Rioja sales keep increasing. What do you put this down to?
Rioja has a very consistent strategy. The Consejo Regulador invests €7m every year. If you compare that with other DOs around the world it’s the number one in terms of global investment.
The strategy is right because they are only focused on key markets, [such as] the US, the UK, Germany, China, Canada, Mexico and Germany. You need to repeat the message [to get it across]. Most of the companies in Rioja are in favour of this strategy.
Campo Viejo Tempranillo is now the no.1 red wine in the UK by value. What do you put this success down to?
The brand grew 20% in the UK last year. The success is a combination of [factors]. The work of Pernod Ricard UK engaging consumers through campaigns. [Getting across the message that] Campo Viejo is Rioja and Spain in a bottle.
The other element is the taste profile of the wine. People are looking for less wood and more fruit. The style is less traditional Rioja but it’s still true to what Rioja is.
Was the move in 2012 from ‘Crianza’ to ‘Tempranillo’ a factor?
We realised a few years ago that we had an issue with ‘Crianza’. While Reserva is understood [in international markets], people had no clue what Crianza was - they thought it was a grape variety. It was bringing confusion. Though in Spain Crianza remains; they understand what it means and are more traditional about the styles.
When it comes to Campo Viejo, are consumers shopping by brand, varietal or region?
Most consumers look for Rioja and will discover a selection of brands – Campo Viejo offers reassurance. In the UK people are going for the brand as they are at the second stage [of development].
Did the sales increase in the UK come at a price?
We try not to sacrifice margin. The increase in volume that we have had did not impact the value of the brand. The retail price has stayed the same. Some retailers have use Campo Viejo as a lost leader – but discounting is not good for the brand and playing this game with Campo Viejo is a short term gain. It impacts the premiumness of the brand. We have tried to prevent it.
Exports of Rioja are growing faster than domestic sales. Are exports becoming more important to the region than domestic sales?
Export is growing more rapidly than domestic. Of the 277m litres, 102m litres was international in 2013, about 37%. But the domestic market is crucial to having a strong base and to give credibility on the export market. In Spain overall wine consumption has decreased – in 1980 Spanish wine consumption was at 40 litres per person per year but now it is 17-18 litres - but Rioja has increased its sales.
It is also key to make sure export is successful because the value is important but also to mitigate risk. 75% of Campo Viejo sales are now in export.
Apart from the UK, what other markets are showing promise?
Most markets where Rioja is strong are European because of the marketing there by the DO. Also the impact of tourism - consumers’ exposure to Spanish wines.
In the US Rioja is still small as a category but there’s a very positive trend. In Canada too.
In China there is a trend towards Spanish culture and Spanish wine is the fourth largest producing country selling there. The significant price [bracket] is 100-500 Yuan (£10-£50). After that is fine wine, where our Ysios brand is positioned.
Russia will be in the longer term. Rioja sales have benefited from Russian tourists switching from North Africa to Spain. There were 1.2m Russian [holidaymakers] in Spain last year. That’s 100,000 a month.