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GET YOUR HEAD AROUND THIS: In 2008 30 million 70cl bottles of Brandy de Jerez’s entry-level Solera were sold in Spain; now that figure is 1m. If the regulators of scotch or American whiskey are worried about spirit drinks eating into their spirits sales, they ought to wander down Jerez way and try their predicament on for size. 

Brandy de Jerez volumes have plummeted from 63m bottles in 2008 to under 20m last year but it is the entry-level Solera that has fallen hardest in Spain which is one-third of the global market.

Once a powerhouse style, Solera was 80% of Spanish brandy sales domestically. But the advent of spirit drinks, introduced by three big Brandy de Jerez brands — Veterano, Soberano and Centenario — but also many others, has changed the market beyond recognition. These products are similar in price to their Solera predecessors (largely under €10) but fall outside of the Brandy de Jerez DO. We can say what was entry-level Spanish brandy here is mostly not brandy. But what we cannot say, is what it is made out of. 

Cristina Medina of Williams & Humbert says these spirit drinks came about because of an “increase in the cost of wine spirit from 2008 to 2012, due to removal of subsidies of wine distillation and short crops”. She says reduced abvs mean these brands are no longer Brandy de Jerez DO and do not conform to EU regulations on brandy so may have opted for “cheaper alcohols like grain or molasses”. “We believe that some brands are 100% non-grape alcohol,” she says.

Testing times

Drinks International doesn’t have the facility to lab-test these spirit drinks for alcohol type and without testimonies from their parent companies, we cannot say one way or the other. What we can say is there was a failed request by spirit drink producers to the regulator to create a new 51% Brandy de Jerez category, the other 49% presumably being grain or molasses spirit. By way of comparison, this would have created a sub-category akin to a mixto tequila. 

In the case of Osborne’s Veterano and Gonzalez Byass’ Soberano, they first dropped from the EU-allowed 36% abv to 33% and now stand at 30%. This means less spirit, so less cost, and also brings tax incurrence down. Before launching, though, producers did carry consumer testing which suggested a favouring of lighter brandy styles. 

Sales have dive-bombed of late so if consumers are looking for easy-drinking alternatives, why not oblige?Cesar Saldaña, managing director of Consejo Reguladores Brandy de Jerez, gives us his view: “We fully respect the free decisions of companies as far as they are in accordance with regulations; and this is the case with the changing of some former Solera brands falling now into the broader category of spirit drinks,” he says, but adds: “We obviously were not happy with these moves and have been alert in order to avoid any sort of consumer confusion about the nature of the products.”

Williams & Humbert too have a spirit drink version of Alfonso, its Brandy de Jerez. Though it is an “extension” not a replacement, and clearly labelled as such. But for those swapping their Solera with a spirit drink, making minimal changes to packaging, bar the word spirit drink, there have to be questions. 

Changed market

Medina tells us how the market changed: “On the one hand, the exit of the main Solera brands has dragged the rest of the Soleras out and, as a consequence, Brandy de Jerez Solera has practically disappeared; the volumes of Brandy de Jerez have gone from 60m bottles in 2008 to less than 20m in 2015. 

“On the other, there is unfair competition to the few remaining Brandy de Jerez Soleras and misleading conduct to consumers that are not aware of the change, since the presentations of the former brandy brands — now spirit drinks — are practically identical, and they keep using terms and symbols
traditionally associated with brandy.”

This end destination can be seen in the Philippines, where the brandy category leader Emperador is made from mainly molasses but labelled brandy. In recent years its own Emperador Light, at 27.5% abv, has taken over as the market leading variant. Spain, though is a more mature brandy market with a more educated consumer. One that might care that what they thought was brandy is no longer brandy. 

The Brandy de Jerez Lustau brand operates in the premium position of the market but Teresa Gutiérrez, head of international department at Grupo Luis Caballero and Bodegas Emilio Lustau, says it’s a matter of horses for courses: “It is understandable and respectable that companies adapt to changes in consumption trends. In Jerez we have seen this phenomenon in the lower segments. At Lustau we do not consider this possibility. We stay true to the origins and traditions and we will never jeopardise all the hard work behind the recognition of quality of our brand.”

Osborne, Gonzales Byass, Williams & Humbert and others are protective too – but perhaps not across all their brands. For their top end, long-aged brandies, it is quality credentials that sells. Indeed Torres, a brand of Catalonia rather than Jerez and the Spanish brandy leader, is committed to grape spirit in all of its products and to building the international image of the category. But to the many of the major Brandy de Jerez players, it’s a case of a two-pronged attack: building the image of their premium wares – particularly internationally and among bartenders - while also becoming more profitable at the volume end of the domestic business. 

But one wonders if these strategies can coexist. They are pulling in separate directions, rather than singularly drumming the beat of Spanish brandy the alternative to cognac. It could be argued these spirit drinks boost a beleaguered local market, and if exported, are destined for price-sensitive, tradition-indifferent consumers. 

But Spanish brandy needs to look to the future. Do entry-level cognac companies extricate themselves from their appellation and fight it out with mass market spirit drinks? Quite the contrary, their market positioning speaks of confidence in their products.  

Young Spanish consumers may be attracted to lighter, quaffable spirits drinks now, but one day this may change. There is an undeniable trend worldwide for millennials rediscovering their food and drink heritage. Look at bourbon in the US, gin in the UK and mezcal in Mexico. Drinking habits circulate. What was old hat yesterday might tomorrow be the latest hipster headgear. What feelings will Spanish consumers have for brandy then? A light, sweet, indescribably produced spirit, that’s easily mixed. 

Will they even know brandy is supposed to be made from grapes if their first taste of Jerez is a spirit drink? Convincing them that Spanish brandy offers terroir, tradition and craftsmanship and that they might want to spend more than €10 on a bottle will be to climb marketing’s Mount Everest.