To Stay Afloat, Spanish Winemakers Export Abroad

Judging from the crowds in Spain's tapas bars, you might wonder where the economic crisis is. But there's been a subtle change. Many are drinking less wine or switching to beer.

"It's more expensive to have a good wine. You can get two beers for the same price as you can get one wine," says Marta Juan Seva, who sips a cerveza at a sidewalk cafe in Madrid.

Spanish wines have never been more popular in the U.S., but Europe's debt crisis means many Spaniards can no longer afford their beloved Rioja, so Spanish winemakers are looking abroad.

A Struggling Country

Seva sits with her friend Carlos Zavala. He's unemployed, but he says staying home is not an option.

"In Spain, everyone socializes in bars and restaurants," he says. "Every, every single block, at least, there's a bar."

And bars measure the economic tides in Spain. Wine used to be just for the dinner table, but after the euro and Spain's construction boom, fancy wine bars started popping up. Spain's foremost wine expert, Jose Penin, says those bars became "cool."

"But unfortunately that's also coincided with the economic crisis," he says. "So we've seen no growth in domestic consumption."

That's hurt even the oldest wineries in Rioja — the Spanish region famous for shipping grapes to France in the 19th century, when a plague wiped out Bordeaux's harvest. Legend has it aristocrats couldn't tell the difference between French and Spanish grapes. Rioja has flourished ever since.

Maria Jose Lopez de Heredia runs Rioja's Vina Tondonia winery, which her great-grandfather founded. On a tour of the winery's cavernous cellar, she explains her business model.

"The problem is, the restaurants were demanding for dropping the prices," she says. "And I told them no way, because my costs are the same. [So,] I started to sell more abroad."

Sending Wine Around The World

She's hoping to sell half her wines overseas this year, up from 30 percent a few years ago. Spanish wines go mostly to Germany, the United Kingdom and the U.S. But now a neighboring vintner, Simon Arina, is learning Chinese.

"China drinks wines because it's prestigious," he says "They buy the most expensive wines in China."

China ranks fifth for Spanish wine exports, but it's the biggest growth market. And there's volume here to export. Spain has the most wine acreage in the world.

But economist Pankaj Ghemawat, of Spain's IESE Business School, says Spanish winemakers face stiff competition.

"If you think of the number of new wine growers around the world — Australia, Chile, South Africa — and how low costs are in some of these locations, especially the ones that have gone in for an industrial approach to winemaking, competing head-to-head with them doesn't sound like a great idea," Ghemawat says.

Weathering The Storm

Back at the Vina Tondonia winery, owner Lopez de Heredia strolls past oak barrels, reassuring herself that the family business is strong enough to take on new challenges.

"My grandfather died when I was 17. He was 96 years old, and he told us a lot of stories about the war. And my father started from zero after the war," she says. "So I'm aware, in my family, of what it is — suffering and going through very difficult times."

Outside in the fields, workers are pruning the same grape vines Lopez de Heredia's great-grandfather planted. Inside, she pops open a bottle of red — and wonders where next year's harvest will end up.