Accounting for Alcohol – part 13 “Accounting in Spanish co-operative wineries during the 20th century”

This is a brief summary of chapter 13 in our book, written by Francisco J. Medina-Albaladejo. This chapter focuses on co-operative wineries in Spain. They emerged in the late 19th century and have played an increasingly important role in the sector ever since – now accounting for over 70% of wine production in Spain. The chapter explores the accounting records of three Spanish co-operative wineries – Rosario (Murcia), San Isidro (Murcia) and Pinoso (Alicante) from the 1930s to the 1980s.

In the early part of the 20th century, the co-operative model was not very successful. Most wineries were under-capitalised, their financial position precarious and their management non-professional. They operated within the framework of the 1885 Commercial Code,5 which required the use of double-entry bookkeeping, through books such as libro de diario (journal book), libro mayor (ledger), libro de inventarios y balances (inventories and balances book), libro de actas (minute book) and the annual preparation of balance sheets. In essence, the accounting practices used by co-operative wineries before the 1940s directly reflected the characteristics of these organisations – small organisations composed of small and medium-sized landowners with no training in accounting, who followed simple administrative procedures and adopted accounting methods which were dictated by external state pressures in the form of legislation.

During the Francoist period, 1939-1971, financial support of the state saw a boom in co-operative wineries. However, the support provided by the Francoist regime did not contribute to the implementation of sound management policies. In accounting terms, a 1942 Act, and its attached regulations, established accounting systems that differed little from those that had already been put in place in the preceding decades. Single- or double-entry bookkeeping was required, depending on the complexity of the operations carried out by each co-operative, as well as annual balance sheets.17 The regulations also recommended producing annual reports, but this was optional.

After Francoism, the mid-1970s witnessed substantial changes in the wine market. Consumer preferences adopted a new pattern: instead of low-quality wine to be consumed daily as part of the Mediterranean diet, consumers began demanding smaller
quantities of better-quality wines, which were bottled and better presented in general. From the point of view of accounting, the state tried to adapt the existing legislation to the new conditions and bring it closer to European regulations. A 1971 decree made double-entry bookkeeping compulsory, regardless of region and the scale of operations, and also demanded that co-operatives submit a profit and loss account to the public regulators, along with the balance sheet and the annual report, which was no longer optional. In addition, the decree gave members the right, for the first time, to request information on administrative issues and accounts. The outcome of this decree was the homogenisation of accounting practices among Spanish co-operative wineries.