Interview with the director of Lalomba in Zamora Company – Ramón Bilbao

How is the industry experiencing the crisis? Today, Alberto Saldón has come to talk to us, he is the director of Lalomba, a small and exclusive project recently born in La Rioja belonging to the Zamora Company group, owners of Ramón Bilbao. His vision of the current situation in the wine industry is very interesting because it allows us to get a closer look at the impact of the virus on large companies, such as Ramón Bilbao, and to understand the repercussions that the crisis can have on Premium projects such as Lalomba.

Q.- How did you experience the first months of the pandemic on a personal and professional level?

A.- I remember that on the 6th of March, when I was returning from Madrid on business, I already suspected in my head that something was going to happen. At home, my wife is a doctor and I asked her, is it really that serious? I looked at Italy and couldn't believe that something could stop our lives in this way. None of us, would have imagined that a pandemic would deprive us of freedoms, of being able to leave home..... Now this is very much taken for granted.

Concerning wine, I remember there were two speeds. We were declared an essential activity, so we kept taking orders from abroad. And then the pace changed at national level and we started to serve a little at Easter and in the run-up to the summer. In our case we are a fairly mature company and we reacted well, both on the spirits and wine side. We started to look at the different options that were available both in terms of budget and strategy, putting ourselves in the different scenarios of recovery, growth in U, V, W. After a lot of internal work, we came up with two scenarios, U and V, and we started to work on trying to change our business model. A very high percentage of our turnover comes from the hospitality sector and we started to think about a strategy to achieve a greater share of sales in retail.

“We have the challenge of listening more to the consumer and seeing what we can offer them”

Q.- How has the wine business had to adapt to face the virus and its consequences?

A.- Mainly by thinking a little more about the consumer and the moments of consumption. In this industry I don't think we ever look enough at the consumer. While other products such as beer or soft drinks always have the consumer at the centre of their decisions, wine sometimes does what it wants. The consumer is key. We have to get used to new business models, new moments of consumption, to understand that if the consumer is consuming by delivery, as has happened with the pandemic even with Michelin-starred restaurants, wine has to be there. The challenge is to understand this consumer better and how we adapt to them. This year our global marketing team has carried out countless studies to try to understand the new consumption formulas. We have the challenge of listening more to the consumer and seeing what we can offer them.  Faced with a situation like this, everyone has to try to reinvent themselves and find solutions, the vast majority have been able to adapt.

Q.- Are there wineries that have been more prepared than others to face this pandemic?

A.- Without a doubt, yes. In the same way that if you close a restaurant for two months you can have the sword of Damocles hanging over your head, there are wineries that have developed business plans that do not allow them much room for manoeuvre.

A winery that has a more international, geographically global point of view, with a focus or a mind that is more open to doing new things, compared to a smaller, more family-run business, where decisions are slower, albeit they may seem quicker, will be better prepared to implement a change at a given moment. How many years have we been saying that we need to develop the digital part of the business? Here in Rioja you know that there are few wineries that have a real capacity to sell on the Internet. It is one thing for me to be able to send a case of six bottles to your house, but it is another for the online channel to be relevant in the profit and loss account. We started the digital transformation three years ago, which has allowed us to adapt, to work remotely and also to sell wine through a logistics operator. Although the online channel weighs very little in our profit and loss account, we have grown more than 300% this year. It's about being aware that your business needs this as much as working the vineyard.

We have a privileged land, extraordinary vineyards, but we have to know how to communicate and market it. This is something that this region lacks, there are few multinationals here with marketing and sales teams that can provide this vision and strategy.

Q.- How does the pandemic affect a winery like Ramón Bilbao compared to another one like Lalomba? A small production winery versus a larger one.

A.- Our case is a bit exceptional. I always say that Lalomba is a winery that has a godfather in Ramón Bilbao. And having such a godfather is very good for many things. For example, my godfather has helped me at some points in my life, for example, to gain access to a university, to be able to have access to a person's contact, and Ramón Bilbao works with Lalomba in a very similar way. Logically, it is also the fuel.

In terms of sales, I'm not going to say that we don't have pressure, but the pressure is very small. This is a very long-term project. Lalomba is an independent entity that is lucky to have such a godfather. We also have different sales channels. We, for example, are not in the food channel. We are a brand that is just landing and that wants to reach the market in a natural way. If wine projects are usually very long-term, this one is even more so.

"During 2020, people drank less but they drank better"

Q.- Has premium wine suffered more from the pandemic than more commercial wine?

A.- At the beginning of the pandemic, which was the first blow of a health crisis, the consumer took refuge in the brands, and this has been a trend. In the 2008 recession, we consumers lost our economic capacity and we went to private labels, to buy a lot of white brands. Today this is not the case, although there have been ERTEs and tough situations, but people have wanted to live experiences at home, such as, for example, ordering a meal in a restaurant on a Friday night and drinking a bottle of wine from a brand x that has a guarantee of quality, what we at Ramón Bilbao called the safe bet. I think the brands have not suffered at the beginning, but now, with the evolution from a health crisis to a more economic one, we will see. The trend data are not bad for now, in big brands there are products that have even grown. During 2020, people drank less but they drank better, the value of wines did not fall and in some cases grew.

Q.- How has the relationship between wineries and restaurants been? Talking to the chef Dani García, he told us that some producers were leaving the wine in storage, is this a valid model for the future?

A.- We would have to look at each case. We work in an industry in which the product has to be showcased. We for instance, have made a lot of agreements with the hotel and catering industry to give them all kinds of facilities, payment deals, last minute wine deliveries, when they didn't know if they were going to be able to open and they would place an order on Friday morning for you to deliver that same afternoon.

We have also done a lot of promotions with some more seasonal wines, such as Ramón Bilbao Verdejo or Mar de Frades, we have been members of the different associations of Salvemos la Hostelería, we have allocated money for the promotion of restaurants and also, something that has been very productive this year, we have done a lot of training for the hotel and catering industry, both on-site and online.

All of that, yes, but as far as putting wine in storage... It's not the formula we like. The wine policy with the on-trade is to highlight the value of the product, to be empathetic and to work with businesses hand in hand.

Q.- How are the wineries' warehouses? Are you thinking of limiting the production of the next harvest in order to balance the supply?

A.- In our case, the wine is coming out. That is fortunate, although I know wineries in Rioja that are full of wine and I don't know what they are going to do. At Ramón Bilbao we don't make young wines. The Crianza 2021 (next vintage) will be on the market in 2025, so I don't think we will make any limitations.

I don't think Rioja is going to do that. Everyone will have their own individual problems and we will have to solve them ourselves. The important thing is that the grapes that come in pay well, that they are quality grapes. We have a long-term policy of paying expensive grapes to growers so that they give us quality. It is a way of guaranteeing that you won't have problems whether the year is good or bad, as the grower will have no problem discarding grapes or pruning green if he knows he will earn more or less the same every year. We own 206 hectares of vineyards and control almost another 800 hectares, so imagine how important it is that your suppliers do things well.

"The hotel and catering industry is 100% viable with the security measures that are being taken"

Q.- Open, closed, open with limitations, what is the way forward for the hospitality sector?

A.- Restaurants are doing very well and so are the people in general, but we cannot relax. This is very hard and it is taking a long time. I recognise that I am tired, that I miss the affection, giving someone a hug, but we have to continue to be responsible. This individual responsibility will allow the hotel and catering industry to function, it is 100% viable with the security measures that are being taken. By limiting capacity, taking things out onto the terrace and using protective measures such as hydroalcoholic gels and masks, it is feasible, but they have to be used properly. It is not enough to arrive at the restaurant and take off the mask. Open restaurants, but mindfully of course, and with responsibility on the part of the customer. The owner is doing what he can, but he is nobody's policeman either. As a consumer, I assume that I have to follow certain measures.

Q.- Is the wine industry grouping together in any way in order to be able to make its situation known to political decision-makers?

A.- The wine industry has never been the most collaborative or the most demanding from a union point of view, but right now it is. The general manager of Zamora Company, Emilio Restoy, this year is the president of the Spanish Wine Federation, and the FEV with the Interprofessional met the other day with Minister Planas to provide him with information about the industry and to convey to him what the industry was demanding. In Rioja, I know that the regional government has got together with the ministry to try to make a little more effort. Small companies here, such as Bodegas Familiares de Rioja, for example, are quite united, because for these small companies, if they don't have sales the business disappears.

The wineries can clearly demonstrate that the drop in income has been significant, that the restrictions of limiting the hospitality sector and the fall in national and international tourism are evident. All money, even if it is little, will be very welcome.

"It's going to democratise the chance of drinking a great bottle of wine at home"

Q.- Is this pandemic going to change anything in the wine industry?

A.- This pandemic is going to change us all. For example, consumption at home is here to stay. We can go out to eat and drink a crianza any day, but possibly the day you have dinner at home with your wife you will decide to uncork a good wine. I think it's going to democratise more the chance of drinking a great bottle of wine at home.

I also see that online commerce is going to have another boom, and the pandemic is a trend accelerator. I think there will be more online consumption and people will be more and more educated. This has to help us realise that wine, like any other industry, has to be much more consumer-focused.