas, Tomelloso, Ciudad Real

Virgen de las Viñas, Tomelloso, Ciudad Real

Rafael Torres, director of wine cooperative Virgen de las Viñas, explains the strengths and weaknesses of the Spanish wine industry in general and especially in the region of La Mancha. It is the largest wine cooperative in Europe and sells 90% of its production in bulk, of which 80% is exported to France, Italy and Germany.

The cooperative continues to grow and they are now focusing on selling more bottled wines and less bulk wine. “We are bottling more wine, but it is utopian to believe that we can sell all the wine from La Mancha bottled,” he says. Rafael has personally seen profitability go down during his 14 years at the helm. “We lack a strong brand, people associate wines from La Mancha with large quantities of poor quality wine. We have wines that can compete with the best France has to offer, but it will take time and state campaigns to prove it,” he continues.

Juan Park

Juan Park

Not all regions are as hard hit as Castilla-La Mancha. In La Rioja, they have managed to get a good brand of bottled wine. But even these are low in price compared with similar areas in France. “It is not a question of quality, but about perception,” says Juan Park, research director at the London-based marketing, strategy and research service Wine Intelligence. “Spain says they have quality wines and are still selling wine for € 0.40. If they want to count as quality wines, they have some decisions to make.”

Just a half hour drive from the Virgen de las Viñas, there is another winery that is the opposite of the big wine cooperative. Vinícola de Castilla sells only bottled wines and the production is not more than 10 million bottles a year. Two thirds of these are exported to customers in 45 countries. Of the staff of 26 people is 12 vendors and four of them are traveling around the world with a bottle of wine under their arm. Alfonso Monsalve, Director of the company, says that “just like any other wine makers, we have trouble finding employees who are willing to travel, and who speak good enough English to represent the company abroad.”

Vinícola de Castilla, Manzanares, Ciudad Real.

Vinícola de Castilla, Manzanares, Ciudad Real.