Circular 4/2018. Qualitative stock

 

The regulation of the qualitative stock was modified by the Plenary in its meeting of September 7th, 2018; These changes are available in the next consolidated version

 

Legal basis:

The figure of the ‘qualitative stock’ is foreseen in the DOCa Rioja Designation Specifications, in two of its sections:

Designation Specifications

8.b.5.2) Vinification practices – Qualitative stock

In the terms expressed in section 3.b.3, or where applicable in the first paragraph of section 8.b.5.1., the Control Board may constitute a production yield as expressed in section 8.b.6.1., which gives rise to a qualitative stock of wine, as well as the procedure for managing and monitoring and the requirements for the protection thereof by the Designation of Origin, all of which shall be in accordance with the provisions set forth in the specific rules and regulations, in the Harvest Season Standards and in applicable laws.

This shall not apply to the vineyards included in a viñedo singular.

8.b.6.2) Yield per hectare – Qualitative stock.

Within the limits expressed in the previous section, in any growing season, the Control Board may set up a qualitative stock of grapes in addition to the amount subject to protection, as well as the procedure for managing it under the conditions set forth in the specific rules and regulations, in the Growing Season Standards themselves and in applicable laws.

This shall not apply to the vineyards included in a viñedo singular.

Objective:

The objective of the implementation of this figure is to preserve quantitative and qualitative sustainability:

  1. global within the wine region.
  2. individual of the owners of the vineyards and the wineries they supply.

Clearing mechanisms:

Individual, qualitative and collective.

Concepts:

RMA: Maximum Yield Subject to Protection. It is about the achievable yield set for each harvest season.

SCI: Individual Qualitative Stock. It will be set annually. Annual yield that each vineyard owner can obtain in addition to the RMA. It will reach a maximum of 20% of the Standard Yield in 3 years, with an annual maximum of 10%, which can be reduced in the Harvest Season Standards by up to 5%.

RC: Harvest Season Yield It will be set annually. It consists of the production allowed to be delivered to the winery and includes: the RMA, the SCI and, eventually, a margin of productive deviation attributable to weather conditions (DCC). The aforementioned yield that could exceed the RMA up to a maximum of 10% at the expense of which it is set as RC, will be automatically allocated to SCI, except for waiver, in which case it will be sold as common wine.

DCC: Deviation due to weather conditions. Annual yield that each vineyard owner can get above the RMA in case of waiver of SCI, as well as the percentage that exceeds the SCI limit up to the maximum set for RC.

RA: Protected yield. Yield that is protected for the owner of the vineyard either to be produced within the protected area in each harvest season or by the protection of the RMA and, where appropriate, of all or part of the SCI.

RR: Actual yield. It is the yield of each vineyard owner in each harvest season.

RT: Standard Yield. It is the reference yield in the Designation Specifications: 6,500 kg/ha for red varieties and 9,000 kg/ha for white varieties.

PA: Potentially subject to protection. They will be the volumes contemplated in cards of respective vintages and colours, resulting from SCIs whose destination has not been determined.

Notwithstanding the foregoing, the Harvest Season Standards may determine each year the possibility of receiving a yield between the RC and the maximum yield provided in the Designation Specifications, 8,125 kg per hectare for red varieties and 11,250 kg for white varieties. If this is the case, the resulting wine will be sent for distillation.

INDIVIDUAL QUALITATIVE STOCK (SCI)

  1. Definition

The SCI is constituted in each campaign within the production margin allowed to deliver (RC) above the RMA. The percentage of SCI can never exceed that of CR and, in any case, 10% per year on the standard yield or lower performance set in the Harvest Season Standards.

The SCI stock creation agreement must be expressly executed and reflected in the grape sale and purchase agreement between the grower and the operator. The owner of the PA wine from the SCI will be the winery in which the grapes have been processed.

The total of the RMA + SCI + DCC may not exceed the maximum of 125% set out in the Designation Specifications.

  1. Automatic and voluntary system

In each campaign, the production delivered above the RMA up to the maximum percentage set as RC will be allocated automatically to the constitution of a personal and non-transferable SCI of the owner of the vineyard, with the limits set.

It is voluntary, so that growers and wineries that do not wish to avail themselves must expressly waive their right in a form designed for that purpose before 30 November of each harvest season. A calendar with dates is included as an annex.

In general, the following portions will be assigned to each Grape Grower’s Card:

* If you waive the SCI: RMA, followed by DCC.

* If you do not waive the SCI: RMA, followed by SCI, followed by DCC in case the production exceeds the SCI, until the limit set for RC is reached.

  1. Duration and maximum limit of SCI

The SCI may not include harvests more than three years old. On the fourth harvest season, the result of processing of the oldest SCI (RCIn-3) must be shipped out. The destination will be common wine.

Within a period of 3 years, the owner of a vineyard may not accumulate more than 20% of the standard yield for SCI. In addition, a maximum annual limit of 10% is set on the standard yield.

To maintain the system, two years from the start of SCI implementation, it will have to be either expressly ratified or reviewed. Should it not be ratified, the stock creation will be finalised, allowing for the unblocking of stock until the SCI wine expires, and this will not have any retroactive effect.

  1. Receiving winery

The SCI will be generated annually in a single winery where the owner of the vineyard has delivered grapes within the Maximum Yield Subject to Protection. 

The winery will have preference when constituting the SCI where the highest percentage of protected grape has been delivered.

In any case, the receiving winery may not receive in each harvest season more than 25% of the SCI in global terms, calculated on the total of eligible grapes that have been brought in that year.

The SCI may be distributed in different wineries in each of the three years, each year, with each winery, meeting the above conditions.

Exceptionally, the Control Board may consider different situations in the case of business groups.

  1. Contractual agreement

Winery and supplier will freely reach an agreement, although:

* They will expressly recognise the condition of the grape initially received as SCI.

* They will assume that the grape received as SCI could later be protected, in the event that this is notified by the Control Board to the owner of the vineyard.

* They will freely agree on the costs of processing, storage and / or the consequences of the lack of protection.

  1. Harvest report

The Control Board will issue each vineyard owner, after 15 January of each year, the Harvest Report that will contain the following information:

* Protected yield: RA + SCI protected by previous harvest seasons

* Volumes of grapes whose processing will be destined to common wine, by application of the stock system or by waiver of protection by the owner of the vineyard.

* Volume of SCI by crops, that may subsist.

  1. Processing

The processing percentages that are set for each harvest season will be applicable to the total of the Actual Yield.

  1. Winery Vinification Affidavit.

The winery will declare, separately, the volumes produced resulting from the processing of the grape deliveries produced under the SCI of its suppliers, applying the grape-to-wine ratio determined in each harvest season.

  1. Classification

The volumes of SCI will be submitted and must pass the classification process after the wine is made, although its status will be that of PA, that is, potentially subject to protection, as long as its protection is not agreed.

  1. Control Cards

SCI generated volumes will be entered on a vintage card identified as PA.

The year of harvest will be respected, and the applicable regulations for its preservation, in the event that the wine is protected.

In the event that a SCI volume is protected, the transfer will be made from the PA record to the relevant record of the vintage.

All wines in PA situation will maintain their traceability according to the rules dictated by the Control Board for Rioja wines.

  1. Ageing

The wines may be aged before protection in accordance with the regulations of the Control Board. In the event that the SCI wines finally earn protection, the ageing times during the period in which they have remained in PA situation will count in an equivalent way to the wines of the Denominación de Origen Calificada Rioja. The aging processes will not be certified by the Control Board if the wine is ultimately not protected.

  1. Stay in winery

The status of the wine as PA, potentially subject to protection, allows it to remain in the winery beyond 31 Ma.

Every expedition of common wine must take place by 31 May of the year in which the obligation occurs.

  1. Constitution mechanism

The potential SCI for a harvest season (n) will be calculated as the difference between a maximum of 20% of the Standard Yield (RT), referred to each holding, and the sum of the SCI of the two previous years (n-1 and n- 2), with the SCI limit established for the harvest season.

The SCI of previous years pending protection (n-1 and n-2) will be automatically aggregated to those that may have been produced in the harvest season (n), up to an individual maximum equivalent to 20% of the standard yield.

In each harvest season, the owner of the vineyard and the winery will have to allocate to common wine the result of the transformation of SCIn-3.

  1. Individual and qualitative unlocking mechanisms.

In each harvest season, the owner of the vineyard and the winery may waive, by colour, the accumulated SCI produced in the harvest season (n), which will mean that it is sold as common wine.

In each harvest season, the owner of the vineyard and the winery may waive, by colour, the SCI of previous years (n-1 and n-2) pending protection, which will mean that it is sold as common wine.

In each harvest season, the owner of the vineyard and winery may, with a deadline of 15 January, determine the replacement of all or part, by colour, of SCIn-2 or SCIn-1, with volumes of the SCIn, up to a maximum of 10% of the SCI, provided that the result of the processing of the SCI is stored in the winery. As a general rule, the replacement will comply with the “first in-first application” principle.

In each harvest season, the owner of the vineyard and winery may, with a deadline of 15 January, determine the qualitative unlocking of all or part,  of SCI volumes through the self-downgrading of an equivalent volume of protected wine by the winery. As a general rule, the replacement will comply with the “first in-first application” principle.

The volume of SCI used would be protected and the self-downgraded wine must leave the winery as common wine.

Unlocking cases

14.1   The Actual Yield (RR) is less than the Maximum Yield Subject to Protection (RMA))

In general, the grape grower will automatically benefit from the protection of the difference between his Actual Yield (RR) and the Maximum Yield Subject to Protection (RMA) attributed to the SCI of previous years, starting with SCn-2. In addition, the holder will benefit from the protection of the difference between RMA-RR-SCI, if this is positive, attributed to the SCI n-1 or even to SCIn until RMA is reached.

When the total stock/release ratio, estimated on the basis of the September YOY and the total volume of eligible grapes received in the Designation exceeds the value of 3.05, the individual unlockings will not be executed, except as agreed in writing by both parties accepting it, before 30 November and/or a weather incident (loss equal to or greater than 30%).

14.2  The Actual Yield (RR) is more than the Maximum Yield Subject to Protection (RMA))

The owner of the vineyard and winery may, with a deadline of 15 January, in a form designed for this purpose:

  1. Give up accumulation in case the maximum of 20% in previous harvest seasons has not been reached. It will entail the obligation to sell the difference between the CR and the RMA as common wine.
  2. Waive the SCI of previous years (n-1 and n-2) pending protection, which will mean that it is sold as common wine.
  3. Replace the SCI of one or both of the previous years, starting with the oldest, with SCI from the new harvest, with a limit of 10%.
  4. Collective unlocking mechanism.

Once the volumes protected as a result of the classification changes of the SCI have been determined, the origin or not of an additional global unlocking will be decided.

The variables under consideration are:

  1. Reference to ratio. From the calculation of the ratio at the end of the year, the protection of all or part of the overall PA volume stored in the winery would be automatically settled, taking into consideration the successive order SCIn-2, SCIn-1 and SCIn, until the percentage is determined, horizontal for all the wineries and with repercussions depending on how the SCI would have been generated for the different owners of the vineyard. This ratio is set at a value of 2.80. The ratio must reach this value and consequently cover all the PA volume necessary to achieve it or try it;

or

  1. By decision of the Plenary in situations of indisputable necessity.

The Control Board will notify, before 31 March, each producing winery the PA volumes that are protected, as well as those that should be sold as common wine, and each winery will record the respective movements in the card.

You are hereby notified for your knowledge and such effects as may obtain.

 

Logroño, 29th June  2018.

THE PRESIDENT

Fernando Salamero Laorden