Spain's harvest is likely to go down as the country’s most contentious harvest in decades, marked by a dramatic fall in grape prices as wine producers grapple with the impact of Covid-19 on demand and market uncertainty.
On September 4, growers ended strike action in Valdepeñas after Spain's biggest producers Garcia Carrion and Felix Solis, reversed a decision to severely cut grape prices by up to 30 percent. But since then growers have continued to voice grievances over prices in Rioja, Extremadura, and Catalonia, where big Cava producers including Henkell-Freixenet are selling grapes for as low as €0.30 per kilo ($0.16 per lb).
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Falls in grape prices, which growers say have tumbled below production costs, reflect a widening gulf between supply and demand; Spain's wine stocks up to the end of July registered a 3 million hectoliter increase, highlighting the fall in domestic consumption in hotels, bars and restaurants, and the decline of tourism and exports.
This week, however, wine producers in Rioja, Rueda and Catalonia dismissed earlier industry forecasts of a bumper crop, which had increased concerns over surplus supply. Harvest volumes this year in Spain are now expected to fall in line with the average volumes of between 42 and 44 million hl registered over the past five years according to the Spanish wine market observatory (OEMV).
Considerable rainfall this spring led to a long, hot summer together with an outbreak of vine disease; mildew in Catalonia and Rioja and odium in Rueda, which has hit organic production, curtailing anticipated wine production levels, producers said.
The impact of the Covid-19 on Spain's wine sector has highlighted structural concerns; Spain's total vineyard area has decreased over the past decade, but wine production has increased to levels beyond demand for average yearly exports and domestic consumption.
EU funds to limit production volumes through green harvesting, storage and distillation, together with government legislation to limit maximum yields, have been reinforced by local finance loans for producers in Rioja and the Basque Country and include schemes to entice producers to buy grapes.
But this week, hundreds of growers in Spanish wine regions were unsure if producers would buy grapes this harvest – not all of them have contracts.
Mayor de Castilla vineyard in Rueda, Spain's biggest white wine region, said it had adopted new measures to curb production volumes as a result of the Rueda DO wine board's 15 percent reduction of maximum yields this year.
"Instead of buying grapes from growers, we will make wine for growers and concentrated grape must instead," Miguel Melida Gutierrez, co-owner of the 1000-ha Mayor de Castilla vineyard told Wine-Searcher. He played down a report on Monday in El Norte de Castilla newspaper that said the measures would result in 60 growers – with 1500ha of vineyards – being unable to sell grapes.
Last year, Mayor de Castilla made 12 million bottles of Rueda wine for Garcia Carrion, which sells its Pata Negra brand for around €3 in Spanish supermarkets and directly online.
Victor de la Serna, the veteran wine journalist at Spain's Spanish El Mundo newspaper, wrote earlier this year that Spain's commercial problem centered on "the enormous production of cheap and low-end wine made by giant groups Felix Solis and Garcia Carrion", which had tarnished the country's wine sector image and limited export prices.
Gutierrez, however, said Garcia Carrion’s affordable wines were competitive in quality and price.
He blamed local cooperatives this year of adopting price dumping measures, by selling wines as low as €0.90. "Unlike us, they don't have to pay growers within 30 days, it is not something we can do this year," Gutierrez said.
This harvest, Pernod Ricard has amended contracts for its Rioja vineyards to reflect lower grape prices. Unconfirmed reports also said Marqués de Cáceres and Felix Solis's Pago del Solis had informed growers that they would not be buying grapes this year. Marques de Riscal, however, told Wine-Searcher that it would continue to buy grapes in Rioja and Rueda this year.
Smaller wine producers who sell to hotels, bars and restaurants where trade has collapsed this year have been the hardest hit. Covid-19 has had a far less impact on larger companies who sell wines in supermarkets. Of the Spanish wines sold in supermarkets, wine sales of Rueda, have grown the most, Santiago Mora, managing director of the Rueda DO wine board told Wine-Searcher. Spanish still DO wine sales increased by 11 percent in the first half of this year in Spanish supermarkets, the OEMV said.