Friday, 17 October 2014

This is a Unique Time to ‘Take a Risk’ in the Sherry Business

Juan P Simó of Diario de Jerez interviews Jose Luis Torres Rodriguez de Torres, ex Osborne executive, now vine grower, about the Sherry district and its situation.

Jose Luis has been cultivating vines for the last five years in the vineyard “Las Conchas” in the Las Tablas area of albariza in Jerez Superior. His vineyard house, once owned by Rumasa, is called “El Paraiso” (paradise) and is surrounded by luxuriant garden and orchard.

JPS: How did you get into wine?

JLT: My grandfather had some bodegas in La Algaba, which my mother inherited. My father was a doctor who used to think – and I do too – that natural alcohol in moderate doses is healthy.

JPS: That’s been proved…

JLT: There’s a tradition that Sherry is a most agreeable wine which promotes conviviality, does not produce aggressiveness, forges friendship, and which seems to exercise us when talking about such an extraordinary and unique product. It hurts me deeply to see people linked to the Sherry trade drinking products from other regions.

Jose Luis Torres (foto:Diario jerez)
JPS: And do our politicians know this and spread the word?

JLT: Well, what do we need to do to get them to promote our product? I would tell them to stop taxing a healthy product, to stop considering it as a drug, and not to remove it from the Health Ministry’s list of alimentary products. They should be explaining how to drink it since we are talking about a healthy product, and promote Spanish produce, including wine.

JPS: Tell me, is trade healthy?

JLT: Better than ever in terms of product quality, thanks to technological advances in the production of grapes and in the ageing process. In commercial terms, however, things have been difficult, perhaps there has been a lack of confidence in the product from the commercial perspective, but I believe that this is a time of opportunity.

JPS: Is this a good time to invest in wine?

JLT: A great time, but not many have this faith. We need to take a risk – like a bullfighter!

JPS: Where have we gone wrong?

JLT: I think that historically, we arrived somewhat later than other areas with respect to professionalization. It is also true that we have lacked innovation. Those bodegas who have succeeded have done so by perseverance, good management and suitable strategic planning for the long term.

JPS: Tell me something about those euphoric nineteen-sixties, before the great crash.

JLT: That was somewhat illusory. In those days credit facilities were very important, there was a different financial culture, and we worked by imitation and improvisation. There was also that fraudulent demand: the “wine lake” in England, and production was in a few hands who allowed prices to collapse. That did great harm to the image of Sherry, and those same bodegas began producing non-traditional alcoholic drinks. Furthermore, strategic plans, if there were any, were managed rather than led, two different but complementary concepts. Management meant keeping history going where leadership looked towards the future. We were always looking to the past, not the future.

JPS: Go on.

JLT: There was money… so we planted. We had some 23,000 hectares of vineyard. Later distribution channels changed so they were in fewer hands distributing much larger quantities. Now only a few firms distribute some 80%. Sales teams were dismantled as buyers’ own brands (BOB) appeared. It saved us money, but we found ourselves in the hands of the distributors.

JPS: Later Rumasa burst onto the scene, one which was traditionally calm and friendly.

JLT: There were positive sides to Rumasa because they forced us to professionalise, but they brought down prices, bottled a lot of BOB, made well thought out strategic plans but implemented them in an improvised way in a difficult economic climate and employed people who did not understand the Sherry trade. This trade needs understanding, it is difficult and complicated.

Jose Luis Torres at his vineyard (foto:diario jerez)
JPS: What was Sercovisa?

JLT: Servicios Comerciales Vitivinicolas. It was a company born of the professional union of bodegas with the idea of rationalising the sector. It was established in the nineteen-eighties in a period of success and prosperity. This was Evaristo Babe’s (now president of CRDO Brandy de Jerez and Fedejerez) first contact with Jerez. Its president was Luis Ortiz, ex UCD minister, and its purpose was to unite professionals and facilitate intercommunication between managers and buyers, stock balancing, commercialisation, the protection of Sherry etc. Sercovisa organised the establishment of the Consejo Regulador for Brandy.

JPS: Later on, the big drinks groups enter the picture, de-localising the trade.

JLT: That’s what did it. We lost everything; multinationals are more interested in conquering the Spanish consumer than the expansion of their products. This did a lot of damage, but luckily there were bodegas who were prepared to diversify.

JPS: Where did that leave the producer?

JLT: In a difficult position the trade had everything to lose. Speculative manoeuvres left the growers in the hands of the bodegas. Growers had to invest 55-60 pesetas per kilo of grapes, but the bodegas were only paying 25 pesetas. Many were ruined. There was much indiscriminate grubbing-up of vineyard with little consideration of the consequences. I believe the bodegas and growers should stop speculating, get production and demand into balance, and that the bodegas should stop squeezing the growers, who should in turn stop trying to speculate with their principal customer. With these factors in balance, the trade could recover, and there should be inter-professional agreement between growers, bodegas - and why not distribution as well? Let’s not see ourselves as enemies, but as a continuity.

In a further interview, they discuss how to promote Sherry:

JPS: Tell me about the Consejo Regulador.

JLT: Well, the Sherry Consejo is the oldest in Spain, though I think that it is not really suitable for the actual circumstances because it is still an organ of control, which it does perfectly, and which watches over quality, but not so well. Just one example: In its organisational chart there is a section on the growers’ production, integrated in the Consejo itself, which is managed by the exporters. But where are the producers of the raw material, those who must guarantee quality? And where are the marketing professionals, those who should be dealing with these matters? I for one wouldn’t dare to be in charge of production quality. Do they have people in the trade who are truly specialised, with the capacity for this activity? In my judgement, not enough.

JPS: Where else are there failings?

JLT: I think there is a lack of communication. Jerez is important enough to have a media presence. I was following a leading radio programme in the mornings about the countryside which every year analyses every detail of the harvests throughout Spain, but Jerez wasn’t included, and was never even mentioned!

JPS: So they don’t do adequate promotion?

JLT: There has been promotion and it is still done, but I think it is very limited. It is fine at local level, much more than at the level of the Junta de Andalucia.

JPS: Then there is advertising.

JLT: When talking about this matter, many say: “It’s because there is no money”. But we must look after the media. If not, will they look after us? Look, the corporate promotional budget represents between a third and a quarter of that spent by a single bodega on its brands only a few years ago… There’s money here for lots of things! But when money is tight, the first thing they cut back is communication. Communication is as important as the voice itself! If I let the media understand the economic problems which I am experiencing, but I make an effort to invest, I’ll surely get a response.

JPS: What is needed?

JLT: I think that the organ of promotional structure needs further development along with vigilance and the regulation of quality. Grapes are still paid for by weight and not for quality. I’ve never seen this in any other product. Nowadays we need to love our product and not be mean with its production.

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