News from Jerez 25.6.12

A very small harvest is expected this year, possibly the smallest ever. This has led the independent grape growers to ask 33 centimos per kilo, 10% more than last year, and double that of two years ago. The shortage is due to two factors: the reduction of vineyards in production to equalise supply and demand, and the drought suffered this year with 40% less rain than usual. Some bodegas are worried about getting enough raw material to replace stocks.

The growers, who control little more than 20% of the vineyards (some 1,500 hectares of the now reduced total of around 6,400 registered with the Consejo Regulador) now find themselves in a powerful position against the bodegas who may have to compete on price to secure grapes.

After a decade of poor prices which hit a low of 15 centimos per kilo in 2010 - the lowest in Europe - some growers found it cheaper not to bother picking the grapes at all. This year they will have a respite and might even make some money.

The highest grape price was in 2002, the result of a strategic plan put forward by the Junta de Andalucia when a price of 30 centimos was agreed. This backfired though, when the National Competence Commission ruled that this represented a cartel, and the Sherry organisations were fined 500,000 euros. Fedejerez, the bodegas' organisation then let individual bodegas negotiate their own prices.