During the first quarter of 2020, Spanish data shows a significant drop in wine sales to the domestic and international markets. The drop in Spanish wine sales is primarily due to the closure of the hospitality and tourism sectors in response to the COVID-19 crisis. Average prices for Spanish wine are also expected to declin*.
Spanish wine production represents 23% of the total wine produced in the EU, ranking third after Italy and France. Of this total wine production, Spain produces 33% of its wines under Protected Denomination of Origin (PDO) and 9% of wines with Geographical Indication (GI). The rest are varietal wines without PDO or GI.
Spain produces wine throughout all its 17 autonomous regions, with a total of 70 different PDOs and 42 GIs. In Spain, there are about 150 native grape varieties planted. The most cultivated varieties are Airen, Tempranillo, Bobal, and Garnacha Tinta.
According to Spanish Wine Market Observatory (OEMV) data, in 2019, Spanish wine consumption increased almost 10% compared to previous.
According to a study by the Spanish Wine Interprofessional (OIVE) and OEMV, in 2018, one third of the total volume of Spanish wine consumption represented household consumption. Another third represented HRI consumption, and the last third represented consumption through other channels, namely gourmet stores, direct sales in wineries, on-line sales, and direct sales to tourists. However, only 17% of the total value reached in 2018, represented household consumption. The HRI sector consumed 54.5%, and other channels 28.5%.
Regarding trade, Spain is a net exporter of wine, the top global wine exporter in volume terms while third largest exporter in value. Following a shorter-than-expected harvest and relatively high 2018 wine stocks, according to official trade data, Spain's wine exports increased 6.7% in volume to 21.7 million HL in 2019 compared to previous year. However, due to a 14% decline in average Spanish wine prices, in 2019, the value of Spanish wine exports dropped 12% to $3 billion. Last year, Spain's wine exports to the EU, its major market, declined 18% mainly due to the value decline in exports to France, Portugal, and Italy. The United States was Spain’s second largest export destination. Spanish wine exports to China also declined in 2019, both in value and volume, to $143 million. Conversely, last year, Spain's wine exports to Japan and Canada continued trending upward.
Official consumption data shows that during the first 10 weeks of confinement from week 11 to week 21 of 2020, average wine consumption in Spanish households rose 42%. Additionally, during the Spanish lockdown there was a significant increase in on-line wine sales. However, this rise in sales did not compensate for the sales loss incurred from the closure of the hospitality sector in terms of both volume and value.
In the first quarter of 2020, Spanish wine prices rose 5.7% compared to the same period in 2019. Exports fell 11% in volume and 9% in value. During this period, Spain's wine exports to the EU dropped 6% and 13% to non-EU countries.
In response to the pandemic's negative impact on the Spanish wine sector and seeking to avoid a surplus of wine during the new 2020/21 wine season, the Spanish Ministry of Agriculture implemented a set of extraordinary measure.
Author: David BECK
Excerpt from our EUROPE WINE MARKETS Handbook.