Challenges for California and Spain

Value for money has become central following volume declines in exports.

California experienced a volume drop of 11% during the first six months of the year. Spain suffered, too, with Rioja also experiencing an 11% drop in exports in 2009. The giant Felix Solis escaped the attrition with their Rioja, Campo Viejo, experiencing volume growth of over 3%, and 9% in some multiples. Value for money has got to be key here and it’s hard to escape the view that some riojas, especially in the Reserva category, have not always offered the concentration and character expected for their price. However, tough as things were for Rioja, they weren’t as tough as for some other Spanish regions; total volume sales were down 17%, with value down 16%. Prices for some regional wines had glided quietly upwards over the past couple of years; like Ireland, bringing costs down is likely to supply much of the cure.

As we’ve said, South Africa is poised to take some extra sales due to the publicity factor of the World Cup but in some of its markets it hasn’t had to wait that long to see an upturn. In 2009, it grew its volume by almost 30% on the vital UK market, finding itself less than half a million cases behind France. French wine sales fell by 7% in the UK off-trade sector. It’s likely that the end of 2010 will see South Africa take fourth place in the UK.

France had problems in America too, as the USA’s largest importer of Bordeaux, Diageo Chateaux and Estates, suspended buying from the region. It had often been said within the US trade that the large volume of purchasing by Chateaux and Estates, when added to that of Costco, had encouraged Bordeaux producers to raise prices in response to that demand. It is believed that, having bought 2006 and 2007 vintages at similar levels to previous years, Diageo was left with stock overhang, as the 2007 vintage was reviewed less warmly than hoped and consumers traded down. What effect this withdrawal will have on the Bordeaux trade generally, remains to be seen.

Sign Up for Drinks Industry Ireland

Get a free weekly update on Drinks Industry trade news, direct to your inbox. Sign up now, it's free