I have translated this interview from yesterday's Diario de Jerez, to whom I am much indebted.
"Sherry is no longer in crisis and our priority is to create employment once more."
The relationship with Mercadona created a "before and after" at Estevez, who are expanding after the purchase of 400 ha of vineyard. The bodega's president talks of resurrection but says "let's not go mad."
Grupo Estevez has just bought from Beam Global (former owners of Domecq) 400 ha of vineyard in the biggest deal in the area for many years. While others are slimming down, this family business is pursuing expansion together with Mercadona (a Spanish supermarket chain based in Valencia) with whom they started working in 1998. This created the "before and after" at Estevez, home of Tio Mateo, by the sales volume of the 50 or so lines they produce for the chain, which has over 1,000 branches throughout Spain. Jose Ramon Estevez, president of the bodega, believes Jerez has overcome the crisis and now is the time to build, to forget the hard times and to get back to creating employment - without sacrificing quality.
The vineyard purchase is good news in an area with ever decreasing vineyard, you see a lot of bald patches in the countryside.
It's awful. Whenever you go into the countryside you say this was a vineyard, that was a vineyard, and you think of all the hope and work which went into it. It is a shame, a lost patrimony, but we have a responsibility for our inheritance which we cannot afford to lose. I am now creating employment and this purchase is part of the plan, because with so little vineyard left and demand from abroad, there could be supply problems.
It's odd that only a few years ago Fedejerez (bodega association) estimated that there was a third too much vineyard in Jerez and now there isn't enough.
I never said there was too much, and if we'd had enough sense we wouldn't have uprooted so many vines, neither would we have lost so much labour, and we wouldn't have had so much unemployment in Jerez. I do what I have to do and I've always said what I believed to be right, and I've never believed in grubbing up vineyards in Jerez. That's what I said to the local agriculture minister, and to the national one, and to everybody, because Sherry is a treasure we can't afford to lose.
Is there an expansion plan behind the purchase?
In the short term we're going to need as many people as Beam had for the vineyard we bought which needs some attention. To put it into full production, to graft, prune etc. needs a lot of specialised workers. So long as our customers are ordering we are happy to grow. Beam is a fantastic multinational, very successful, but they can make more profit from the money they invested in Jerez elsewhere. I think we could do it here.
In an investment such as this, Mercadona will be involved, what is it worth to Estevez?
It is worth about 50% of our business nowadays.
Is there any guarantee of continuity?
Mercadona isn't going to go away. It's for life, I'm sure of that.
Can you explain that?
In the first place I won't let them go and in the second case it's not their philosophy. And if Mercadona makes a mistake with me they make a mistake with their own project, but that won't happen. They have put a "before and after" at Estevez, they've made us see how to do business, create wealth and distribute it. They took the opportunity no-one else saw, and here are the rewards.
Are we talking about just volume?
No. Mercadona never questions volume; they question quality and the wellbeing of all involved: 1st the customer, then the workforce, then the suppliers, then society, then capital. When one puts this model - this philosophy - to work, the results are spectacular. We now have a motivated workforce working with impressive dedication; we have suppliers who are delighted because we can guarantee to pay them, so they earn money. Last year in the vineyards we paid growers 10% more than the market rate and this year we'll pay another 10% and next year too, because we want suppliers to earn money. We pay more, but we expect more because quality is fundamental. The price is a function of your perception. Not always selling at a higher price shows you are less competitive. You can sell at a higher price and be more competitive because you are giving greater quality, you are giving something the others aren't. But you have to remember that there is no business without a supplier, and Sherry has stopped being a commodity, it is a unique wine in the world with no barriers.
Jerez itself has some sort of barrier - or frontier (!)
That is part of the Jerez culture which should be got rid of. It upsets me that the Jerezanos seem to lack affection for their land. When we're away we are proud of the place, but here we are always running things down. We have to change because there is so much unemployment, so many people to feed and a tremendous cultural and historic patrimony in Sherry. We've reached the limit - of many things, now we are going to do things properly.
In the trade there are those who are beginning to see signs of recovery, do you agree?
The situation in Jerez today is much better than last year and the previous one. It's better because everything has been adjusted, the balance between supply and demand has been restored - but that doesn't mean to say that everything has been done, you have to reinvent yourself every day. One thing we lack is plain speaking and taking on leadership, we mustn't wonder every day what they are going to do for us, but do things ourselves. Jerez has a product we must make the most of.
How can we make the most of it?
All we need is for businessmen to put their batteries in, that we all work in the same direction, and that we all - including Jerezanos - drink Sherry every day. Why do we drink Rueda or whatever, and not Sherry?
Perhaps the reason is that Sherry has been thought of more as an export wine than local.
So what do we do for the Feria in Jerez? What more important event is there in Jerez than the Feria? It's our culture, our way of life...
And what do we do for the rest of the year?
The rest of the year we throw it away, we give it away. At Christmas time toys are more expensive than in the sales, but we do it in reverse - when the season of demand comes we just give it away. We've done things backwards for a long time, but never mind, but now we must be realistic, it's time to grow. Everything it could be said we had done badly everybody knows; the cooperatives know, the growers know, the bodegas know, we all know. We'll have to start from the beginning and build all over again.
You seem optimistic.
I'm not optimistic but realistic. Jerez is not in crisis now, it's been resuscitated now that balance has been restored, and I'm positive that the first thing we have to do is to make sure the growers, without whom there would be no Sherry business, make some money. We can't keep going from boom to bust because the bodegas couldn't cope. That's where we need agreement - for a start. And if we could guarantee supplies we could grow - but that's in doubt with so much grubbing up.
Many have fallen by the wayside because of this rebalancing.
Yes. We now have 6,000 hectares and we used to have 22,000. Last year we had 1,800 growers and loads have gone, just like so many employees of the business and those of auxiliary industries. But it has stopped now, we're no longer in crisis, we are balanced and need to put in the batteries. But we shouldn't go mad now that we have balance and say tomorrow that grapes should cost 200 pesetas (@ 1,30 euros), no. I aspire for Jerez to be like Champagne or Cognac. Do you know how much 1 hectare costs in Champagne?
If Jerez is less than 9,000 euros, say 15,000?
One million euros!
How much?!
You heard that right, one million euros, and a kilo of grapes costs 5 or 6 euros.
The bodegas must have a share of the blame for all this.
The bodegas had the problem that sales were falling and it was thus impossible to maintain a cost structure. But there was no vision for the future, no business vision, and the loss of labour this implied hadn't been taken into account. The situation has changed, and I am for creating employment because we have a responsibility.
That responsibility also belongs to the Consejo Regulador and for providing funds for promoting Sherry.
Firstly we must be grateful to Beltran Domecq for having taken on the presidency of the Consejo. He is a person who will give great value to Sherry because he is well known internationally and understands the business. If we don't provide the resources and don't support him, his work will be very difficult. To be able to have resources you have to have a margin, profitability, profit, because nowadays you can't just ask for money from a bank. I would ask for investment in Jerez because I believe in Jerez and I believe that by reinventing ourselves day by day we'll have much more to say than other products, other DOs and other types of business. But we have to regain profitability and the winegrower must make money. If he doesn't make money we will be left with no grapes, and no grapes means no wine, nothing. And if we're not selling anything I don't know what we'll do here.
What would your father, Jose Estevez, have thought of all that's happened in Jerez?
My father saw the situation coming through the circumstances, society, the politics. We have been living in a very wasteful world in which everything was bad. Everyone in the business has to agree, the bodegas, the growers, the cooperatives... and stop lecturing the institutions. We have to forget the mistakes of the past and the bad things we have done. We have a great asset, we have lots of good workers in Jerez, we have an obligation to move forward and do something with our inheritance. And it can be done because the main things are balanced. Before, there was a lot of distortion: excess production, excess stocks, excess credit, people who shouldn't have been there - a veiled reference to Jose Maria Ruiz Mateos. But that has disappeared, we have a name known the world over for the wine, the motorcycle racing, the horses, the Feria, the people, the personalities... and that's what we must capitalise on.
After so much hardship, do you think the lessons have been learned?
Whoever hasn't learned the lesson won't be able to do anything now. I think things are much clearer now.
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