Friday, 16 November 2018

16.11.18 Some of the Problems Facing Jerez

The independent growers of the Marco de Jerez, mostly members of Asevi-Asaja are moving closer to cooperative membership as a means of protecting their interests, everyone´s interests, in the hope of achieving higher prices for their grapes. The first steps in this direction came over the last few months with a few dozen growers joining the coop Nuestra Señora de las Angustias to try and protect themselves from this situation. Now, Asevi-Asaja has begun a search for some kind of alliance between the 7 coops of the area and D-Coop, the largest in Spain and which counts the Trebujena coop Virgen de Palomares as a member.

The growers, independent or cooperative, reckon the moment has arrived to form some type of union and take action to improve their working margins. Let us remember that a kilo of grapes in Jerez costs just 36 céntimos and that all the growers together account for 75% of the vineyard against the 25% belonging to bodegas. Nobody yet knows how exactly this unión will be since they must avoid any problem with the CNC (competition commission) which has its eye on Jerez due to past accuasations of price fixing (though in other DOs people seem free to talk of an official price – though there isn´t one, nor is there a guide price – and sectorial agreements).

Winter pruning in Jerez

 Centralising sales, the constitution of a company or even a new 2nd grade cooperative (2nd grade is a super coop where the members are cooperatives rather than people) are some of the possibilities on the table after rounds of meetings between independent and cooperative growers along with D-Coop and from which the main conclusions to be drawn are that the production sector has a serious problem with profitability, it is their problem and that nobody else is going to come and solve it for them, as has been proved over the last 5 years or so. They are even showing themselves willing for such an alliance to go beyond the merely economical and include all matters of sectorial policy.

On the part of the bodegas, the message that the growers want to organise and seek solutions to their profitability problems, though it might be a bit of a shock, has generally been taken on board. This is partly because they are hoping that the constant criticism they have been getting over the years about the price they pay for grapes will stop or at least subside. There are some bodegas which just shrug their shoulders and point to the laws of  supply and demand (like with their other suppliers), although there are some voices which go farther - among others, that of Evaristo Babé, president of Fedejerez who wrote an article in the Diario de Jerez newspaper shortly before the meeting between the growers and D-Coop – and talk of the damage to the trade which could be caused by such alarmist declarations about the vineyards in a global, complex and interrelated world.

The bodegas are quite clear that it is the growers themselves who have to sort out their own problem (possibly with help from public administration) and guardedly some think this first step is going in the right direction. As proof of this is the fact that some independent growers have been offered “three or four pesetas more” for next year´s grapes, but as 4 pesetas is less than 2 céntimos it is more of a gesture than anything else.

Then there is the other matter, a complicated one, which is overproduction. Around a decade ago the amount of vineyard was drastically reduced to bring production into line with demand, but as sales have been declining ever since, the spectre of overproduction may return and it is estimated that this could amount to 20,000 butts by the end of the 2018/19 campaign especially after the large 2018 crop which was around 135,000 butts. Current requirements for Sherry, vinegar, white wine, wine for seasoning spirits barrels and other products amount to only 100,000 butts, so it is hard to see growers being able to charge more for grapes when some of them might not even be needed by the bodegas.


So that is the picture. The growers are sick of low prices but are looking for ways to increase them at a very difficult time. In similar situations in other years the coops have sold disqualified concentrated musts which they sold to local bodegas which needed them or to bodegas elsewhere as they are useful in the production of various alcoholic or non-alcoholic drinks. Perhaps on this occasion in view of the numbers and the changing fashion towards the grapes´origin, “the return to the vineyard”, the growers should consider adding the production of wine alcohol to their sectorial agenda.

It seems crazy that Jerez has excess wine and yet the bodegas are buying fortifying spirit from outside Jerez (not to mention Brandy, which if produced locally would get its own full DO) and sometimes concentrated must, and thus squandering the opportunity to make more profit and provide more employment in Jerez. The producers should actively join the movement proposing that 100% of the content of a bottle of Sherry is produced in Jerez, not only for prestige, but also for profit.

This idea resonates with that of returning to the origin which various people have been proposing for years and it might find some unexpected allies if the current situation were to change. From deepening crisis the trade could in the medium term have a distillery, a subject which has seen little or no progress since it was suggested nearly three years ago when EU funds were available. It should be remembered that the Asevi leaders have said at least twice that they are in favour of the idea, even suggesting that one of the cooperatives take up the initiative. As to the EU funds, the general feeling in the trade is that the opportunity has now been lost (again) and that the money has been spent on investing in wine tourism which are considered, well, superfluous.

Profitability in the vineyard and unity in sectorial policy have been mentioned, but not a Word which is key to the future: planning. There are some who say that planning, global planning, planning which addreeses the needs of a product of diverse types would be fundamental for the growers to achieve better profitability. Planning could make Sherry and all the other related products great again. The ideas are on the table and the difficulties are enormous, but the challenge could not be more exciting.

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