ROUND TABLE – FORTIFIED WINE: Strong opinions

The topic of ‘bloodshed’ in the supermarket aisles prompted some lively debate at the Mentzendorff/ drinks business round table discussion of fortified wine

As Christmas approaches, traditionally the season when we dash out and buy our one bottle of Port, Madeira and Sherry of the year, thoughts turn to the fortified category. What are the challenges faced by the sector’s producers? How can the fortified category increase its relevance to today’s consumer?

These and many other questions were debated at a recent round table discussion on the rare occasion that we were able to gather together some of the sector’s leading producers; Javier Hidalgo and Tim Holt, Bodegas Hidalgo; John Cossart, Henriques & Henriques; David Guimaraens and Tiago Trigo, The Fladgate Partnership; and Andrew Hawes, Mentzendorff.

Hawes opened the discussion by setting the scene for the fortified category as he perceives it in the UK: “One of the problems that we face is the definition of the category, fortified wine is a hugely diverse area that spans from British fortified wine to vermouth to Port. Channelling a niche path with the category is a challenge given the fact that the largest volume areas are in decline driven by the demographic of consumers.” He continued, “There are, however, some rising stars such as manzanilla, aged tawnies and a renewed interest in Madeira which indicates to us that there is great potential for the category in the less volume but higher value areas.”

Tiago Trigo agreed, “We have seen that the decline in the fortified category is in general associated with the standard styles of Port. For example our single quintas are now on allocation.” But does this mean that the category is polarising? “Not necessarily,” according to Trigo, “There is still growth at the standard end of the Port market, which is driven by the multiple grocers, so I don’t see any real signs of polarisation. In fact, the volume figures in general have started to look a lot better.”

“Let’s face it, though,” said Javier Hidalgo, “The premium sector is really going to improve the perception of the category.”

“The term ‘fortified’ really is the kiss of death as far as consumers are concerned; it’s something we have been saddled with by Her Majesty’s Customs and it doesn’t do us any favours,” said Tim Holt. “They don’t understand the term and associate it with over-alcoholic wines, which is erroneous when it comes to the styles of Port, Sherry or Madeira.”

“Perhaps,” interjected Hawes. “But really we can get too obsessed with the terminology; there are other more important challenges for us to confront than the how the trade refers to the products.”

“Looking at our sector of the fortified category – Port, Sherry and Madeira – you can see, especially for the former two, there has been a great deal of bloodshed in the aisles to get two or three companies into the limelight,” said John Cossart. “But this has forced a renaissance in Jerez and Port at the quality end which should, I feel, enable the volume of giveaways to be cut down and bring about a meaningful offer.

“Madeira”, he continued, “is very small in volume in this market and while there is great interest among connoisseurs and traditional consumers there is still a lot to be done in terms of education. The style and quality of the product is incomparable.”

“Quality is so important,” added David Guimaraens, “When you consider the quality of the products available today you realise that the standard has never been higher. The backdrop to the growth in Port, I believe, is the young, fruity flavour profiles that are so suited to today’s consumer. Undoubtedly, there has also been growth at the premium end but what we as an industry have had to do is to adapt to the market.”

“Yes, you have a point,” said Cossart, “the UK consumer is increasingly driven by forward fruit.”

“Not just fruit; lighter, drier styles are growing in popularity,” interjected Hidalgo. “And this is why manzanilla has seen amazing growth recently. The style and taste profile of the product is very much suited to the trend of the market. What we now need to do is to convince younger drinkers to trial Jerez and manzanilla. We need to delete that brown, sweet and sticky image. It’s astonishing the amount of people who are still surprised when they learn that there are lighter, drier styles.”

The situation for fortified wines might be looking much more positive currently but other challenges still have to be faced up to, as Trigo pointed out: “Changes in distribution and the ‘bloodshed’ in the market means that we are dealing with a much smaller customer base and this obviously presents its problems.”

“Yes, but that is all part of today’s market dynamic of supply and retail competition versus consumer trends,” interjected Hawes. “There has been a reduction in the supply base but this is now being counteracted by a perceptible increase in demand for diversity and authenticity of product – affluent customers want to try something new and the retailers have to respond.”

“One of the key things to recognise,” added Guimaraens, “is that, whatever the challenges of the market, in order to survive we have to be able to work with our existing consumers while re-educating and appealing to the next generation with our products. We as a category have to remain relevant to the consumer drinks portfolio.” He continued, “In the 1990s Port managed to conquer a whole generation by education. Once the consumer had discovered our product and was comfortable with drinking it, he or she was happy with the protocols and, therefore, to include Port in the food and drink experience. We, whether we are Port, Sherry or Madeira producers, have to continue to innovate in the market.”

“Really it all comes down to the retail environment,” pointed out Hawes. “It has become harder and harder to operate at a multiple level and so what we are now seeing is a surge in the independent sector. Suppliers in this category have to be prepared to promote and educate in all the retail environments. It has to be a powerful, if blunt, message that we deliver; the detailed message doesn’t always hit home. The messages about our products have to resonate in a strong way.”

“There is no doubt that promotion and education are an essential part of any marketing strategy for the fortified category,” said Tim Holt. “We also have to differentiate. The traditional consumption cues for our products are in many cases
no longer relevant to today’s consumer. We have to create new perceptions about when to consume our products. The aperitif and the post-prandial are no longer of interest, the consumer needs different cues as to when they feel comfortable about drinking the product; new drinking opportunities.”

© db December 2006