The long, hot summer

September is just around the corner. In Rioja, that means the grape harvest, wine festivals and the beginning of the annual joust between wineries and grape farmers over prices.

The Rioja Regulatory Council is predicting a smaller harvest than in 2011, when 387 million kilos of grapes were vinified. The theoretical production ceiling in Rioja is 413,77 million kilos (58.442 hectares of red grapes x 6.500 kg/ha. + 3.767 kgs of white grapes x 9.000 kg/ha). The smaller than normal harvest is a consequence of a severe drought that has lasted two years and several hailstorms in June and July that hammered Rioja Alavesa. In Álava agriculture experts have predicted a 35% reduction in yields, suggesting a harvest of 77 million kgs, 41 million less than normal.

The Council is strangely upbeat about the situation. The technical services director, Domingo Rodrigo recently went on record to praise the excellent state of the vineyards while minimizing the effects of the drought and the hailstorms. I’m surprised that the Council isn’t concerned about a 41 million kilo drop in production in the smallest sub-region of Rioja. I’m certainly worried about it.

Sales (from January through June, the latest figures available) are flat – 0,51% lower than in the same period in 2011. While export sales are up 5,3%, this doesn’t compensate for the 3,1% drop in sales in Spain. Hopefully sales in the Spanish market will pick up as soon as cooler weather invites Spaniards to drink red Rioja after a long, hot summer of cold beer.

What does this mean for grape and wine prices? In a supply and demand economy, the current situation in Rioja, with lower supply and flat demand usually means higher prices, but Rioja beats to a different drum. Prices will ultimately depend on how much wine is needed by wineries (a smaller harvest could be interpreted as a good thing) and on whether profits will be impacted by higher grape prices, which they probably will because wineries won’t dare raise prices. In addition, VAT (value added tax) will increase from 18% to 21% from September 1 and I seriously doubt that wineries will pass it on to their customers. Financial constraints will probably prevent bigger wineries from buying up more grapes than they require, as has been done in the past.

All the above suggests to me that red grape prices will remain low in 2012 and early 2013. Growers will complain and probably boycott the approval of the 2013 advertising and marketing budget, but that’s nothing new.

In short, we’ve had a long, hot summer and all things point to a wild, crazy ride for the rest of the year.

The Know-It-All

Most of the time I enjoy being in the wine business, but sometimes I think it’s a curse. Last week my wife and I were invited to a friend’s birthday lunch.  There were several people present whom we didn’t know and when the host asked me to choose the wine, the inevitable happened.  As soon as one of the other guests, whom I didn’t know, found out I was in the wine business he immediately tried to impress me with his encyclopedic knowledge of the subject.

Wine is an interesting topic (at least I think it is) so I suppose I should be flattered when someone wants to talk about it in a country where wine consumption is at an all time low.  But I usually get upset because the first comments I inevitably hear are:

  • “The best wine in Spain is from my village.”
  • “Most Rioja wine comes from other parts of Spain, especially from La Mancha.”

If the conversation stays on the first topic I consider it a victory, because it leads into a discussion about other great things about village life – long walks down dusty roads, card games after lunch, this year’s crop and the local festival.

But if the person insists on debating the second point, the conversation can take an ugly turn because even though it’s easy to refute the argument, we’ve entered into the realm of Spanish obstinacy.  Arguments (called discusiones in Spanish) are usually two or more people talking at the same time, each expounding their own ideas which they defend vigorously, while at the same time ignoring what the other people are saying. 

The Spanish have an expression to describe it:  diálogo de besugos.  Literally, a conversation between two sea breams (a popular type of fish).  Imagine looking at fish in a tank – they open and close their mouths but no sound comes out. It’s people talking at rather than to each other.

What do I say when people say that most Rioja wine comes from other parts of Spain?  The non-Spanish approach would be to argue the point:

  • it’s almost impossible because the control and inspection procedures in Rioja are so strict, and if you get caught, the fine is likely to bankrupt you (there have been instances of this);
  • given the current oversupply of wine, prices are low and it doesn’t make economic sense.

But when in Spain, you have to take the Spanish approach.  Arguments are a part of daily life here and people consider them a sport.  If you don’t know how to talk (or argue) about football or politics you’ll be bored stiff. You smile (very important) and say, “Bah, qué ridículo.  No tienes ni puta idea.” (“That’s ridiculous.  You don’t have a f***ing clue.”) Then you order another round of drinks. It works every time.