“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.
