- Traditional quality pyramid based on time and ageing in wood proved to be very effective for communication and marketing of wines from Spain and is firmly entrenched in minds of consumers.
- Whilst acknowledging its necessity, a debate has arisen in DOCa Rioja, which markets more than 65% of wood-aged wines, concerning the sense, purpose and value of this system.
- Voices of niche “New Spain” producers now advocating terroir indicators in their quest for differentiation and prestige.
- Downward trend of prices in Reserva category makes competition challenging for smaller producers and highlights need for an upgrading in this lower segment.
- Repositioning of Reserva in particular, could be achieved with subcategories, yield reduction, on-premise ageing.
- Segmentation under the Rioja umbrella brand could delineate price segments through differentiated storytelling, however other systemic changes also needed.
There is no doubt that the quality levels of the Spanish system for classifying quality wines made a significant contribution to the relaunch of the Spanish quality wine market in the 1980s. Created within the framework of the Spanish Wine Law of 1970, and designed and sponsored by the viticultural authority of the then DO Rioja, the model was conceived in such a way that it could be easily transferred to most of the quality wine regions of the country at that time.
Effective Marketing Tool
On the one hand, Crianza & Co proved to be a highly effective marketing tool: easy to communicate because the basic idea of a framework of aged wines that promised immediate drinking pleasure without requiring much detailed knowledge from the consumer was not too complex. On the other hand, the system anchored a categorisation of wine types in the minds of consumers that, once established, could not easily be softened.
Between Mainstream and "New Spain”
Today, Spanish viticulture is undergoing a profound transformation. The successors of the generation of the Spanish wine miracle of the past 40 years simply reject the classic categorisation that brought the country great commercial success but basically created a family of wine types. They turn to more individual ideas that, broadly speaking, are oriented towards the respective terroir conditions.
Basically, a rift is opening up between the "New Spain", which hardly carries any weight in terms of volume but is gradually influencing the country's prestige, and the big business of the Spanish mainstream, which of course determines what happens in the German trade.
Business-defining Tradition
At first glance, there would be no reason to worry about the Crianza and Reserva business, were it not for the fact that there are fewer and fewer areas of origin where the classic quality levels determine what happens, even if these are not the relevant production areas.
The big players are certainly not impressed by this trend, because it is undoubtedly still the big names of the, to put it cautiously, classical Spanish wine world that, at least from the outside, uphold the time-honoured model of Spanish classification via ageing in wood.
These include Valdepeñas and Navarra, the Castilian appellations Ribera del Duero and Toro, the Levantine Utiel-Requena and, of course, the country's most important appellation of all, the DOCa Rioja.
But especially in the famous winegrowing region on the Ebro, which markets more than 65 % of wines made from wood-ageing, with and without quality grades, there is a heated debate about the sense and purpose and, of course, the value of the classic system. Certainly, there is nothing to dispute about the fact that the sheer volumes of classified wines are decisive for business.
Price Collapse?
But the figures also reveal problems that many producers today describe as systemic errors. The Reserva category in particular, has seen its average price drop significantly over the past few years and, in the opinion of many critics, is sometimes practically sold off. Small producers, but also medium-sized family businesses, often hardly create any added value with their higher-quality Reservas, as they have nothing to counter the creeping downward trend and are measured in terms of price against the cheap competition in the trade.
Basically, in the large winegrowing region, the whole structure has shifted downwards in price almost unnoticed over the years, and some players are offering Reservas at a price that would have been normal for a better Crianza a decade ago.
There are many reasons for this. The decisive factor, however, is certainly the fact that the buzzwords Reserva and Gran Reserva sound much catchier and more understandable than the term Crianza, which most customers probably have little idea of.
In the trade, therefore, a gradual shift of the Reserva category into more attractive price territory could have been obvious. This has widened the price gap for Rioja Reserva in general and poses a great challenge for the part of the winegrowing industry with limited Reserva quantities and only very limited marketing resources.
The traditional system with its three levels of maturity - Crianza, Reserva and Gran Reserva - is the backbone of the Rioja business model. Leaving things as they are is, however, not an option.
Upgrading Needed in the Lower Segment
But even the big bodegas, including many of the historic houses, see the problem of cheap goods at the lower end of the price structure. A few years ago, renowned producers had already supported the changes in the law that imposed a minimum of six months of bottle ageing on producers before a Reserva could be released.
In terms of quality, this specification of the Reserva ageing criteria had brought about a slight improvement in the products of the lowest price segment. In terms of price, however, an upgrading of the quality level has not been achieved, and the discussion regarding the value of the traditional classification model has become somewhat livelier, especially among the renowned classic producers.
Even the very critical voices among Rioja producers agree on one point. The traditional system with its three levels of maturity - Crianza, Reserva and Gran Reserva - is the backbone of the Rioja business model. And nothing is likely to change in the long term. However, leaving things as they are is not an option for many producers.
Terroir Indicators
First of all, the introduction of terroir indicators, which allow the mention of region, place and single vineyard on the label, has by and large been positively received by the sector.
To put it very simply: Without an alternative to classic wines formally designed by the legislator, which takes the pressure off the boiler, so to speak, the positions in the Rioja sector would certainly have hardened unpleasantly. This counterpoint to Crianza & Co. opens up new marketing levels for winegrowers and wineries, even if acceptance, especially of local wines, for example, is still rather sluggish.
Repositioning: From New Subcategories to Yield Reduction
Two of the buzzwords that are used again and again when talking about the future of Rioja are segmentation and repositioning. The latter would undoubtedly affect the classic categories and especially the Reserva, which many producers believe needs to be improved. Alex Tomé, managing director of Bodegas Barón de Ley, recalls that it took a lot of time to establish the system of maturity categories and that the terms are now deeply anchored in consumers' minds. Under no circumstances should this be put at risk.
Despite everything, one must try to tackle the problem of cheap Reservas. There are many ideas on how to do this. For example, it would be plausible to introduce a sub-category called "Reserva Superior", which would be bound to stricter quality standards.
In addition, consideration could be given to restricting the movement of future Reserva qualities between registered bodegas in the area by requiring wineries to age their Reserva lots in their own cellar facilities for two-thirds of the time prescribed for the category.
One could also start with a clear officially controlled yield reduction, whereby in this case one would first have to get the cooperatives on board.
On the other hand, the proposal to think about a mandatory organic label for the entire category with a correspondingly long transitional period seems decidedly futuristic or very long-term. Rioja has managed to establish a serious single-vineyard regulation in an astonishingly short time. So why shouldn't the super-appellation be able to upgrade its classic wines as well and thus escape the fate of other large winegrowing regions whose price substructures are afflicted by a creeping sense of agony?
Segmentation: Differentiated storytelling
Segmentation, on the other hand, is a completely different topic. According to Javier Galarreta, CEO of the export group Araex and Spanish Fine Wines, the term stands for a clearer delineation under the umbrella of the Rioja brand.
Classical ageing categories and current terroir indicators, which would also include a more intensive focus on the Alta, Alavasa and Oriental areas, require a differentiated "storytelling", according to the Basque wine entrepreneur. The many different price segments, according to this concept, could possibly be better handled by means of segmentation. However, this would only work if communication and marketing were reorganised and a number of problems were solved. In particular, the designation "vino generico" for wines without a traditional quality level would have to be addressed. Associating some of the world's most prestigious Iberian wines with the term "generic" seems more than unfortunate.
