The XVI century was a time of religious wars and economic upheaval. Spain Portugal and France were Catholic, and from the reign of Elizabeth I England, along with the Northern countries was Protestant. At this time vast riches were crossing the Atlantic to Spain and Portugal from their colonies which proved irresistible to cash - strapped England. English raids against their territories and shipping became a real threat to Spanish economic interests, and along with other European religious/economic strife, there was a real possibility of war.
In 1585 the Anglo Spanish War broke out and Philip II ordered the "Invincible Armada" to be built. English raids on Cadiz, notably that of Sir Francis Drake involved destruction of ships and plunder of provisions - much of which was Sherry (which converted the English palate to it). These raids delayed the Armada's unsuccessful attack on England till 1588, and eventually peace was declared in 1604. Despite events, trade had continued.
The XVII century was more peaceful, and some rationalisation took place in the vineyards after it had been realised that the chalky "Albariza" soils produced better musts, and that the "Flor" yeast was beneficial. The effects of oxidation had also been observed, and so various styles of Sherry were beginning to emerge. Early bodegas began to be established, starting with those of Cabeza de Aranzada and Zarco, who merged in 1653 and introduced what was probably the first Sherry "Brand" namely CZ in the early years of the XVIII century.
The last third of the XVII and first third of the XVIII centuries saw many important developments converting Sherry from traditional viticulture to a modern wine industry. During this time the system of criaderas and soleras was developed and established; the various types of wine; bodega architecture; improved methods of business; choice of the most suitable vines; addition of fortifying spirit; more systematic racking; ageing and blending. Increased demand from Britain and Holland had necessarily led to these recent changes which established the "Sherry Business" much as we know it today.
In the meantime, however, the British had been at work in Portugal. As an alternative to French wines, merchants had been exploring the wines of the Douro. With the signing of the Methuen Treaty in 1703, duties on Port wines were reduced in exchange for preferential treatment for English textiles. Britain has a long history of friendship with Portugal, and while this represented competition for Sherry, both were popular in Britain.
In Jerez, there were inevitable problems between growers and merchants, as there still are, but things generally progressed. Another novelty was the gradual establishment of foreign merchants in the area. Many of their names are familiar today Domecq, O'Neale, Garvey, Duff Gordon, Osborne, Sandeman...With their contacts abroad the business grew exponentially, as did the vineyards.
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