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SHERRY IS IN A CYCLE of change – while the volume figures don’t make for great reading and the slight growth in value is positive but not enough to hang a Tío Pepe hat on, new consumers are coming into the category without their parents’ preconceptions.

The ‘sherry is for grannies’ association is being challenged by two factors. The first is nature – not to be macabre, but the golden oldies who grew up with the drink aren’t going to last forever and the next generation is the one that turned away from it. The second is that millennials are discovering sherry for the first time in an entirely new way –heroed in cocktails and paired with a plethora of cuisines.

González Byass international sales director Nicolas Bertino picks up the point: “We have seen a marked change in attitudes towards sherry from people under 40 who are coming to it without any of the traditional baggage. Admittedly this is from a small base, but it is one which has gained momentum in markets around the world.”

Bertino credits the arrival of sherry bars in London towards the end of the last decade for the renewed interest in the category. He adds: “There was the US boom in sherry as an essential ingredient for wine-based cocktails in top bars in New York and now we can see the trend spreading to Germany and mainland Europe where interest is beginning to revive. There is a definite shift towards the lighter fino style which can be enjoyed as white wines.”

In terms of food, an appetite for Spanish cuisine and the rise in tapas as a sociable and economic way of dining has done sherry no harm whatsoever. “The boom in Spanish cuisine has certainly helped to market sherry to gastronomes worldwide,” Bertino says.

“Sherry is a perfect wine to match with food throughout a meal, from the lighter fino styles at the beginning to rich, dry olorosos which pair well with game and meat, to PX at the finish.”

Sherry’s food-pairing versatility extends beyond Spanish cuisine, Grupo Estevez international division deputy managing director, Ignacio López de Carrizosa, says.

“What is most important is the fact that we are avoiding the typical clichés of pairing sherries with the traditional Spanish cuisine and we have adopted international cuisine to match with our different sherry styles.”

He adds: “Asian, Nikkei (Japanese/Peruvian fusion), seafood, etc, have proved to match beautifully with sherry. The trendy umami flavours are demanding sherry to pair with foods where other wines cannot make it.”

De Carrizosa insists this can only be achieved by a versatile spectrum of different styles offered by this wine – ranging from the ultra-dry and saline manzanilla to the deliciously rich Pedro Ximenez.

CONSUMPTION CHANGE

Changes in consumption and consumer base are undeniably reasons to rejoice, but ultimately sherry is a business and the books need to be balanced. In 2015, total sherry volumes declined by 2% and grew 3% in value, according to official figures from the all-seeing, all-knowing governing body, the Consejo Regulador.

“We are growing in the quality segment,” says César Saldaña, director general at the body. “Sherry volumes are one-third the size they were in the 1980s but we firmly believe we will grow on a different scale. We will be a niche product and quality will keep the category growing. It is growing enough for us to increase value by 3% while losing volume.”

González Byass’ Bertino gives an equally frank assessment: “Sherry as a category is in decline. But expansion with high-end products such as Tío Pepe En Rama and Fino Las Palmas are introducing new, wine-interested consumers to the category and helping us to stabilise and, in some cases, increase growth for Tío Pepe and other brands.”

The Tío Pepe brand grew by an impressive 8% last year. Key markets for the company are all those which were traditionally important for sherry – the UK, Belgium, the Netherlands, Germany.

“In general, these markets continue to decline in terms of volume for the category, but González Byass is managing to hold its own and, in some cases, increase share as the figures demonstrate,” Bertino adds.

Taking a closer look, Saldaña says the UK continues to be the most important market for sherry overall, followed by the Netherlands and Germany. He says: “The evolution of our exports in these countries is strongly affected by the different structure of these markets in what refers to our consumer base and corresponding portfolio distribution.

“While we are still suffering from a steady decline in the traditional segments of our consumer base, made up by matured consumers, in the past five years we have seen significant growth in the off-premise and specialist segments.”

Saldaña reports fewer own-label, standard sherries being sold but important increases are taking place in the value-added, premium categories.

“As a consequence, we see overall growth in the UK (3.9% to August 2016) while Germany – and especially the Netherlands, with a very high percentage of own-label sherries – are still declining.”

In terms of the domestic market, healthy and steady growth of 4.2% was reported in the same time frame. While this growth is not necessarily sizable, Saldaña is bullish and describes it as a “positive evolution”.

He continues: “A significant part of this positive evolution in the off-premise and specialist segments is due to new consumers – wine-aficionados who discover sherry as a classic, versatile wine with a character of its own – particularly the original, more ‘Spanish’ traditional styles, such as fino, manzanilla and the other classic dry styles (amontillado, oloroso and palo cortado) and in connection with food.”

HARMONY OR DISCORD?

It sounds like the Consejo and sherry producers are all singing off the same hymn sheet. Younger consumers? Tick. Versatility and cocktails? Tick. Food pairing? Tick. But beneath the harmony a dispute about tradition rages and the sherry triangle of Jerez de la Frontera, Sanlúcar de Barrameda and El Puerto de Santa María is out of tune.

The crux of the matter is the vessel in which sherry should be transported and sold.

“The authorisation of bag-in-box for wines protected by our denominations of origin (particularly for manzanilla) has been a matter of much debate for more than 15 years,” Saldaña says. “As is the case in all Denominations of Origin, the type of containers in which the commercialisation of sherry is authorised is something that is regulated by the Consejo Regulador.” But in some DOs operators are disregarding this.

Saldaña continues: “This is why there are denominations in Spain in which bag-in-box is authorised (Montilla, Valdepeñas or La Mancha, to name few) and others in which it is forbidden (Rioja, Ribera del Duero, Rias Baixas).

“In our case, the different versions of the regulation have always established that sherry (and manzanilla) can only be sold in glass bottles or – exceptionally – in containers made of other materials, if specifically authorised by the Consejo Regulador, and providing that these materials do not have a negative effect on the product.”

The reasons for not authorising bag-in-box, Saldaña says, are mainly related to image issues. He says the scientific community is not 100% in agreement about the technical advantages of this type of container to maintain the wine in good conditions, but concedes it is generally accepted that it performs better once open compared to an open glass bottle and that bag-in-box is easy to store and transport.

The main reason Consejos Reguladores in Jerez and Rioja and Ribera del Duero have decided not to authorise bag-in-box is related to the fact that this type of container is perceived – at least by the Spanish consumer – as inappropriate for quality wines and it would therefore damage the reputation of the DO as a whole, according to Saldaña.

Over the past 15 years some bodegas – mainly from Sanlúcar – have occasionally brought the issue to the Consejo, asking for the authorisation of bag-in-box for manzanilla. The board of the Consejo, formed by a representation of bodegas and growers, has consistently voted – by an overwhelming majority in all cases – not to authorise this kind of container for DO wines, neither manzanilla nor any style of sherry.

Saldaña says: “In 2014, a group of bodegas decided to defy the Consejo and announced they would produce and sell manzanilla in bag-in-box, no matter what the Consejo would say.”

Fermín Hidalgo García, of Bodegas Hidalgo La Gitana, describes the dispute as a commercial war. He says his bodega is in favour of the use of bag-in-box for the on-trade business. He adds: “For decades, wineries have sold wine in bulk to bars and restaurants.”

He argues the garrafa, a crystal container that is returnable and looks like a 19th-century container, is very difficult to clean and transport. “It does not comply with the highest hygienic standards because it is really difficult to clean because of the shape of the container. We have been struggling with this issue for around two years. We want to deliver to our client the best manzanillas in the best containers, and for sure the garrafa is not an alternative.”

The decision earlier this year to allow bag in box for the on premise channel only stoked the fiery debate on both sides. “No one sees the bag-in-box on the bars or restaurant,” García says. “They are used for the tap and to refill barrels, so there is no one who can see them.

“The Consejo was pro-bag-in-box, at least about three years ago. It wrote a report saying that we should change the garrafas for the bag-in-box. Unfortunately, the Appellation of Origin is controlled by the big wineries,” he says.

Bodegas Hidalgo La Gitana has developed a tap for its Manzanilla La Gitana. The patented tap uses bag-in-box. “It seems the wineries that are against the use of bag-in-box have seen the tap as a threat,” García explains. “What would have happened if instead of us (a medium-sized winery), they were the ones that developed the tap?

“The reason behind all these issues is it’s a commercial war,” García says. “There are many small wineries that basically conduct all their sales in bulk. Therefore, not allowing the use of bag-in-box will make them close.”

NATURAL EVOLUTION

For García, bag-in-box is more environmentally friendly and the natural evolution. He adds: “Do you still use a typewriter to write articles or do you use a computer? Do you go to work riding a horse or do you go by car or public transportation? We have to adapt to the modern way of living. Many years ago the bag-in-box was seen as a container for cheap wines, however that view probably is from the ’90s. Nowadays you can find many types of wines in bag-in-box. For example, there are wines from Saint Emilion in Bordeaux that use it.”

Saldaña says the Consejo sees the latest decision as a partial and temporary victory for the bodegas that are pro-bag-in-box. “The Consejo has immediately started the process in order to change its regulation so that there is no other possible interpretation but the one the industry has opted for: the use of glass bottles as the exclusive containers for sherry and manzanilla. It will therefore be just a matter of time that bag-in-box sales to the on-premise channel will again be forbidden. We calculate less than a year to complete the whole legal process to publish the amendment to our regulations.”

The likes of García are ready. He says: “Bodegas Hidalgo La Gitana will continue fighting for the use of bag-in-box at the on-trade business. I have to deliver to my customer the best manzanillas in the best container. Time will give us the reason. By the way, as soon as one of the biggest retailers in Spain asks its sherry supplier to have Manzanilla on bag-in-box, this war will end.”

Despite protests to the contrary from both sides, the fight looks set to continue for a while and it’s good to see – as a neutral anyway – that the category and all those involved in it still have fight in them to challenge clichés and keep the sherry cycle moving.