Wine in figures
Spain is one of the greatest producers of wine in the world: in first place, in terms of planted surface area, the 3rd biggest producer (giving a larger yield than that of France and Italy) and 2nd global exporter when it comes to volume, third if you take into account value. This is a sector which is phenomenally important for Spain, not only for its economic impact, but also relevant in social and environmental terms, and in the way Spanish wine portrays an image of the country abroad.
1. SITUATION IN THE GLOBAL MARKET
According to figures from the OIV (International Organization of Wine and Vine), in 2011 the global wine-growing surface area dropped by 94,000 hectares compared with 2010, making the global total 7,495,000 hectares. The total EC vineyard (UE-27) is diminishing progressively in planted surface-area, dropping from 3,742,000 hectares in 2008 to 3,530,000 hectares in 2011. This process is the result of a combination of factors, like the re-structuring of vineyards and the impact of the wine-growing crisis, which, in addition to this, has become less distinct in terms of specific areas and types of wine, and the process has also come at the tail end of the European programme providing aid for clearances. However the shrinkage of the EU vineyard has been compensated by the maintenance of the planted surface areas in the rest of the world. While vineyards and plantations are reducing in Argentina and Turkey, they are on the increase in China and Australia, and have remained more or less constant in the USA and South Africa.
According to OIV estimates, 2011 global production (not taking into account must and grape-juice) is around 265,8 million hectalitres, 700,000 more than in 2010. The biggest producer is France, at 49,6 million hl (18.7% of the global total), followed by Italy, at 41.6 million hl (15.6%) and Spain, at 34.3 million hl (12.9%.)
Outside the EU, the production level in 2011 is slightly higher, at 108.9 million hl, than in 2010 (when it was 108.7 million hl). The USA is the non-European country with the highest wine production, at 18.7 million hl, a drop of 2 million hl from 2010. Argentina holds 2nd place, with 15.5 million hl, which brings its figures down by 800,000 hl from the year before, when they rose considerably. Australia takes 3rd place, with wine production at 11 million followed by Chile with 10.6 million, almost a million and a half up from 2010.
With regards to other non-EU countries, South Africa increased production from 9.3 million hl in 2010 to 9.7 million in 2011, though this was lower than their 2009 recorded figures, which topped 10 million. Brazil rose from 2.5 million hl in 2010 to 3.5 million in 2011, returning to positive figures after the drop of 2010. New Zealand bounced back to over 2 million hl, in fact, 2.4, after plummeting in 2010 to 1.9 million. Switzerland increased production slightly, by 100,000 hl.
In line with the most recent data published by the OIV and even using approximate figures which may have to be modified later, 2011 EU wine production is around 156.9 million hl, slightly higher than in 2010 (156.4 million), though lower than in 2009, when it reached 163 million hl. Last year, France produced 3.9 million hl more than in 2010, Italy suffered a significant setback of almost 7 million hl less, mostly caused by its vineyard re-structuring policy. Germany and Austria considerably raised production volume, Germany from 6.9 to 9.6 million hl, and Austria from 1.7 to 2.8.
According To European Commission figures, up to date in February 2012, EU wine and grape juice production should reach 165.0 million hl in the 2011/2012 season, constituing a 1.5% increase on the 2010/2011 season, though this is a drop of 7% on the average of the last 5 seasons. Production designated to wine-making is estimated at the above-mentioned 156.9 million of which, 68.6 million hl will have ended up as Protected Denomination of origin wines (PDO) , 33.6 million as Protected Geographical Indication wines (PGI) , 2.8 as varietal wines with neither DOP nor PGI, and 51.6 million as other types of wines.
By wine type, France takes 3rd place as PDO wine producer, at 23.3 million hl, compared to Italy's 13.8 and Spain's 13.7. When it comes to PGI wines, French production leaps to 14.5 million hl, Italian to 11.7, and Spanish to 3.3 million. With regard to varietal wines, with neither PDO nor PGI, Spain brings up the lead, with 1.8 million hl, followed by Italy (0.4 million hl) and Bulgaria (0.34 million hl). Finally, when looking at the category of other wines, Italy is the main producer, with 15.9 million hl, just ahead of Spain, at 15.5, and France, at 12.3 million hl.
Although it is still too soon to confirm 2012 production levels, initial estimates point to a significant reduction in European wine production. The French harvest is said to be around 42/46 million hl, the Italian harvest at a historic low of 39/40 million and the Spanish at a reduced rate which some analysts estimate to be about 15%. The general impression at the start of this season is that of scarcity, caused by the drought and heat of previous months.
OIV estimates that 2011 global wine consumption is at about 241.9 million hl, which is an increase on the previous year, of 1.7 million hl. This growth has been calculated by analyzing the forecasts for the countries outside the EU: China, in first place, will consume 1.2 million hl more, reaching a figure of 17 million hl, followed by the USA, with almost 1 million hl more than in 2010. General figures for consumption growth reach 2.5 million hl. Other countries with positive consumption statistics are Hungary, Brazil, South Africa and New Zealand.
In the EU, consumption is likely to fall 864,000 hl compared to 2010. The main European consumers are showing a tendency to decrease consumption compared to the previous year, in descending order: Italy (down 1.6 million hl), the UK (down 0.4 million), Spain (- 0.2 million), Greece, (- 155,000 hl) and Portugal (- 140,000 hl), while Sweden only dropped by 10,000 hl. On the other hand you have countries like France, a million hl up, and Belgium, Luxemburg and Austria, among others, who are consuming more.
Outside the EU, breaking ranks with these generally positive tendencies, are countries like Australia, Argentina and Switzerland, which are all experiencing a slight fall back compared to 2010.
The difference between production and consumption according to OIV 2011 estimates, will fall somewhere between 15.7 and 32 million hl, giving an average of 23.9 million hl, approaching 2010 levels, which were 24.9.
2. HOW THE SECTOR IS PERFORMING IN SPAIN
Spanish wine-making is crucial, not just for its economic performance, but also for the people who work in this sector, and for the role it plays in environmental conservation.
According to the OIV, Spain remains the country in the EU, and indeed the world, with the largest number of vineyards, with 1,032 million hectares devoted to vine cultivation (97.4% used for wine-making, 2% for table grapes, 0.3% for raisin production, and the remaining 0.3% for nurseries). However, more recent official statistics compiled by the FEGA note that this surface area decreased to 970,000 hectares in 2011. In any case, it represents 30% of the EU total( followed by France and Italy, both with approximately 22.5%) and 13.8% of the world-wide total. Its wine-making tradition can be traced back to Roman times, though it isn't until recent times that exports have become a major concern, and generalized across the sector. The vine is the 3rd most cultivated crop in Spain, after cereals and olives.
Wine production in Spain has had 7 continuous seasons of great stability, reaching about 40 million hl (figures for wine and grape juice combined). In the 2010/2011 season, and according to figures released by the FEGA (The Spanish Agrarian Guarantee Fund), in November 2011, production hit 40.9 million hl, as opposed to the 39.3 million achieved in 2009/2010 (definitive figures), which is a 4.1% increase.
For the current season 2011/12, MAGRAMA estimates production at 38.6 million hl, which is a decrease, when you compare it to the last season, of 5.6%. According to geographical distribution, and this season's estimates, Castilla-La-Mancha remains the principal producing region, with more than half the total Spanish production (48.3% and 18.6 million hl), but with less than the last season's production, which was 21.6 million hl.
Extremadura is likely to be the 2nd Region, just surpassing 4 million hl (just over 10% of the total), followed by Catalonia in 3rd place, with 3.3 million hl produced (8.5%). The sum of production from Castilla-La-Mancha, Extremadura and Catalonia surpasses 68% of Spain's total production for the 2011/2012 season, with 26 million hl of the total 38.6 million.
Among the other Autonomous Regions, Valencia and Rioja really stand out, both hitting targets over 2 million hl (2.3 and 2 respectively). Four Regions will probably reach more than a million hl: Castilla y León (1.8 million), Andalucía (1.4 million), Aragón (1.1 million) and Galicia (1.5 million).
Among the main Regions, Castilla-La-Mancha, Rioja and Andalucía are decreasing production compared to the 2010/2011 season, while others like Extremadura, Valencia and Castilla y León are increasing.
Vineyard Surface Area
Geographical position, climatic differences and the variety of soils make the Iberian Peninsula and our islands a privileged location for the production of very different wines. In all, 17 Autonomous Regions in the country cultivate vines, and almost half of this total distribution is found in Castilla-La-Mancha (473,050 hectares and 48.7% of planted vines), which is the geographical area with the greatest concentration of vineyards in the world, followed by Extremadura (around 85,000 hectares, 8.7%), Valencia (67,491 hectares), Castilla y León (65,837 hectares), Catalonia, Rioja, Aragón, Murcia and Andalucía. However, it is the Autonomous Region of Rioja, given its size, which dedicates the greatest proportion of its surface-area to vineyard cultivation. The average agricultural holding in Spain is 3.34 hectares, though this varies from Region to Region, the smallest holdings are in Galicia and the largest in Murcia.
In any case, the picture that is emerging is of Spanish vineyards in decline. With the aid of the wine OCM, for the 2010/2011 season, the clearance of 25,120 hectares of vineyards has been approved , which, added to those already cleared with European aid in the previous 2 seasons, add up to 93,567 hectares wiped off the map. And to this number must be added the vineyards which have been cleared privately, and simply abandoned due to non-profitability.
Spain has 89 zones which produce PDO wines, of which 67 are Denomination of Origin (DO), 2 are Qualified Denomination of Origin. (DOCa), 6 are Quality Wine with a Geographical Indication. (Vino de Calidad) and 14 are Single Estate Wine (Vino de Pago), made in accordance with the European production model, with strict control over the quality produced, grape-growing practices, and the quality of the wines produced in each area. The first authorized Denominations were passed in 1932, awarded to Jerez-Xères-Sherry, Manzanilla de Sanlúcar de Barrameda, Málaga, Montilla-Moriles, Rioja, Tarragona, Priorato, Alella, Utiel Requena, Valencia, Alicante, Ribeiro, Cariñena, Penedés, Condado de Huelva, Valdepeñas, La Mancha, Navarra and Rueda.
An updated map of Spanish Designations of Origin (Appellations) and a PGI Wines Map or Country Wines Map is available in our Downloads section.
From the most recent harvest, 51.1% will go to red and rose wines and 48.9% to white wines. The most common grape types in Spain are Airén (23.5%), Tempranillo (20.9%), Bobal (7.5%), Red Garnacha, Monastrell, Pardina, Macabeo and Palomino, in descending order depending on their cultivation. Of these varieties, Tempranillo, Bobal, Red Garnacha and Monastrell are red, and the others are white.
Meanwhile, the domestic consumption of wine in Spain continues to throw up some worrying figures, levelling off currently at an estimated 20 litres per person per year, which trails behind the rest of Europe.
3. BUSINESS STRUCTURE
The Spanish wine-making sector is currently undergoing an important process of modernization and updating. Because of this, since 2000, the surface-area undergoing conversion and re-structuring has surpassed 130,000 hectares, the result of an investment of approximately 800 million Euros. It is estimated that about 4,600 wineries in Spain make still wines, sparkling wines and liqueur. For the most part, these are small businesses and mostly they run on domestic capital, often family money, while a great number of them are made up of agrarian co-operatives.
You can find the following names among the major players in this sector: Freixenet, J. García Carrión, Codorníu, Arco Wine Invest Group, Grupo Domecq Bodegas, Grupo Miguel Torres, S.A, Félix Solís Avantis and Grupo Faustino.
Small wineries and co-operatives function alongside large companies, who operate in production centres in different areas, with the aim of offering greater variety. In an attempt to control quality throughout the production process, some wineries have bought out or extended their vineyards, as most supply to Spanish wineries comes from other vineyards or directly from co-operatives in the form of wine. There has also been considerable investment in the building of new wineries, the improvement of facilities and machinery and the adoption of different ageing techniques in order to offer a wider range of quality wines, although this level of investment has dropped off in recent years with the economic crisis. It has been interesting to observe, in this context, relaunching of activity and innovation of many wineries which have been trying out different grape varieties and using local varieties to produce wines more suited to the tastes of today's consumer. Current Investment projects to create and improve the productive capacity of wine-making businesses are over 1,200 million Euros.
The DOC Rioja holds the highest number of registered quality wineries, (1.209), followed by DO La Mancha (276), DO Ribera del Duero, DO Cataluña and DO Penedés.
This fashion for modernization has even led to the construction of new wineries, projects which have been undertaken by world famous architects, the outstanding among them being in Rioja, the new Domecq winery, Ysios Winery, the CVNA (designed by Philippe Mazieres), the Frank O Gehry project for Marqués de Riscal, the R. López Heredia Shop by Zaha Hadid, and the the Rafael Moneo project, Señorío de Arínzano, for Chivite Wineries in Navarra.
It is an incredibly dynamic sector. Also a highly concentrated sector, with estimates showing that the 5 top companies together hold almost 28% of the market. There has not been much foreign investment among the major players, although joint ventures are being negotiated with other countries to improve the possibilities of global marketing, and forge alianses against the increasingly fierce process of internationalization which the Spanish wine sector finds itself immersed in.
Global transactions are increasingly more important in the wine sector. In the 5-yearly period 2001-5, from an average total of 72.2 million hl, they have risen to 103.5 million hl in 2011, according to OIV estimates. In terms of value, according to the GTA, which compiles data from the customs of various countries, the global amount of wine and grape juice exports will be 23.264 million Euros in 2011. The global market, considered by the OIV to be the sum of all exports from all countries, has grown significantly over the last year, by 7.9% more than the previous season. In 2011, global exports of wine represent approximately 42.8% of global consumption (against 34.6% in 2006). From this we can take heart that there is a steady trend throughout the last few years to constant growth in international transactions in the context of global consumption, a sign that the drop in consumption by the traditional producing countries is being compensated by the increase in countries whose wine needs outstrip their own production, meaning that they, in turn, have to import it.
In the first quarter of 2012, and according to GTA figures, Spain, in the absence of Italian seasonal statistics, still to be published, is in the lead in terms of global wine exports, with 1,065 million litres. In the first quarter of the year, Spain has certainly beaten Italy for the first time, becoming the leading global exporter of wine in terms of volume. In value, the low average sale price of a litre of Spanish wine (1 Euro 6 cents this quarter) makes us the 3rd exporter in terms of value, at 1,124.6 million Euros. France, therefore, selling at an average price of 5 Euros and 9 cents a litre, much higher than other providing countries, takes the lead with a figure of 3,568 million Euros. The observed exports of wine in the first half of the year show yields of 13% in value and 6% in volume, with a price rise of 7.2%, figures which are very close to those registered at the close of 2011. French packaged wines are the stars of this year's sales, with a particularly good spike in value (+18.5%), mostly down to their healthy performance in the Asian market.
Italy, despite having no figures for June, occupies 2nd place. Italy exported a total of 847.9 million litres of wine in the first five months of 2012, at a value of 1.786 million Euros, at an average price of 2.11 Euros per litre. Compared with the first 5 months of 2011, it has seen a drop in volume of 9.9% although the steep increase in prices (+18.5%) has helped it to turnover a further 6.5%
Looking at other producers, Australia is in 4th place as global wine provider in terms of volume, with somewhere above 350 million litres and an increase of 4.8% on the first quarter of 2011. Chile is close behind in 5th place, having grown 17% to 343.3 million litres, while the USA and Germany, next on the list, display marked decreases. South Africa, Argentina, Portugal and New Zealand, in that order, complete the list of the 11 principal exporting countries, all of which display healthy growth, above all Argentina (+31%) and New Zealand (+16%.) In value, if you take the Euro as a common currency for analysis purposes, only Germany (-2.3%) shows weaker figures in this first quarter among the 11 main global providers. Consequently in this context, Chile, Argentina and New Zealand show a marked increase at roughly 20%. Within the EU, Spain continues to be the country with the best figures in terms of value, although the drop in sales in terms of volume is affecting these figures in 2012.
The market share of the 5 main exporters in the EU (Italy, France, Spain, Germany and Portugal), according to these estimates, will be around 65.5% of the global total, with very little difference from 2001-2005, when it was 65.2%, while during the period spanning 1986-90, it was 78.8%.
The group of 6 countries who are new exporters (Argentina, Chile, South Africa, the USA, Australia, and New Zealand), take 25.5% of the market in 2011, compared to an average 23.4% during the 5-year period 2001-2005, and barely even 3% of the global total in the time period spanning 1986-90. It is forecasted that the share will increase in the first quarter of 2012, even in the absence of official data.
These figures, which reflect a decrease in the export share of 'Old World' countries, together with an increase in the share held by 'New World' countries spotlights just how dramatic has been their entry into the global market. Export has thrived, particularly of bulk wine and packaged wine of over 2 litres (from these countries), along with the bag-in-box wine format, a major factor for most of them, and this has contributed to very healthy growth.
Spanish exports – first quarter 2012
In the first quarter of 2012, using AEAT (customs) figures, Spain exported 1,073.5 million litres of wine, at a value of 1,143.6 million Euros, which denotes a slight increase of 3.4% in volume and 13.5 in value on the same period the previous year. These figures are considerably lower than at the close of 2011 (above all in volume) when they grew 26.3% in volume and 16.7% in value. As we can confirm, the situation has experienced a U-turn: in the last few years, there has been a great leap forward in bulk wine and packaged wine exports (in quantities above 2 litres), at very low prices, which has given us a much greater growth in volume than in value. However, thus far this year, this wine has been steadily going up in price, off-setting the general level of exports, given that this type of wine constitutes more than 50% of the total exported by Spain. This price hike brings very positive growth in value, although care must be taken as this might only be short-term: the markets are reducing the volume of imported Spanish wine, showing very low growth levels, which could lead to decreases, and even to a drop in turnover in the medium term, in line with the needs of our buyers like alternative offers.
Of our total exports in terms of value, DO wines make up 40.4%, while packaged table wines display healthy growth of 20.3%, even topping 200 million Euros. As above-mentioned, bulk wine without PDO is still showing good results in terms of value (+27% up to 230.8 million Euros), although in this first quarter of 2012 it is showing a drop in volume of 1.3% to 555.3 million litres: and its average price has gone up during this period by almost 30%, going from 32 Euro cents to 42 cents. Likewise, sparkling wine shows a drop of 4.7% in volume, though it has risen 7.3% in value, given the average sale price increase of 12.5%. With this, Spain has placed its average sale price of a litre of exported wine at 1 Euro and 6 cents, while, at the close of 2011, it was 1 Euro a litre.
For target markets, almost two thirds of the volume of Spanish wine exports goes to EU countries. By country, Germany, The UK, The USA and France are the top of the list when it comes to value, all of them showing increases on the previous 2011 quarter, Germany and the Uk rising (by 5.2% and 9% respectively), the best markets in value terms, while the USA (+15.8%) and France (+31.2%) take third and fourth position, pulling up the general figures with them. In volume it is France, Germany, Italy, the UK and Portugal who are our top five destinations. France, the main market, dropped slightly by 0.5% due to its sharp increase in average buying price (+32%), though is a crucial destination for Spanish bulk wine. Italy offers really positive figures: this country showed growth in these first six months of almost 50% in volume, despite importing at an average price which was 34% higher; this meant it doubled its investment (+100.2%), building up our exports by a huge amount. Outside Europe and in this same quarter, exports to countries like China have slowly stalled: the Asian superpower closed 2011 with 84% growth in value terms and 47.2% in volume, while in these six months our sales have dropped by 10.4% in litres, growing by 23.1% in Euros. China has given us the 2nd major percentual rise when it comes to the average price (+37.4%), after that of Russia (54.7%); with regards to the latter, our wine sales have fallen up to 35.3%, already down 40 million litres, though turnover has remained stable since the same quarter of last year. Following a general trend, our exports to Mexico have dropped 9% in volume and have risen 10% in value, while the Japanese market continues to perform very well: +64.2% in volume and +53.3% in value.
Report produced for ICEX by The Spanish Wine Market Observatory.