In 2022, France tightened wine labelling rules for restaurants and bars to protects consumers over misleading labels and packaging. Now, restaurant and bar owners in France face fines unless the origin of wine is listed — and Portuguese wine regions want their government to do the same. Amidst the cost-of-living crisis, many Portuguese restaurants have turned, sometimes unwittingly, to selling Spanish house wines by the glass or in jugs to consumers who may presume they are drinking Portuguese. Five-litre bag-in-box wines in Portuguese supermarkets with an average price of €5.99, are often packaged with Portuguese emblems. Closer examination reveals small lettering stating “Producto da UE” (EU product) – indicating that the wine originated in Spain.
Illegal blending?
Selling Spanish bulk as ‘EU wine’ is legal. The EU single market as well as modern production techniques and machinery, often funded by the EU, have allowed bulk wine operators to be competitive in terms of quality and price. However, Andovi - the Associação Nacional das Denominações de Origem Vitivinícolas, the PDO/PGI wine regions - suspects big Portuguese wine companies are illegally blending Spanish wine with Portuguese appellation wines, adding to the local producers’ problems.
In April, Francisco Toscano Rico, Chairman of Andovi, told the Portuguese online news site Econews.pt: “If it is true that we are in the [European] single market — and we do not dispute that… how is this [Spanish] wine being placed on the market? To what extent is it marketed as imported wine or is it being blended and sold as Portuguese wine? It is essential to check this. We need more and better control and there are mechanisms to do this.”
Calls for import controls
On May 14, Andovi representatives met with Portugal's Secretary of State for Agriculture to advocate for new reforms aimed at ensuring transparency in wine origins and greater control over production.
The meeting was held less than a week after the Douro wine board, IVDP, put out a statement on May 17th to remind producers that the use of bulk wines is strictly prohibited in PDO wine production. It also suggested it would start to control movements of bulk in the PDO region of the Douro and exert more control over regulatory exemptions to the circulation of bulk wine in the region.
The reforms could also result in changes to PGI regional wine legislation, which currently permits 15% of PGI wines to be made from wines from other regions. Portuguese producer Joao Portugal Ramos has suggested that using grapes from other Portuguese regions should be allowed only in exceptional circumstances.
IVDP reminds producers that the use of bulk wines is strictly prohibited in PDO wine production and suggested more control over regulatory exemptions to the circulation of bulk wine in the region.
Several producers have urged regional wine boards to exert further controls and testing on PDO and PGI wines before they are granted permission to use the appellation stamps on packaging (something which generates cash for wine boards), to ensure wine has not been blended. Testing for evidence may prove difficult.
Tempranillo, known as Aragones or Tinto Roriz in Portuguese, is grown in Portugal and Spain in a similar climate. But there are ways in which to prove where wine was produced.
Luis Margaça, general manager of producer Familia Margaça, wants the Portuguese government to go further by adopting quotas to limit the amount of imported wine. ‘We don’t want to turn our backs on the world, and we do not agree with what French growers have done by attacking Spanish wine lorries, but we need quotas on imports from Spanish wine to protect producers in Portugal. Quotas would help raise grape prices in Portugal and relieve surplus stocks,” Margaça told Meininger’s.
Copycats using Spanish wine
Familia Margaça, which produces around a million litres of bottled and bag-in-box wine per year, has been making wine in the village of Pias in Alentejo since 1973. Its predicament epitomises the situation concerning wine origins. The success of its asPias brand led to the proliferation of copycat brands, some of which involve EU wine. Portugal’s National Intellectual Property Institute (IPNI)’s website shows there are an astonishing number of 189 mainly wine brands, which use the Pias name, such as Amor de Pias, Alma de Pias, Amigos de Pias, Ermida de Pais and Secretos de Pias.
Familia Margaças’s asPias, the original Pias wine sells at €11 a box, almost twice the average price. “There are several big producers who use bulk. Bag-in-box is a cash cow for brands, but with very low margins. Pias was once associated with quality, but it is now associated with cheap and fake wine in terms of origin, that’s why in 2020, we started to use the Familia Margaça brand name in both bag-in-box and bottled wines, showing the consumers the truth about what’s behind wine labels in term of origin,” Luis Margaça said.
Spanish wine imports into Portugal are nothing new. What’s driving calls for controls on imports is surplus stocks of wine in Portuguese wineries. Ahead of this year’s harvest, Portuguese producers fear they may not have capacity to bring in grapes due to the extent of the surplus stocks, which Fenadegas, the Portuguese federation of cooperative wineries, says stands at 120m litres.
Excess imports
“Portugal has surplus wine stocks due to surplus imports. In 2023, we imported 120m litres more than we need. That's almost a fifth of national wine production," António Mendes, Chairman of Fenadegas, told Portuguese TV station Sic on June 7th.
Francisco Mateus, Chairman of the Alentejo wine board reckons the surplus wine stocks in Portugal could be as high as 200m litres. Mateus told Meininger’s that the region had 50m litres of surplus red, and that sales of Alentejo wine were being hampered by imports from Spain. Fenadegas has urged the government to adopt distillation of stocks to provide cooperatives with direct credit and to avoid a crisis for their growers in the forthcoming harvest, in which cooperatives may not buy grapes.
The surplus wine stocks in Portugal could be as high as 200m litres. Fenadegas has urged the government to adopt distillation of stocks.
In the report Sic said that Portugal imported close to 300m litres of wine last year, most of which was from Spain.
Portugal is Spain’s fourth biggest export market for bulk wines, after France, Germany and Italy. According to the IVV, Portugal’s wine institute, Portuguese wine imports (without geographical indication) increased on average by 83m litres between 2019 and 2023, reaching over 2.5m hl in 2019 and 2021.
According to Spain’s wine market observatory the OEMV, Extremadura, Spain’s third biggest wine region in terms of volume, increased wine exports by 26% to 50.3m litres during the first quarter of 2024, compared to 2023.
‘Return to normality’
However, Viñaoliva, a cooperative in Extremadura, which produces bulk wine and 3m bottles of quality wine, said the rise in regional exports this year did not mean growth in real terms, but rather a return to ‘normality’ of volumes, as production had slumped in 2022, during a poor harvest. Portugal is Extremadura’s key export market for bulk wine – much of the wine was, it says, traditionally reexported to Portugal’s former colonies.
Yet operators in Extremadura say red wine exports to Portugal slowed in 2023, following Portugal’s generous harvest in 2023; output increased by more than 8% to 7.3m hl, while production in Spain fell by 21% to 32m hl. The OEMV said Spanish bulk wine exports to Portugal fell by 19% in volume to 1.1m hl between March 2023 and March 2024, suggesting that growth of Spanish bulk wine to Portugal ended last year.
“Demand for red Spanish bulk wine is depressed,” said broker Rodrigo Vargas, a director at Inexvin XX1, which trades bulk from Extremadura and Castilla La Mancha. Meanwhile, prices for Spanish white bulk wine have dramatically increased, as there is less supply available.
Providing an overview of Spanish bulk market, Aude Auger, head of exports at Spanish bulk wine broker company, Pedro Rovira, said: “Entry-level generic red bulk wine prices are low at around €34/hl, whereas prices for white bulk wine increased this year by 40% to €50/hl. Prices are higher this year, so customers have bought less wine [as a result of] rising inflation, costs and changing consumer habits.
Spanish Sekt and French table wines
Portuguese concerns over imported Spanish wine centre on red wine, yet the origin of white grapes and base wine used to make Sekt sparkling wine in Germany may also be a concern for consumers. If the Penedes of Catalonia was once a source for base wine exports to Germany, where it is bottled to make Sekt sparkling wine and reexported to markets including the Netherlands, demand has turned more towards Castilla La Mancha. The Requena wine region of Valencia is also a key producer of white bulk wine from Spain.
Germany imports predominately white bulk wine from Spain and is also importing some red wine to prepare Glühwein for winter consumption. France also predominately imports white bulk wine as well as red and rosé, which it uses for bottled table wines and bag-in-box; these two countries are the biggest markets for Spanish bulk. Over the past five years, Germany has been narrowing the gap with France, in terms of volume.
Rafael del Rey, director of Spain’s OEMV, who defended the competitiveness of Spanish bulk wine in terms of quality and prices, said that between March 2024 and March 2023, Spanish bulk wine exports to Germany increased by 13.4% in value and by 11.4% in volumes.
In April this year, the Spanish newspaper El Economista said Cava producers had acquired 15m litres of base wine annually over the past couple of years.
Base wine from the Penedes is now being used up in the Cava DO appellation. Drought over the past three years has lowered supply. Facing their own short supply, Cava DO producers in Catalonia have turned to Extremadura, to buy base white wine for Cava.
Recovery in key Spanish regions
While the Penedes in Catalonia has been hit by drought, hopes of a better harvest which had been raised by rain in the spring were dampened on 1 June, when a hail and rainstorm destroyed around 6m kilos of grapes, or 4% of the 25,000 ha of the Penedes according to Joan Huguet, President of the Penedes DO. The storm resulted in a 20% fall in yields in about 15% of the Penedes, Huguet told Meininger’s. Areas of Castilla La Mancha, including la Manchuela were also affected by a similar storm this week; however, cooler spring weather in Extremadura and Castilla La Mancha has raised hopes of a bumper crop in these two key regions this year.
Some signs of recovery in the Spanish bulk market have already come from Italy, where exports have returned after a slump last year. With several French and German wine regions, hit by outbreaks or either frost or hail, demand for Spanish bulk is expected to rise later this year, but maybe not as enthusiastically from Portugal if the government adopts the changes demanded by Portuguese wine regions and producers – and if the country’s producers have not been able to find buyers for their own excess stock.
