Spain’s banks might be looking to someone else to pick up their tab, but its most famous wine region is in good shape and still dining out on 2011’s export success. 

In 2011 Rioja exports hit a record high with an estimated value of Ä370m. Exports made up 35% of Rioja sales over the 12 months from May 2011 to April 2012, a 2% increase on the previous 12 months – so 2012 looks set to be a new record breaker. 

Earlier this year, the DOCa announced a Ä7.4 million investment campaign for its top markets to “consolidate the historic export figures achieved in 2011”. 

Although it’s a Ä2m reduction on what it invested in 2011, the Consejo Regulador (Rioja’s regulatory and promotional body) is confident that consumers still have an appetite for Rioja. But whether the appetite is for young, fruity wines from the famous Tempranillo grape or older, perhaps more complex wines from lesser-known varieties is another matter. 

Then there’s the question of home or away – in a country stricken by financial uncertainty and major export markets facing duty hikes and minimum pricing, has anyone still got money for a drink?

Consejo Regulador marketing director Ricardo Aguiriano says: “In difficult economic times, and against a backdrop of challenges to the wine trade from duty increases and talk of minimum pricing [in the UK], our challenge is to maintain and grow value for the Rioja category, and maintain and increase our average price.”

That figure currently stands at £5.72 a bottle. According to Nielsen figures, this is higher than the average in Spain and in the UK, £4.59 and £4.78 respectively. 

Although the UK is Rioja’s most thirsty export market, with 34% of total exports heading there, it is not set to receive the largest slice of the Ä7.4m. That bounty – Ä2,915,353 to be precise – is to go to the US because it shows the greatest growth potential. 

The Consejo says: “This year, the United States moved up to third place among Rioja importers, so the campaign will be based on an ambitious programme of point of sale promotions, with 75% of the budget to be spent in the off-trade and 25% in the on-trade.”

Miami hosted a Rioja tasting for trade and consumers in April and New York, Texas, Chicago and California are all focal points for the brand Rioja.

Even the wine’s home market is getting a few euros – Ä984,898 to be exact. But some producers believe the financial troubles on home turf make the export market a much more appealing proposition. 

Luis Miguel Soler, export manager for Paternina, says: “Rioja’s domestic figures are suffering due to the economic recession that has hit the country’s consumer spending severely. Rioja needs to find abroad the sales it’s not obtaining within, and all in the midst of a global decline in consumption and facing stiff competition from other wine-growing areas around the world. Rioja needs to convince that it offers a price/quality ratio second to none in world wine markets.”

Marques de Riscal’s general sales manager José Luis Muguiro says he estimates 70% of his wines will be exported in 2012. This figure was 60% in 2011. 

He says this is partly due to financial problems in Spain but also because of export inroads that have been forged by the company.

“I have been going to Japan for 25 years now and our wine is now in Mongolia and Indonesia.”

Trusty reputation

Richard Grant, international division director of Hijos de Antonio Barceló, a winery group which includes Bodegas Palacio in Rioja, says the trusty reputation of brand Rioja has helped grow export figures. 

He says: “Over the past two years we’ve seen exports of Glorioso crianza rise in the key markets of the US, Switzerland, Germany and the UK. The Rioja ‘brand’ has great strength in these countries and in times of economic uncertainty consumers tend to play it safe and go for brands or regions they recognise rather than try something new – choosing the value ranges of crianza or cosecha wines, accounting for the growth of exports of young and crianza Rioja wines to Germany over the past year.  

“To take advantage of opportunities for Rioja wines that offer value for money in these mature markets, we’re launching a range of entry-level Riojas under the Castillo Rioja label – a historic labelling of Bodegas Palacio which was first launched in 1916 in honour of the medieval fortifications of Laguardia, the capital of the Rioja Alavesa region where Bodegas Palacio is located.”

Bodegas Palacio is not the only one looking at the value end of the market. Marques de Riscal is also rolling out an entry-level crianza, which is about two-thirds the price of its flagship reserva. Marques de Arienzo has sold about 1,000 cases since it started in 2011. 

“It has been booming in Asia,” says Muguiro. “It is in Singapore, Germany and the US and we’re about to launch it in the UK.” It will be priced £8.37 with distributor Enotria.

The UK market should be ripe to receive the cheaper wine, as 40% of Rioja sales in the UK are actually “sin crianza”, meaning wines that have not been aged to crianza level, 23% are crianza, 34% reserva and 3% of exports to the UK are gran reserva (Rioja Exporters Group stats to April 2012). This is actually very close to how the global exports of Rioja shake down: of 41% sin crianza, 27% crianza, 27% reserva and 4% gran reserva.

Also at the value end of the scale, Pernod Ricard took a bold move earlier this year to rebadge its Campo Viejo Crianza as Campo Viejo 100% Tempranillo in the UK. The company claims the move was well received by consumers. 

Simon Thomas, deputy managing director, wine, Pernod Ricard UK, says: “Our research tells us grape variety is consumers’ number one buying criteria, with 69% of wine drinkers considering grape variety important, or very important, in their decision-making process. We’re enabling retailers to tap into this opportunity with a premium-quality wine showcasing the best of the Tempranillo grape, which our research has shown to score better overall than Campo Viejo crianza on every measure, including purchase intent.”

The cynical among us have questioned Pernod’s intentions for taking crianza off the bottle – what’s to stop it from putting crianza and 100% Tempranillo on there, for example? Well, in a word, the consumer. It’s easy to forget when you’re in the trade that some people think Rioja is a grape variety. Understanding words such as crianza might be a bridge too far for your average Jo(e).

Of course there is another reason – the wine is no longer aged to crianza rules. 

Adrian Atkinson, wine development director, Pernod Ricard UK, says: “To create a more fruit-forward expression of Rioja this wine is aged for four months, whereas a crianza is aged for at least 12 months. This more subtle ageing delivers a balanced taste between oak and fruit – creating an approachable, yet quintessentially classic Rioja style.”

The blend has also changed – previously it was 85% Tempranillo/20% Garnacha/5% Mazuelo. The wine was launched in the UK in April and is set to roll out in all export markets “in the coming months”. The UK rrp is £8.55. At the time of going to press, the Campo Viejo crianza was on Sainsbury’s website for £8.29. 

Challenging pricing

Not everyone is looking to the younger end of the market for success. Faustino, which claims to have the number one gran reserva Rioja worldwide, says that in the UK the brand is showing strong growth in the £10+ category – a challenging price point in the current economic climate. The brand grew despite seeing overall decline in gran reserva sales. According to Lisa Duckenfield from UK distributor Cellar Trends, in 2011 one in five gran reservas sold in the UK was Faustino.

The thirst for more complex, aged wines runs alongside a thirst for different styles of wine and grape varieties. There are many grape varieties authorised by  the DOCa. They are (red): Tempranillo, Garnacha (Grenache), Graciano, Mazuelo and Maturana Tinta; amd (white): Viura, Malvasía, Garnacha Blanca, Tempranillo Blanco, Maturana Blanca, Turruntés, Chardonnay, Sauvignon Blanc and Verdejo.

Some believe the region’s opportunities lie in the variety of styles it can offer as well as in the reinvigoration of more traditional varieties. 

Adam Marshall, commercial director at Bottle Green, distributor of Baron de Ley in the UK, says: “With a continual focus on quality and a modern, intense, style, Baron de Ley has built terrific loyalty from consumers. At the same time, innovation – such as the recently released Varietales ranges, featuring the lesser-known grapes of Rioja, plus a fantastic new premium white Rioja (3 Vinas) – continues to excite consumers’ taste buds.  

“The Consejo does a great job but by it’s very nature it has to appeal to a broad spread of producers and consumers. Innovative, market leading companies such as Baron de Ley can focus and drive relevant messages to the end consumer in an arguably more exciting way.”

His colleague Nick Butler, winemaker and director, says the challenge for the region is keeping the message fresh and engaging. He also suggests that major international grape varieties such as Sauvignon Blanc could boost the popularity of the region. 

“The opportunities lie in the fact that the regional body is being progressive – this creates opportunities to relaunch old varieties, such as Maturana and Graciano, and introduce new varieties such as Sauvignon Blanc and Verdejo. The best way for Spain to create a mainstream white wine would be to launch a Verdejo/Sauvignon Blanc from Rioja.”

Wine tourism

On a domestic note, wine tourism could be key to injecting money into the region – and the country. 

In the movie Field of Dreams, Kevin Costner’s character hears a voice saying: “If you build it, he will come,” which Costner interprets as an instruction to build a baseball pitch. I wonder if the team at Marques de Riscal had the same idea? In 2006, a hotel designed by world-famous architect Frank Gehry opened its doors. Before its construction, the winery received around 1,000 visitors a year, during the three-and-a-half-year construction this rose to 9,000 and in 2011 the company received almost 70,000 visitors. 

The building was actually intended to be the company’s headquarters but it cost so much that it became more economically viable to make it into a hotel. 

Although general sales manager José Luis Muguiro didn’t break down the figures, the total investment in the hotel and revamping the winery was Ä70m. The investment covered improvements to the winery – including a car lift to a huge function room, which has facilitated the launch of several prestigious cars. 

On the wine side, Marques de Riscal is taking steps to improve the quality of its oak with some new barrels costing as much as Ä1,000 each, as well as a tasting room that offers a three-day wine course. Did I mention the Michelin-starred restaurant? 

Then there’s Dinastia Vivanco with its museum of wine culture, restaurant and tasting room, and the iconic undulating roof of Ysios. Driving around Rioja you can see how modern architecture complements the backdrop of traditional towns and countryside, much like modern styles of wine sit on the shelf alongside their more traditional counterparts. The region should be laughing all the way to the bank.