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Sunday 5 July 2015

Port at the crossroads

27th July, 2012 by db_staff - This article is over multiple pages: 1 2 3

The twin problems of years of mismanagement and economic recession have left Port with significant challenges that must be overcome to ensure the health of the historic Douro region and its workers, says Paul Symington

Port is facing fundamental challenges after strong growth throughout the 1980s and 1990s took sales to a record €415 million (£334m) worldwide in 2000. This growth was fuelled by the development of new markets such as Holland, the US and Canada. But Portugal’s accession to the EU in 1986 gradually increased rural labour costs. By 2000 the true cost of growing grapes in the Douro, the world’s largest area of mountain vineyard, had become abundantly clear.

Inevitably these costs impacted on Port’s retail price in markets such as France (2.53 million cases), where Port is largely drunk as an aperitif, and sales declined. Fashion and lifestyle also have a major influence on consumption, and in France and Belgium, which are responsible for 40% of all Port sales, other aperitifs have muscled in on Port’s traditional role as the preferred pre-dinner drink. Meanwhile in  other traditional Port markets such as the UK (0.98 million cases), the decline in formal dining, the increased quality of everyday red wine and the latter’s far wider availability across Northern Europe, have narrowed the opportunities for serving Port.

Consequently by 2011 the value of Port sales had declined to €353m. This was the principal reason for the exit of virtually all multinational drinks companies from the region and for trade consolidation. Some decline is of course due to the deep recession of the past three years. But the underlying trend is concerning, particularly as the economy of the whole Douro region is so dependent on Port.

Premium Ports

On the positive side, the sales of premium quality Port have continued to grow and last year shipments to the UK marginally increased. Historically the Port trade was based on sales of good everyday ruby and tawny Ports, and at the other end of the scale, small quantities of highly prized vintage Ports. By 2007 the sales of premium Ports had reached 20% of all Port sales by volume and 37% by value. This tremendous growth was based on good marketing and on substantial increases in grape quality from the Douro vineyards; the result of plantings in the 1980s and 1990s supervised by a new generation of viticultural managers. Major improvements were made in the wineries, again by innovative young winemakers. From the late 1990s, the Douro was no longer known as the wine region for visiting to see 17th-century winemaking. New equipment with quality as the driving objective was increasingly to be found in the wineries of the more far-sighted producers and those willing to invest.

Traditional treading in lagares, for which the Douro is so well known, is very appealing to see for those who come for

a short visit. In reality, traditional treading with a full team of treaders almost certainly accounts for less than 3% of all Port made each year in the Douro (exact figures are not available). The huge advances in winemaking that have propelled Bordeaux and several other regions to the pinnacle of quality and value are somehow not thought to apply to Port. Many consider its production methods to be stuck in a 17th and 18th century time warp. While traditional treading is appropriate in some specific circumstances, it is impossible to make more than a few thousand pipes in this ancient way. Furthermore, treading in lagares can be objectively and empirically matched by some new winemaking techniques and equipment.

The result of all this work is that today Port quality has never been higher. This great leap forward has gone hand-in-hand with good marketing and sales efforts, creating a substantial volume of premium-quality Port sales that is the envy of other fortified wines.

However insufficient planning and an almost total lack of awareness of macro-trends has characterised the Port regulatory bodies for too many years. Like many Old World wine regions, the Douro is bound up with rules. But for Port the power has been dispersed among several bodies, including the IVDP (Instituto dos Vinhos do Douro e Porto), the IVV (Instituto da Vinha e do Vinho), Customs and Excise (Direcção Geral das Alfândegas) and the Casa do Douro, with the Ministry of Agriculture in faraway Lisbon supposedly overseeing the whole process. Some of these bodies were responsible for issuing planting licences, some for assessing the vineyards, some for distributing the annual licences for making Port and others for controlling its stocks and issuing quality certificates. One regulatory body even competed with producers by buying a substantial share of a large Port company; bizarrely, it has to be said, with support from some sections of the British wine trade. This particular deal was announced in the UK at a specially authorised press conference held in the rooms of the venerable Vintners Company.

The regulatory bodies impose special taxes on farmers and Port companies at every stage and the system has led to the development of an expensive structure whose primary objective inevitably becomes maintaining its own continuity. It is extraordinary how some bureaucrats in these bodies see themselves as the guardians and the “owners” of Port, and some even appear to consider the farmers and the Port companies as something of a nuisance – people who get in the way of the proper functioning of the region and the category. In particular the generic campaigns tend to be handled by these bodies that, again, sometimes seem to think they are the ones actually developing new markets. The overwhelming evidence from around the world’s wine regions indicates that work by small, medium and large wine producers is by far the most successful way of developing markets.

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