1. Wine consumption in Spain Rafael del Rey General Manager XVIII Giornata Internazionale Vitivinicola - Siena, 28 maggio 2005

2. 2  How much is consumed?  How has consumption evolved?  What type of wines are consumed and where?  At what prices?  By whom?

3. 3 Unfortunately, nobody really knows how much wine is actually consumed in Spain… SourceLatest year Figure MM Hltrs Ministry of Agriculture (viticultural balance: rest of…) Jul 200413,90 Ministry of Agriculture (Inquiry on food & Beverage consumption) Dec 200411,98 Institute of Statistics * * Total sales minus exports Dec 200316,85 NielsenDec 20046,58... Although it should be around 12/13 million hectoliters

4. 4 Therefore, differences arise on how has consumption evolved… … although most indicators show clear decrease. -24,8%; -4,6 Mill. -25,9%; -4,2 Mill. 1988 to 2004

5. 5 Something similar (different sources) happens in terms of value… … although most reliable figures show increase. 1995 to 2003: +956 Mill. € (+8,2% p.a.) 2000 to 2004: +334 Mill. € (+3,2% p.a.) 1996 to 2004: +518 Mill. € (+6,1% p.a.)

6. 6 In terms of per capita wine consumption: The same decrease in wine (-39% since 1987) takes place... … which is not caused by the increase of other alcoholic beverages, but is due to growth of non- alcoholic.

7. 7 By place of consumption: By type of wine:

8. 8 By type of wine and place of consumption: 30 70

9. 9 By average price (according to Nielsen) : Price per unit off- trade (year 2004) 8,13€/bot 4,82€/bot 3,33€/bot 2,46€/bot 1,49€/bot 0,73€/litro IN VOLUMEN IN VALUE 62% of total wine is sold below 1,50 € /bot-Ltr, which only represent 32% of total value of domestic wine consumption

10. 10 By region of consumption (home consumption) : Spain is divided into northern consumers with 10 Lit/head and over, and central, southern and eastern consumers below the average, with: The Balearic Islands in the leading group; and Aragon in the North though well below the average Note: Large increase in population in recent years

11. 11 Above 15 Lit/person/year Between 11 an 15 Lit/person/year Between 10 and 11 lit/person/year Below 10 Lit/person/year Is it more difficult to drink wine in warmer areas? Wine consumption at home by region:

12. 12 By size of the city (home consumption): more wine is consumed in small towns than in larger cities More detail on consumers at home (1): By socio-economic status (home consumption): slightly more wine is consumed in houses with a medium and high status and larger decrease takes place in medium-low and low income families. By color (home still wine): two thirds are red wine, 23% white and 13% rosé

13. 13 By age of the house lady (home consumption): wine consumption is clearly associated to elder age More detail on consumers at home (2): By activity of the house lady (home consumption): much more wine is consumed in traditional houses, where, however, decrease has being much larger. !!!! Does wine in our countries have a problem of acceptance among young people?

14. 14 By size of the family (home consumption): the larger the family, the lesser wine is consumed, and only in houses with one person (old / young??) consumption has grown More detail on consumers at home (3): By age of the children (home consumption): more wine is consumed in houses with no children and those with elder children, as compared to houses with young sons and daughters More children probably means younger

15. 15 Conclusions: Clear decrease of wine consumption in Spain (as in the other traditional wine producing countries) Mainly in table (popular) wine consumed at home, while AO wine is growing, particularly on-trade (also AO regions grow) Probably due to changes in patterns of consumption –Less basic products in exchanged for few higher quality –Less traditional lunch (big, quite, followed by a “siesta”), though good dinners outside –More quick meals –Problems with traffic (How much can be consumed?) Affected (distribution, presentation, advertisement) by the consideration of wine as a dangerous alcoholic drink (legally associated with drugs)  need to separate wine from other drinks  Wine Act 24/2004 Not very attractive for younger generations (“a parent’s drink”); consumption directly link to age  urgent need to make it an attractive beverage (presentation, degree of alcohol, innovation, etc), also as way to learn/enter moderation Not due to prices, although too expensive in restaurants  innovation in distribution (direct sales? Enoturism?)  growth of firms (balance of powers between wineries versus distributors)

16. 16 Conclusions (2): We are loosing a generation of consumers while wine is less attractive to young people (as opposed to young generations in Anglo-Saxon markets)  need to innovate, marketing, presentations The great importance of on-trade consumption –makes it comfortable for small bodegas to exist and limits possible entrance of foreign competitors, but, –on the other hand, limits growth of domestic firms, increases power of distributors (and regional administrations and unions) on the medium term and makes needed export less attractive. Off-trade distribution is concentrating everywhere and may contribute to increase consumption at home (following trends in northern countries). stableThe need to supply larger amounts of quality wine in stable terms at competitive prices, both domestically and abroad, generates doubts on the EU policy regarding quality wine associated to specific producing regions  increasing need of flexible laws on presentation and AO

17. 17 At the end,… … two questions arise: Is it reasonable to expect a large increase in domestic demand to absorb our larger production? If not, export will be required, but then: Can we face export markets with the same criteria and mentality than we do our domestic markets?

18. Thank you Rafael del Rey XVIII Giornata Internazionale Vitivinicola - Siena, 28 maggio 2005