A massive increase in the cost of spirit is causing problems for Port producers in the Douro, and prices are predicted to rise further.
With its steep sides and harsh climate, the Douro River Valley is an expensive place to grow grapes
According to managing director of The Fladgate Partnership, Adrian Bridge, the spirit used to fortify grape must in Port-making (Aguardiente) has almost doubled in price from €1.60 per litre in 2011 to €3 today.
He also said the price of spirit will be “higher again” next year.
Bridge, who was speaking at a London tasting focused on the Fonseca Port brand, blamed the increases on a shortage of grapes for distillation following two “short harvests” in Europe, and an increasing demand for brandy.
He also noted the impact on prices of a gradual withdrawal of the EU subsidy on distillation since 2007.
Bridge stressed that although everyone in Port country was affected by the price rises, it was a particlar problem “for bankrupt cooperatives which can’t buy any spirit.”
Furthermore, due to the shortage of spirit in the market, Bridge said that producers now have to order and pay in advance for their spirit needs.
“We have to pre-contract ahead of the harvest… before we wouldn’t pay for spirit for 365 days, now we pay six months in advance.”
As a result, Bridge predicted a possible rise in grape plantings in places such as India, China and Brazil purely to supply grapes for distillation.
He also said there was industry pressure to allow Port producers to use alcoholic spirit that was not made from table wine.
However, he added, “the quality of the spirit is crucial” in Port making.
Countering the suggestion Port producers might want to produce their own spirit, Bridge pointed out, “While it is not illegal to distil in the Douro, no-one would do it because the Douro is a very expensive place to grow grapes.”
Concluding on the subject, he said, “You will here a lot about spirit in the next 12 months.”
As previously reported by the drinks business, Paul Symington, joint MD at Symington Family Estates, warned in July this year, “The price of wine brandy, an essential part of Port making, has skyrocketed: brandy will cost at least 60% more at the 2012 harvest in two months.”
Continuing he stated: “Even if grape prices remain unchanged, the cost of Port will increase by at least 9.5% early next year.”