WINE IN FIGURES 1. Market situation The Spanish wine sector is hugely important both in terms of the economic value that it generates as well as for the number of jobs its sustains and its role in environmental conservation. With nearly 1.2 million hectares under vine (of which 97.4% is for wine, 2% for table grapes, 0.3% for raisins and the remaining 0.3% is plant sales), Spain continues to be the country with the largest area of vine cultivation in the European Union and the world (accounting for one third of the total EU area, followed by France and Italy with approximately 25% each, representing more than 15% of the world s area under vine). Spain s wine producing tradition extends back to the Romans. Vines are Spain s third ranked crop by area after cereals and olive trees. According to data from the International Organization of Vine and Wine (O.I.V.) the decline in grape cultivation areas for wine in the European Union is offset by growth outside of the EU, and the total global cultivation area remains virtually unchanged, falling from 7,930,000 hectares in 2005 to 7,924,000 in 2006. GLOBAL VINEYARD AREA (000s hectares) 2002 2003 2004* 2005** % of total world Spain 1,202 1,207 1,200 1,180 14.9 France 898 888 889 890 11.2 Italy 872 862 849 847 10.7 Total EU 3,663 3,641 3,617 3,600 45.3 United States 415 415 398 399 5.0 Chile 184 185 189 191 2.4 Australia 159 157 164 167 2.1 Total World 7,955 7,955 7,930 7,943 100 *Provisional **Forecast Global Production According to data published by the O.I.V., global output will continue to rise at a faster rate than consumption, despite the total planted area remaining stable. Global wine production in 2006, excluding musts and juices, is estimated between 279.9 and 287.3 million hectoliters, equivalent to an increase of between 0.5% and 3.2% over the previous year. Of this volume, two thirds corresponds to the EU-25, 18% to southern hemisphere producing countries and 7% to the USA. GLOBAL WINE PRODUCTION (000s hectoliters) 2002 2003 2004 2005** % of total world France* 50,353 46,360 57,386 52,004 18.8 Italy* 44,604 44,086 53,000 50,556 18.3 Spain* 33,478 41,843 42,988 34,750 12.5 Total EU- 25 155,666 160,201 184,201 164,647 59.4 United States* 20,300 19,500 20,110 22,890 8.3 Chile 5,623 6,682 6,301 7,890 2.8 Australia 11,509 10,194 13,810 14,000 5.1 286,800- Total World 260,900 262,700 294,900 277,000 100 *Excluding musts **Forecast Source: F.A.O./O.I.V. Page 1
EU-25 Production Provisional data on output in the main EU producing countries in the 2006/07 season, forecasts a total production of approximately 166 million hectoliters, broken down as follows: EU-25 PRODUCTION 2006/2007 France Italy Spain Germany Portugal Greece Austria 55 m 49 m 39 m 9 m 6.9 m 4 m 2.3 m Other producing countries include Bulgaria, Hungary, Luxembourg, the Czech Republic, Malta, Slovenia, Slovakia and the United Kingdom. Compared to the previous year, these quantities show a 5% increase for Spain, 3% for France and a 6% decrease for Italy. Spanish Production According to data from FEGA, the Spanish Agricultural Guarantee Fund, wine and must production in Spain rose to 44.36 million hectoliters in the 2006/07 season, of which more than 39 million were wine and 5 million were must. Of the 39 million hectoliters of wine, 13.3 million correspond to quality wines with a denomination of origin, equivalent to 30% of the total wine production and 8% more than 2005/06. Table wines with a geographical indication and country wines represent 4.09 million hectoliters, a 60% increase over the previous year; while 21.7 million hectoliters are table wines without a geographical indication, which have increased by only 1.4%. By autonomous community, 51.8% of total wine production comes from Castilla-La Mancha, followed by Catalonia, Extremadura and the Valencia region. Rioja and Castilla-Leon are ranked fifth and sixth. By hectares, the largest area belongs to Castilla-La Mancha (45.6% of all vines for wine production), followed by Extremadura (7.8%), the region of Valencia (6.6%), Castilla-Leon (5.8%), Catalonia (5.7%), Murcia (4%), Rioja (3.8%), Aragon (3.8%), Andalusia (3.2%), Galicia (2.9%), Navarre (2.2%), Canary Islands (1.6%) and Madrid (1.6%). The other regions account for lower percentages. By color, more than 21 million hectoliters were red or rose wines, 53.4% and 18.22% of the total respectively, while 46.6% were white wines. Wine production, including must, represents 2% of total final agricultural output and 3.3% of the value of all crop production. In 2005 the wine industry employed 22,862 people, accounting for 5.99% of the total employed by the agrifood industry. The value of sales by winemakers in the same year rose to 4.963 billion, equivalent to 6.45% of total sales for the sector. In 2004, the last year available, there were 4,109 companies in the sector accounting for 12.9% of all agrifood companies, ranked third behind the bakery, pastry and biscuit industry, and the meat industry. Spain s geographical position, its climatic differences and its wide variety of soil types makes the peninsula a privileged place for producing wines with very different characteristics. Vines are grown in all 17 of the country s autonomous regions, even though nearly half of the total hectares are found in Castilla-La Mancha (540,000 ha) which is the geographical region with the largest area under vine cultivation in the world, followed by Extremadura (nearly 100,000 ha), Castilla-Leon, Valencia, Catalonia, Aragon, Murcia, Andalusia and Rioja. Nevertheless, the region of La Rioja dedicates the highest proportion of its land area to vine growing as a percentage of its cropped land. The average farm size in Spain is 3.34 hectares, although this varies between regions. The smallest are found in Galicia and the largest in Murcia. Page 2
Of the total area dedicated to this crop, nearly 60% has a designation of origin classification, growing quality wine produced in a specific region (vcprd) and the number of hectares is rising to the detriment of areas growing table wines. Spain has 73 areas classified as producing quality wine in a specific region, of which five are classified as quality wines (vinos de calidad), three are single estate wines (vinos de pago) and the remainder are designation of origin, which following the European production model, maintain strict control over the quantity produced, wine making practices and the quality of the wines that are produced in each zone. The first authorized designations date back to 1932 and were Jerez-Xères-Sherry, Manzanilla de Sanlúcar de Barrameda, Málaga, Montilla-Moriles, Rioja, Tarragona, Priorato, Alella, Utiel Requena, Valencia, Alicante, Ribeiro, Cariñena, Penedés, Condado de Huelva, Valdepeñas, La Mancha, Navarre and Rueda. There are also 43 classifications of table wine with the right to use the traditional Vinos de la Tierra en España description (Spanish country wines). There are designations of origin in every autonomous region except Cantabria and Santander, while in some regions such as La Rioja, the Basque Country, Navarre or Catalonia, nearly all the wine produced is classified as quality wine produced in a specific region (vcprd), meaning that they are classified under a specific designation. Of the total wine produced, 66.7% is table wine and 33.3% is vcprd. In terms of grape varieties, 61.5% of the area is planted with white varieties, especially in the regions of Castilla-La Mancha, Extremadura, Andalusia and Catalonia. The latter two regions use white varieties for producing liqueur wines and Cava respectively. The most common grape varieties in Spain are Airén, Tempranillo, Bobal, Garnacha Tinta, Monastrell, Pardina, Macabeo and Palomino, listed by order of importance in terms of growing area. Of these only Tempranillo, Bobal, Garnacha tinta and Monastrell are red varieties, the rest are white. Red wine accounts for 43.5% of Spanish wine production and the regions of Murcia, La Rioja, Aragon and Valencia account for the majority of red wine produced in Spain. 2. Company structure The main characteristic of this sector is the important process of modernization and renewal that it is currently undergoing. Since 2000, the total area subject to reconversion and restructuring has exceeded 102,000 hectares, representing an investment of nearly 650 million. Total sales for the leading 70 wine producing groups exceeded 3.0 billion with year on year growth of 3.8%. In 2005 more than 50 new winery enterprises were registered. The penetration of international capital in the sector is already highly significant and there is a high degree of concentration among the leading operators. The leading companies in the sector with more than 100 million in sales are: J. García Carrión, S.A.; Grupo Freixenet, S.A.; Grupo Osborne S.A.; Arco Bodegas Unidas, S.A.; Codorniú, S.A.; Domecq Wines España, S.A. (Grupo Domecq Bodegas); Grupo Miguel Torres, S.A.; and Félix Solís, S.A. However, small wine producers and cooperatives still exist alongside the large companies, which own wineries in the different producing regions in order to diversify their range. To control quality throughout the production process, many wineries have purchased or have increased the area of their vines in order to ensure consistent quality of the raw materials. There has been a significant investment in constructing new wineries, improving facilities and equipment, and in the use of different ageing techniques to offer a much broader range of quality wines. Of special note are the activities and innovation of many wineries that are experimenting with new grape varieties and the use of indigenous grapes in order to produce wines that meet the tastes of new consumers. Investments and investment projects in progress to create and improve the production capacity of wine companies exceed 1.20 billion. This modernization process also includes the construction of new wineries designed by world famous architects, which some wine companies have embarked upon, including Domecq, Bodegas Ysios (commissioned to Santiago Calatrava), or CVNE (designed by Philippe Mazières), Marqués de Riscal, which commissioned Frank O. Gehry, or the new Señora de Arinzano winery designed by Rafael Moneo for Bodegas Chivite. Page 3
3. Exports Global Exports According to the latest data published by the O.I.V. for 2005, world exports rose to 78.7 million hectoliters, representing a 3% increase on 2004. The market share of the five leading EU exporters (Italy, Spain, France, Germany and Portugal) continued to fall, accounting for 62% of the total in 2005 compared to 75% twenty years ago. Conversely, southern hemisphere countries (Australia, Argentina, Chile, South Africa and New Zealand) together with the United States have not stopped growing and accounted for 25.5% of the total in 2005 compared to just 1.6% at the start of the 1980s. The countries which have suffered the most have come from Eastern Europe and the Maghreb which have seen their share fall from 14% to 3.3%. Spanish Exports 2006 In 2006 Spain exported 1.44 billion liters of wine with a value of 1.642 billion, which represents a modest decline in volume (-0.7%) and a 4% increase in value. The lower volume is due to the decline in sales of wines in bulk, although sales did not fall as much as expected. The harvests in France and Italy recovered and the sales of 2003 and 2004 were not repeated. In absolute terms, sales were 61.5 million higher than the previous year despite the falling volume thanks to the strong performance of exports of quality wines (with and without designation of origin). Bottled designation of origin wines rose by 8.5% to 798 million, accounting for 49% of total sales. Exports of bottled table wines also developed strongly, growing by 3.4% to 177 million. In terms of value, our principal market is the United Kingdom, which grew by 5.3% compared to 2005, followed by Germany, which fell by 9% and the United States, which recorded the strongest growth of the leading destinations rising by 15%. By volume, the leading destination was France followed by Germany and the United Kingdom. SPANISH EXPORTS OF ALL WINES UNDER TARIFF CATEGORY 2204 thousands 2004 2005 2006 2006/2004 % of total TOTAL WORLD 1,540,867 1,548,214 1,605,146 4.17 100 UNITED KINGDOM 279,977 268,771 282,471 0.9 17.6 GERMANY 310,019 298,948 273,587-11.8 17.0 UNITED STATES 145,721 159,231 182,503 25.2 11.4 FRANCE 129,767 120,066 95,884-26.1 6.0 SWITZERLAND 72,055 78,149 82,158 14.0 5.1 NETHERLANDS 74,085 74,816 77,878 5.1 4.9 RUSSIA 15,493 25,770 62,202 301.5 3.9 SWEDEN 52,155 49,178 53,179 2.0 3.3 BELGIUM 32,616 37,252 49,314 51.2 3.1 DENMARK 48,956 47,438 41,826-14.6 2.6 CANADA 26,983 33,939 40,233 49.1 2.5 MEXICO 25,095 29,033 35,110 39.9 2.2 PORTUGAL 56,929 44,764 33,967-40.3 2.1 JAPAN 29,631 31,074 32,855 10.9 2.0 ITALY 54,168 33,784 27,021-50.1 1.7 Source: D.G.A./ICEX Page 4
EXPORTS FROM THE PRINCIPAL DESIGNATIONS OF ORIGIN (hectoliters) 2003 2004 2005 Variation 05/04 % of total Cava 836,342 890,238 953,681 7.1 20.3 Rioja 716,910 658,720 714,310 8.4 15.2 Jerez 534,246 498,364 478,628-4.0 10.2 Valencia 385,522 416,197 415,726-0.1 8.9 La Mancha 262,968 300,409 370,920 23.5 7.9 Utiel-Requena 227,893 228,071 197,375-13.5 4.2 Valdepeñas 192,819 199,404 166,623-16.4 3.6 Navarre 140,206 165,579 185,168 11.8 3.9 Cariñena 154,447 131,363 175,568 33.7 3.7 Catalonia 131,717 120,133 149,255 24.2 3.2 Penedés 135,719 120,071 115,582-3.7 2.5 Jumilla 95,733 112,158 109,720-2.2 2.3 Top 12 3,814,522 3,840,707 4,032,556 5.0 86.0 Others 449,932 541,553 657,664 21.4 14.0 Total v.c.p.r.d. 4,264,454 4,382,260 4,690,220 7.0 100 Source: MAPA/ICEX Page 5