Spanish wine industry set for shakeup

Thu May 7, 2009 4:59am EDT
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By Sonya Dowsett and Tracy Rucinski

ALBACETE, Spain (Reuters) - Pancho Campo knows of 30 to 40 Spanish wineries up for sale.

The founder of The Wine Academy of Spain and the first Spaniard to be awarded the title of Master by The Institute of Masters of Wine believes the recession sweeping Spain will trigger a shake-up of its fragmented wine industry, pushing many smaller players to ruin.

"Small wineries will have to merge or be absorbed by large groups," says Campo. "It's going to be a tough time. Some guys will disappear."

Global restrictions on credit paired with the end of a domestic property boom nearly trebled the number of Spanish businesses entering administration in 2008. Many wineries are looking to sell up to avoid the same fate.

Businesses with a good bottled-wine brand and an eye for international expansion are the most likely to find a buyer, says Spanish investment bank OnetoOne Capital, which has advised on takeovers in the sector. Others will not be so lucky.

"There are a lot of 'for sale' signs out there. Supply is escalating," said Fernando Malo, analyst at OnetoOne. "If it's a new project, it's going to be harder to find an investor; in fact, it's highly likely you won't."

Spain has more land under vine than any other country in the world with around a million families dependent on the wine sector, according to the Ministry of Agriculture.

Best-known for plummy reds from the cool northeast province of La Rioja, it overtook France as the world's second largest exporter of wine last year, and trails only Italy.   Continued...

<p>Winemaker Jose Maria Delicado points to the front of his wineyard in Ontur, southeastern Spain April 15, 2009. REUTERS/Sergio Perez</p>