Jerez Wine

Everyone is being drawn in: The growers, the bodegas and the Consejo – even the regional and national governments. I suspect some of the issues have been brewing for several years but attempts last year to hammer out a general agreement for the sector, plus the general world crisis, have opened a Pandora’s Box and it seems the current “system” is beginning to unravel. This could not have come at a worse time for the trade and for Jerez and I think we are in for some pretty dramatic changes.

To simplify things, and paraphrasing the article linked to above, I will list, in no particular order, the issues causing problems. Some of these issues overlap and are interrelated, but here they are:

1. Sales Quotas – bodegas have long been limited to what they can sell each year. In 2006 the formula for calculating the quota was changed, apparently disadvantaging the smaller bodegas – effectively forming a cartel amongst the larger ones. The Spanish Competition Commission has found that a “very serious infringement” of competition law occurred and fines will almost certainly be imposed. The Consejo itself has been implicated. This does not look good from any angle.

2. Jerez Superior – grapes grown in the “Superior” part of the DO command higher prices than those grown in the rest of the DO, but wine produced from both often ends up in the same bottle. The growers are not happy about this.

3. Non-DO inputs – Most Pedro Ximenez Sherry is not grown in the Jerez DO but comes from elsewhere, also a significant quantity of the “liquid” in Sherry bottles can come from grapes not grown in the Jerez DO, ie. colour wine, rectified concentrated grape must and grape alcohol. The growers in the Jerez DO want to know why they should be ripping up vines when their grapes could be used to produce 100% of the liquid. On the other hand setting up production facilities for colour wine, RCGM etc does not happen overnight. This does mean the whole DO idea is a bit of a farce – especially when so much money and effort is spent promoting the DO and protecting its good name. More about this issue in a Diario de Jerez report today.

4. Grape prices – the price offered for grapes from the 2008 harvest is 24 cents/kg, down from 37cents in 2007. Growers say this is below cost, so refuse to sell – I got that wrong in a previous post, the last harvest has not been sold yet. I guess there must be lots of “mosto” sitting around in tanks somewhere. It’s only fair a grower should know what he is going to get before he spends money contracting people to pick his grapes…

5. Consejo funding – the bodegas cough up funding for the Consejo based on the number of bottles they sell, so I guess the large bodegas have a disproportionate influence, and the smaller bodegas feel trampled on. The Consejo really should be independent but it’s hard to think of another funding model which is fair to the bodegas, so this is a tricky one, but not helping given the other issues. The Consejo is also responsible for promotion, but Fedejerez, the bodegas’ federation, seems to do that too via the “Sherry Councils, Institutes and Committees” in the States, UK and Japan. I’m not sure how the line is drawn but I would have thought promotion should be something for Fedejerez alone and the Consejo stick to the technical and quality issues?

6. Fino in Sanlucar – the Sanlucar bodegas want to be able to produce Fino as well as Manzanilla. There’s a small war on about that.

7. Price Fixing – the Spanish competition commission in July last year opened an investigation into alleged malpractice and price-fixing at certain bodegas. This is a bit of a worry.