Tuesday, 4 February 2014

3.2.14 Manzanilla Slows Sherry Sales on Spanish Market

Sherry has missed a great opportunity to put an end to the prolonged drop in sales, but at least the volume lost has been compensated for by the recuperation of prices. In the Spanish market, poorer sales of Manzanilla brought down the good results of other wines because of the lack of agreement on the use of bag-in-box (BIB), which is not permitted in the Denominacion de Origen (DO), despite growing demand.
Everything was set to change in 2013 after long years of falling sales, but in the end another drop was recorded, of 7.56%, or 10% in exports and 2% at home, despite growing critical acclaim. Sales of Manzanilla – the best-selling Sherry in Spain - are down 5%, while Fino and Cream are up an average 3%.

The fall in sales of Manzanilla is a result of producers simply de-classifying their wine and selling BIB without the DO to the many fairs and festivals. The OIV (International Wine Organisation) has proposed a change to the tariff code for BIB, considered up till now as bulk wine for customs purposes, as this format is common in other DO’s and is very popular with consumers, especially in Scandinavia. The Consejo Regulador however, sees the BIB as inferior in quality to glass.

Nonetheless, increasing numbers of Manzanilla producers are prepared to forego the DO and sell at least some of their wine in BIB. At the end of the day, it is the same wine, however, but there is a risk that the DO might lose some of its brands, in a similar way to some brandy brands which chose to blend brandy with spirit and call themselves “spirit drinks”. Wines sold without the DO do not figure in the Consejo statistics, and could amount to hundreds of thousands of litres, distorting the figures considerably.

There is still work to be done in foreign markets, but at least prices are firmer, especially in Buyers Own Brand (BOB) and Distributors’ brands. A key factor in this is the disappearance of Nueva Rumasa, whose aggressive low-price strategy forced prices down to little above cost – as low as 70 centimos a bottle. Now, as prices rise, sales are dropping, but perceived quality is rising, especially in Holland and Germany, the two big BOB markets.

In the UK, the biggest export market, sales have also been falling - by a million litres, or 8.5% - especially with Cream and Pale Cream styles, mainly from a lack of special offers over the festive period by the two leaders, Croft and Bristol Cream. BOB sales have risen slightly, however.

Sales of Cream in the USA have also slipped, but those of the dry styles have increased markedly, especially Fino, Manzanilla and Amontillado. The Asian market has also seen a large boost, albeit from a small base. In conclusion, Jerez has seen smaller volume sales but is keeping up turnover.

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