Grape spirit price hikes pose problems for Port

A sharp increase in the price of grape spirit poses a “major challenge” for the Port industry.

The hike is caused by an end to European Union distillation subsidies, which have been gradually phased out since 2007 and will disappear entirely at the end of 2011.

Port producers have already reported a 67% price increase from €0.96 to around €1.60 per litre since 2007, with the expectation that this will rise further to €2 per litre as vineyards across Europe continue to be pulled up.

Paul Symington, joint managing director of the Douro’s largest Port producer, Symington Family Estates, stressed the seriousness of the situation, saying: “This very large rise in brandy cost is a major challenge to the Port trade and will inevitably have an impact on sales and on all Port producer’s margins.”

Natasha Bridge, head blender at The Fladgate Partnership, echoed these concerns, asking: “Who takes that hit? The market certainly isn’t ready for it.”

Despite the cost problems it currently poses, grape spirit is widely credited as one of the most important factors behind the improved quality of Port during the last 20 years. Since 1991, Port houses have been free to buy grape spirit from their own sources, rather than the government issue bulk spirit previously forced on them.

David Guimaraens, head winemaker for The Fladgate Partnership, described this change as making “the single biggest difference to our Port compared to 20 years ago.” Fladgate currently buys from three different spirit producers in Spain, Portugal and Lucien Bernard in France.

In particular, Guimaraens credited the current spirit quality with the fact that today’s vintage ports are now approachable from a younger age – “the young fruit comes through much more” – and undergoes a less marked dull phase as it approaches maturity. “We used to excuse bottles for their unattractive phase, but that doesn’t happen now,” he remarked.

For more detailed analysis of changes in Port vinification, look out for October’s issue of the drinks business.