Most important Spanish Wine Industry figures
Spain is one of the greatest wine producers in the world: it has the largest area under vine cultivation, it takes third place when it comes to production (owing to a higher yield than France and Italy), and it is the second global exporter in terms of volume, although it falls in third place if you are referring to the price of these exports. It is an extremely significant sector in Spain, for its economic, social and environmental importance, and because wine projects an image of the country abroad.
1. WORLD MARKET SITUATION
1.1 Vineyard
In 2010 the global wine-growing area decreased by 65,000 hectares compared to 2009, bringing the estimated world total to 7,550,000 hectares. The total European Community vineyard (UE-27) is progressively reducing its planted area, dropping from 3,884,000 hectares in 2006, to 3,630,000 hectares in 2010. A combination of factors are responsible for this process, such as the restructuring of vineyards and the impact of the wine-growing crisis, which has hit hard, and affected different areas and types of wine in varying ways. This decrease in the European Community vineyard is offset by the maintenance of planted areas around the rest of the world. While plantations diminish in Turkey and Australia, they are growing in China and Chile, and staying the same in the U.S. and South Africa.
1.2 World Production
According to the International Organisation of Vine and Wine (OIV) estimates, world wine production for 2010 (discounting grape juice and must) is around 260 million hectolitres, 11.2 million hl less than in 2009. The main wine-producing country is France, with 44.9 million hl, (17.3% of the global total), followed by Italy, with 44.8 million hl (17.2% globally), and Spain, with 34 million hl (13.1% globally).
Outside the European Union, production levels in 2010 were lower, with 107.1 million hl, than in 2008 (108.8 million hl), and 2009 (108.3 million hl). The U.S. is the biggest wine-producing country, with 19.6 million hl, representing a decrease of 2 million hl compared to 2009, equalling 2008 figures. In second place is Argentina with 16.2 million hl, which boosts its figures by 4.1 million hl compared with the previous year’s production. Third place is claimed by Australia, with a wine production of 11.2 million hl (-0.4 million hl).
Chile produced a slightly lower harvest in 2010 (8.8 million hl) than the record harvest of 9.8 million recorded in 2009, while Brazil is experiencing setbacks. Argentina has also managed a bumper harvest, surpassing that of any previous year by more than 1 million hl.
Switzerland and New Zealand are experiencing a slight decline compared to 2009, as is South Africa, which, with 9.2 million hl has been going through another downturn (-0.7 million hl).
1.3 European Union Production
According to recent data published by the OIV, European Union wine production for 2010 stood at 152.9 million hl, proving to be much lower than in 2009 (-7 million hl) and among the lowest figures in the last 15 years. France produced 0.6 million hl less in 2010 than in 2009, but managed to retain higher levels than in 2008, the year in which the Gallic country experienced its weakest production levels since 1991. Italy went through a significant decline of nearly 3 million hl, largely driven by the policy of restructuring its vineyards. Germany and Austria also joined Italy in experiencing major setbacks.
According to European Commission figures, wine and grape must production in the European Union should be around 163.6 million hl, which would signify a decline of 4.4% compared with the 2009/10 harvest and 7% relative to the average of the last five harvests. Wine production is estimated at approximately 157.3 million hl, which is to say, somewhat higher than that estimated by the OIV. Of these, 67 million hl would have been set aside for wines with PDO, 35.6 million for wines with PGI, 2.5 for varietal wines without PDO or PGI, and 52 million for other wines.
For type of wine, France ranks first as producer of wines with PDO, with 23.2 million hl, compared to the 14.9 produced by Italy, and the 14.1 from Spain. Regarding wines with PGI, Italian production reaches 15.3 million hl, French production 12.5, and Spanish 3.7 million. As for varietal wines, with neither PDO nor PGI, Spain is in the lead with 1.6 million hl, followed by Bulgaria (0.3 million hl), and France (0.25 million hl). Finally, in the category of other wines, Italy is the main producer with 19.1 million hl, ahead of France, with 15.5 and Spain, with 3.7 million hl.
1.4 Consumption
With approximate global wine consumption estimated by the OIV at about 236.3 million hl, there is a decrease compared to last year of about 0.1 million hl. The main European countries which produce and consume, and which are showing a downward trend compared to the prevous year, are, in order: Spain, Italy, Greece, Portugal, Germany, Belgium and Luxembourg. Outside the EU, countries like the U.S. and Argentina also show a slight decrease compared with previous years while other countries, like Chile and South Africa, are experiencing a rise in their consumption levels when compared with the previous year.
Again according to the OIV estimates for 2010, the difference between production and consumption should come somewhere between 14.2 and 33.3 million hl, which gives us an average of 23.3 million hl, which would be well below the 34.7 recorded in 2009.
2. SITUATION OF THE SECTOR IN SPAIN
The Spanish wine sector is very important, both for the economic value it generates, for the space it occupies, and the role it plays in environmental conservation.
2.1 Vineyards
With 1,082 million hectares set aside for vine cultivation (97.4% allocated for wine, 2% for table grapes, 0.3% for the production of raisins, and the remaining 0.3% for nurseries), Spain still has the largest area covered by vineyards in the European Union, and indeed in the world. It represents 30% of the total surface area of the EU (followed by France and Italy with approximately 22% each), and 14.3% of the world total. Its winemaking tradition dates back to Roman times, although it is only recently that export has become so significant and widespread in the sector. When you divide up all Spanish cultivation, the vine comes in third place, after cereals and olives.
As previously mentioned, and according to figures from the OIV, the world surface area of vineyards decreased in 2010 by 65.000 hectares, 7.55 million hectares compared with the 7.61 of 2009.
2.2 Spanish production
Wine production in Spain has gone through six consecutive stable harvests of around 40 million hectolitres. In the 2009/2010 harvest, and according to figures from the Spanish Agricultural Guarantee Fund (FEGA), production rose to 39.9 million hectolitres divided into 34.8 million hectolitres of wine, and 5.1 million hectolitres of must. Of the 34.8 million hl, 14 are attributed to quality wines with Protected Designation of Origen (PDO), 3.7 to wines with Protected Geographical Indication (PGI), 15.4 to wines without geographical indication, and 1.6 to varietal wines with neither PDO nor PGI. The volume of wine produced in Spain has seen an increase of 0.3% compared to the previous harvest.
40.2% of the total refers to wines with Protected Designation of Origin (PDO), with an increase of 3% compared with that produced in the previous harvest.
When it comes to the colour of the wine, almost 19.2 million hectolitres are attributed to red and rosé wines, a little more than 55% of the total, and 15.6 million, almost 45% of the total, to white wines. Red wine production fell by 1.5%, while that of white grew by 2.6%.
Moving on to to geographical distribution, Castilla-La-Mancha is the main wine-producing region with almost 50% of the total, maintaining the production figures of the previous harvest, 17.2 million hectolitres. Of this volume, 10.6 million hectolitres refer to wines with no PGI, 3.1 to wine with PGI, and 2.4 to wines with Protected Designation of Origen (PDO).
Catalonia comes in second place in terms of production, with 3.4 million hectolitres, which represents 9.7% of the national total. 3 million hectolitres refer to wines with PDO. In this Autonomous Region, white wine production is 2.4 times greater than that of red or rosé.
Extremadura, with 3.3 million hectolitres, is the third Autonomous region which produces wines, representing 9.5% of Spanish production. Of the total, 0.12 million hl are wines with PDO, 0.25 million hl are wines with PGI and the rest refer to wines with neither PGI nor PDO. In this Autonomous Region, production of white wine also exceeds that of red wines.
La Rioja, cashing in on the drop in production in the Valencia Region, and thanks to an increase of 1% in its own, has moved into fourth place with 6% of the National total, which comes to about 2.1 million hectolitres. Of this total, around 2 million hectolitres are for wines with PDO.
The Valencian Region, given its decrease of 27.7% compared to the previous harvest (2009/10), moves into fifth place with a production of 1.8 million hectolitres, 5.2% of the total, of which 1.1 million hectolitres were wines with PDO, and 0.7 without PGI.
In sixth place, among the Autonomous Regions which produce wine, is Castilla and Leon, with around 5% compared to the previous year. This accounts for 4.5% of national production, with a drop of 5% on the previous year. Of the total produced in this area, almost 1.4 million hectolitres are wines with PDO.
Andalucia, after an increase of 8.6% compared to the previous harvest, holds seventh place with 1.26 million hectolitres, which represents 3.6% of the national total, from which 0.2 million hectolitres were wines with PDO.
Aragon, after declining by 16.5% over the previous harvest, was relegated to eighth place with 1.11 million hectolitres, which represents 3.1% of the national total.
After this, the Regions in order of smallest volume, are Murcia (2.4%), Navarra (2.36%), the Basque Country (1.8%) and Galicia (1.1%).
The Iberian Peninsula and our islands are ideally situated for the production of wines with very different characteristics, given the geographical features, climactic variations and the varieties of soils. Vines are grown in all of the 17 Autonomous Regions which divide the country, while about half of the total area is in Castilla-La-Mancha (505,000 hectares and 49.5% of vines planted), the largest geographical area in the world dedicated to its cultivation, followed by Extremadura (about 86,000 hectares, 8.4%), Valencia (73,000 hectares), Castilla y Leon (57,000 hectares), Catalonia, Aragon, Murcia, Andalucia and la Rioja. However it is the Autonomous Region of la Rioja which provides the largest vineyard cultivation proportionally to cultivated surface area. The average farm in Spain is 3.34 hectares, but varies between different regions; the smallest are those in Galicia, the largest in Murcia.
In any case, this vineyard surface area continues to decline. With the support of the wine CMO, for the 2010/2011 harvest, the removal of 26,472 hectares of vineyards has been approved, which, added to those uprooted with European aid in the last two harvests, make up a total of 95,355 hectares lost. And added to this figure are the vineyards which have been destroyed without official aid and merely abandoned due to poor profitability.
Spain has 86 production areas of quality wines with Protected Designation of Origen (PDO), of which 73 have Designation of Origen, 2 have Qualified Designation of Origin and 11 are vino de pago (single-estate wines), which, following the European production model, maintain strict control on the quantity produced, oenological practices and the quality of the wines produced in each area. The first authorised Designations were approved in 1932, and were awarded to Jerez-Xères-Sherry, Sanlúcar de Barrameda Manzanilla, Málaga, Montilla-Moriles, Rioja, Tarragona, Priorato, Alella, Utiel Requena, Valencia, Alicante, Ribeiro, Cariñena, Penedés, Condado de Huelva, Valdepeñas, La Mancha, Navarra and Rueda.
Moreover, there are 43 kinds of wines qualified to be entitled traditional Local Wines, all of which fall into the general category of ‘Protected Geographical Indication’ or PGI.
61.5% of Spanish wine is produced with white grape varieties, especially in the Autonomous Regions of Castilla-La Mancha, Extremadura, Andalucia and Catalonia. In these last two Autonomous Regions this type of grape is used for the production of liqueur wines and cavas respectively. Of the last harvest, 55% will produce red and rosé wines, and 45% white wines.
The most common grape varieties in Spain are the Airen (23.5%), Tempranillo (20.9%), Bobal (7.5%), Grenache, Monastrell, Pardina, Macabeo and Palomino, in order of importance depending on their cultivation. Of these varieties, Tempranillo, Bobal, Garnache and Monastrell are red, while the others are white.
Meanwhile, domestic consumption of wine in Spain still gives us some worrying figures, today being somewhat below 20 liters per person per year, which means it lags behind in Europe.
3. CORPORATE STRUCTURE
The Spanish wine sector is undergoing a major updating and renewal process. Thus, since the year 2000, the area under conversion and restructuring has exceeded 130,000 hectares, representing an investment of approximately 800 million euros. It is estimated that some 4,200 wineries in Spain produce wines, sparkling wines and liquor. They are usually small, family-run establishments backed with Spanish capital, while a large number are set up as agricultural cooperatives.
Among the major companies in the sector, with over 100 million euros in turnover, are the following: J. García Carrión, Arco Invest Wine Group, Bodegas Domecq Group, Miguel Torres Group, SA, Felix Solis Avantis and Faustino Group.
Small wineries and cooperatives coexist alongside these big companies, which have production facilities in different areas in order to diversify their range of products. In order to control quality throughout the production process, many wineries have bought more land or extended their vineyards to ensure consistent quality of raw materials although most of the supply of wineries in Spain comes from other growers or directly from cooperatives in the form of wine. Also important is the level of investment which has been earmarked for the construction of new wineries, to improve the facilities and equipment, and the use of different aging techniques, in order to offer a much wider range of quality wines. In this context it is interesting to note the activity and innovation of many wineries which are experimenting with new grape varieties and the use of native grapes to produce wines tailored to suit the tastes of the new consumer. Investment projects underway for the creation and improvement of the productive capacity of wine companies exceed 1,200 million euros.
DOC La Rioja has registered the largest number of wineries bottling quality wine (1,212), followed by DO La Mancha (370), DO Ribera del Duero, DO Catalonia and DO Penedès.
This modernization process has even managed to get world-famous architects involved in design projects for new wineries, such as those in Rioja, the new Domecq winery, the Ysios Winery, (commissioned to Santiago Calatrava), and the CVNE (designed by Philippe Mazières), the Marqués de Riscal Winery: a Frank O. Gehry project, the R. Lopez Heredia shop by Zaha Hadid and Arínzano Manor designed by Rafael Moneo for Bodegas Chivite in Navarra.
It is a very dynamic sector. The process of concentration continues to advance (the first five groups account for a combined share of almost 28% of the market). Major players have received a relatively important injection of foreign capital, and to really make the most of global marketing, agreements are being reached with companies in this sector in other countries.
4. EXPORTS
4.1 Global Exports
World trade in the wine industry is becoming increasingly important. According to figures from the OIV, in the five years between 2001-05, the total wine traded was 72.2 million liters; this has risen to 92.9 million hectoliters in 2010, a quantity which is as high as 93.8 million liters, if we count the export figures of wine and grape juice compiled by the GTA of the customs services of various countries. Also according to the GTA, in terms of value, the wine export total should be about 20.909 million euros in 2010.
This world market, considered by the OIV as the sum of exports from all countries (and bearing in mind that the countries for which figures are available, altogether represent 94% of world trade) has grown significantly in the last year, accounting for 6.8% more than for previous markets.
Also in 2010, global wine exports accounted for approximately 39.3% of global consumption (against only 18% at the beginning of the 1980s, and 33% in 2005). From this it follows that there is a stable trend over recent years in the constant growth of international trade, representing global consumption, a sign that falling consumption in traditional wine-producing countries is being offset by an increase in countries whose needs exceed their own production, and which need, therefore, to import it.
Italy, with sales of 20.6 million hectoliters, once again has become the world's largest exporter, accounting for 22% of total trade. Spain ranked second, with 16.9 million hectoliters exported, which gives it an 18% market share, followed by France with 13.5 million, and 15%. Of the three, Spain is the country that has seen its exports increase the most since the 80's: it has gone from 5.9 to 16.9 million hectoliters, and from representing 12% of world trade, to 18%. The market share of the main 5 exporters in the EU (Italy, France, Spain, Germany and Portugal), according to these estimates, will be around 62% of the global total, compared to an average of 65.1% in the five-year period between 2001-2005.
The group of six new exporter countries (Argentina, Chile, South Africa, the USA, Australia and New Zealand) holds a 29.4% market share in 2010, compared with 23.4% on average in the 2001-2005 period, and barely 1.6% of the world total in the period 1981-85.
These figures, which reflect a decline in the export quotas of the "Old World" countries, along with the rise of the "New World" countries’ quotas, clearly illustrate the strong market entry of the latter.
4.2 Spanish Exports 2010
In 2010 Spain exported 1,766 millions of litres of wine, at a value of 1,920 million euros, signifying an increase of 15.6% in volume, and of 10% in value compared to the year before. The figure represents, in terms of volume, a historic sales record, while the it remains in value slightly lower than the record reached in September of 2008, when for the first time it surpassed 2,000 million euros; in both cases, volume and value, the figures at the close of the year 2010 have been totally eclipsed during 2011, going beyond previously unknown levels for Spanish wines.
Of our total exports, wines with Designation of Origin account for 42%, maintaining the sales figures for last year, while bottled table wines increased dramatically by 57%, to 334 million Euros. The bottled Designation of Origin wines, counting both the wines and cava, are equivalent to 60.9% of total turnover.
For export markets, almost two thirds of Spanish wine exports by volume are destined for European Union countries. By country, Germany, the UK, the USA and France, take the lead ranking in value, all of them experiencing an increase over 2009. In volume the countries are France, Germany, Portugal and Russia, our four main destinations and, except for Portugal, all recorded growth in 2010, highlighting the fact that Russia has grown by 37% and has overtaken the UK in fourth position. The same year, outside of Europe, the outstanding markets have become: China, which closed the year with increases of 172% in value and 369% in volume, Mexico (+29% +50% in value and volume) Russia (+35% in value and +37% in volume), and Canada (+29% in value and +48% in volume). The United States also continues to grow, increasing Spanish wine exports in value by 16.3% and 19.9% by volume.
So far in 2011, according to figures analyzed by the Spanish Wine Market Observatory (www.oemv.es), Spanish wine exports are at a record high, having exceeded in August the yearly quota of 2,100 million liters, with an increase of of 27.4%. These export increases, which are higher in the cheaper wines, are still accompanied by a rise in the average price of a liter of wine, which in 2010 stood at 1.09 Euros, down 4.9%, and so far this year they have fallen by 6.2% down to 95 cents.
Report produced for ICEX by The Spanish Wine Market Observatory
