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Homage to Catalonia

What are your current priorities for the group?

Basically to make our wines more known to the consumers in our key markets - the US, UK, Germany and the Nordic countries - as well as our smaller markets such as Switzerland, Belgium and the Netherlands.

What we are always trying to do is make our brands more attractive to the consumers' tastes and to the consumer profiles we have developed. That is what we have done with Codornu with the restructured range and with our new range from Raimat [from Costers del Segre], Viedos. It is something new we have developed particularly for the UK market, and consists of a Shiraz/ Tempranillo, an Albario/Chardonnay and a Tempranillo/Cabernet, which will be launching next month.

The group has invested heavily in still wine production in recent years. Are you happy with the returns you have had from these projects?

We are quite happy with the returns we have had from these investments. We understand that when you create something from nothing there are many ways of measuring the return: the wine has been well received, the wine has penetrated the marketplace and is selling well and so on. On the financial side of the equation, with Bodegas Bilbainas we bought a winery, invested heavily and have had a good pay-off. We've invested in vineyards that have grown in value, and, in terms of the sales of the wines, everything is going well and is on track.

Would it be different if you were a public company?

If we were a public company we would have to have a different mentality, less long-term. We don't have to answer to analysts and can invest in areas we are interested in, but we still have to make sure we have good management and get good returns on our investments.

We are a very solid company, however. Most of our investments are financed through our own cash flow, although we do go to the market place to raise some cash. All our capital is owned by the shareholders and nobody else is involved, and the fact that we can still do what we do shows we are well run.

Are there tensions between the shareholders?

I don't think that a family company can exist without certain tensions. Different parts of the family have different views on certain things, but I would say it's more a question of differences of opinion than tensions. We have been able to use these conflicts as springboards. So far, 'knock on wood', we have always been able to come to a consensus.

What if some members of the family wanted to sell?

It hasn't happened, but first of all they would have to offer it back to the rest of the family, and the rest of the members would be happy to have such an offer.

How have your New World projects developed?

We started with Septima in Mendoza in 1999, when we purchased a winery. This year we are already breaking even and have a positive cash flow, and are happy with that. Most of the sales are still in Argentina and the US. In the UK we are doing well, but the territory for Argentinian wines in the UK, price-wise, is something we are not quite sure about. We only produce 100,000 cases.

And in California?

We purchased and built Artesa, our Napa Valley winery, in 1991. Up until 1997 the project wasn't where we wanted it to be - we were just making sparkling wine and losing money. The market over there was very soft, so we had to ask ourselves what we should do. We decided we have a great location in Napa Valley and great vineyards, so we decided to convert the winery to making still wines and now have positive cash flow. We started selling these wines in 2000; just five years later we already produce close to 100,000 cases of only ultra-premium wines, at e20 or e30 a bottle.

So would you follow Freixenet into Australia?

The word 'follow' is not how we would put it, not because it is not a great company, but because we are not following anybody. There are certain trends in the market place, however, that cannot be ignored by anybody who is in the wine business.

As long as there was the right opportunity, it would be an option. But we are not looking at specific countries. What we would want is a brand that is capable of selling above its category. Chile and Italy are also interesting, and there are still opportunities in Spain.

How have your ultra-premium projects in Ribera del Duero and Priorat been going?

We are very happy with them. We have two great wineries and some great vineyards. We have had some good reviews and scores for both Scala Dei [Priorat] and Legaris [Ribera del Duero], which makes it so much easier at these price levels. Our export markets have to fight for their allocations.

Are you disappointed that your still wines haven't really broken through in the UK?

I wouldn't say disappointed. Our Cavas have gone so well that they have overshadowed our still wines [Cavas account for more than 90% of sales by volume]. Over the past few years we have done very, very well with Cava, with lots of volume at a good price.

I would say, however, that overall our expectations for the UK market have not been met, but we have a great portfolio and we have something to build on.

Why do you think Via Pomal hasn't experienced the same growth as other Riojas?

The UK retailers are reluctant to bring in new Rioja brands and take someone off-shelf. It is very crowded at the moment, and we have not traditionally been strong in the UK, which makes it hard for a premium Rioja brand like us to really break through. But I am very sure that the opportunities will come: we are so pleased with the wines we are producing at Bodegas Bilbainas [which produces Via Pomal, Vicalanda and Vicuana]. Where we have them listed, for example at Oddbins, they do very well, and we are building a strong consumer franchise.

Have you been aggressive enough with your discounting?

We are doing discounting, particularly with the Cavas, as we are always trying to please our customers. But, leaving aside the profit question, we have been careful, as we are looking to protect our consumer franchise. I don't think our premium wines should be discounted heavily.

What are your targets for export?

At the moment 35% of volumes are export. We don't have set targets for export, but it is clear that there are more opportunities for us and we must focus on growth. I'm sure we will soon reach 40% and then, logically, we will move past 50%.

The domestic market is good in many ways, as consumers are buying better-quality wine, but in others it is very soft as people are drinking less, so we need to make sure our exports are strong.

How does the UK market compare to other markets you work in?

It is very, very interesting, and to me it is one of the most exciting markets. It has no production itself, but the retailers are very active in promoting wine to the consumer in innovative ways.

There are other markets where price is the only issue. Of course price is important in the UK, especially discounts, but there is still innovation and average price is still quite high. As long as the retailers are being fair, you can work with them and manage your business to deliver good profits.

How is your current relationship with Freixenet?

Yes, we have had our problems in the past [including court cases], but we now have a good relationship and a very fair one. We always say hello to each other when we see each other; there is no animosity.

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