2024 Beneficio

[Andy Velebil]

From reports, the Beneficio has been set to ~90,000 pipas. A reduction of 14,000 over 2023 and even more over 2022. Yikes.

I know there was a glut last year with some people not able to sell their grapes/must or taking next to nothing for it. This surely won’t help matters.

[Lucas S]

I don't know why they don't use tawny supply to give port prices more elasticity.

In other words, keep the ruby supply fairly stable based on the actual market demand numbers, but then if there are excess grapes, let producers barrel up the tawny-viable excess which both future-proofs the tawny market and smooths out the supply in relation to demand over many years. A 15% production cut reeks of blunt, poorly-thought out decision making.

If you look at the whiskey market, nobody there regrets having more barrels in storage. The IVDP is setting themselves up for a supply squeeze in the tawny market down the line.

[Frederick Blais]

There is a big stress in the viticultor community at the moment.

2022 and 2023 yielded a lot of grapes. There were challenging years and the quality was quite uneven. This lead to many producers having still too much wines and Port to sell. A few big names have sent letters out there to the growers they have been supporting for years saying "that they will probably not buy their grapes this year."

So far 2024 is looking promising! The first real heat wave is only hitting now. Vineyards are healty. A few random showers in August could lead to high quality for both Port and Douro wines. So far we are looking for a harvest that will be closer to September, a nice change from the previous years.

As the prices for grapes in the Douro are still too cheap for the quality compared to other European regions, let's hope this year won't force some small players to sell their vineyard and keep the problem perduring.

[Roy Hersh]

Having been in discussion about the 2024 Beneficio topic with more than a handful of producers so far, (in mid-late July) some producers are very worried. Others are angry as they've related that this is going to create a worsening economic situation across the Douro region compared to the decrease from 2022 to 2023. It has also significantly strengthened the rationale for impending the return of Casa do Douro, to take the side of the grower/producers, when it comes to Port. While it can be viewed with negativity by some, this move is now just about guaranteed to become reality. I am not so sure that this resurrection will turn out positively, but that will depend on who will be the chosen one to guide its new iteration.

Sales declines by volume were already significant and heightened fears about Portugal's overall downturn in both consumption domestically, (and across the EU wine producing nations) and even in USA overall. But without going into November's election; there is significant concern that tariffs will return to European wine brought into America. It would be a negative game changer for PT wine producers, who somehow escaped the last time that 10% was added to wines from the rest of Europe.

And as Fred mentioned, at this moment ... the Douro, (along with almost all regions in PT) are looking excellent and with significantly strong water tables at this time. Porto temps have come close to 40* last week and may reach that number this week and will be in the high 30's as a minimum. Douro also has been getting considerably hotter but with cool evening temps across the growing region, so far.

[Frederick Blais]

There are a few issues that are finally impacting everyone in the Douro. They'll need to be adressed seriously and concisouly for everyone who is part of the puzzle.

I would not bring the Casa do Douro back, it would be to avoid the problem and funding it, altough it is an easy fix. France has been facing this problem for many years now, the solution was to fund the removal of vineyards.

Sales in volume are decreasing but total sales of Port wine are somehow stable and slowly growing. The very old Port and special vineyards VP are saving the day.

The answer to the sales decrease has been to reduce the prices and margins resulting in an intense competition for shelve space, especially in super market even leading to some companies to supposedely cheat to reduce the aging time of their Port in some categories.

In regions like Burgundy and Champagne who are just booming in sales, the high end wines have been pulling the low ends one to dramatically high prices. The total opposite is happening in the world of Port. One reason is that in those regions, the cheap Burgundy and Champagne have been dramatically increasing the basic quality. I'm not saying they are worth their money, but at least they have definitively adapted and improve.

Can Douro adapt? Yes! But it will be complicated.

My first step would be to adapt the Benificio to the new reality of the region. A region that is highly dynamic compared to when the Moreira rating system was introduced. Why would you be penalized in your quota if you have a fantastic vineyard to make Tawny or White Port? I would also definitively bring more sub-region to the Douro and start promoting those special terroir to help the small producers get the fame they deserve for their effort.

The average quality needs to rise, period. You can't be tempted to buy Port wine and then be disapointed by that shitty Ruby that an ice cube needs to be added so it is drinkable. This type of Port is scaring the consumers.

Everyday I meet new customers that are impressed by the quality of Port I offer them, from 10 euros to whatever, but those Ports are not reaching them. They are still flooded by overly sweeet and tasteless Port that is simply dammaging the perenial survival of the industry.

[Andy Velebil]

A bit long but an excellent read.

https://harpers.co.uk/news/fullstory.ph ... ustry.html

[Lucas S]

Great article.

But wait a minute, so a pipa of 550L goes for about 1K Euros.

And yet they are not allowed to be exported as a pipa anymore.

I would buy one, just saying.

If they had any imagination, they could fit a "Coravin" on a pipa and sell excess pipas to bars (especially in the UK) for ~2K euros each. That's going cost 3.6 Euros per liter to the bars which, coincidentally, is about the same as the wholesale cost of a liter of beer from a 50L keg! Cheap availability of Port at such distribution points would stimulate downstream retail demand as more people discover the category. More supply is not the problem - it's actually a blessing if they understood how to take advantage of it. The focus should be on getting that port distributed out there to quench the world's thirst.

[Frederick Blais]

A bit long but an excellent read.

https://harpers.co.uk/news/fullstory.ph ... ustry.html

Really interesting. Some numbers do not match the one I was shown from the IVDP sales statistics but the fact remain the same, the balance is lost in this industry at the moment. For one player to make money, another needs to loose big.

At the moment, it is no longer sustainable in the Douro to be a viticultor. By that I mean that no one starts a business to simply buy a vineyard and live from selling the grapes. If your house is paid and you don't have any children to feed, then it is a small extra income.

I was told from a winemaker that the price for the grapes are more or less the same as it was in the 90's. So if you inherit from your parent's land, you mostly will end up selling it. This is a vicious circle, that in the end will always(and only) benefit the big companies who make economy of scales.

The other time bomb is the labour. There was a time were the locals and foreigners(mostly Romanian) were happily coming to harvest in the Douro. But as of now, it is no longer the case. They go where the money is! The cost of living vs salary in Portugal is terrible.

[Eric Menchen]

But wait a minute, so a pipa of 550L goes for about 1K Euros.

I presume this is raw input product, far from a finished product ready to sell. You need to age that, blend it, fine it or filter it ... But the idea of selling finished Port in bulk again is intriguing.

[Al B.]

I’m not sure I agree with the statement that the production volume is shared across producers regardless of quality, but I guess I can accept that if it’s viewed in terms of the care dedicated to the vines (as opposed to the potential quality of the grapes grown on that patch of land).

But the biggest point that struck me was Adrian talking about the cost of money. The Scottish Whisky producers solved this challenge years ago by selling individual casks to private buyers. At the prices Adrian quoted, I calculated a pipe as costing around €2,800.

At that price, I’d be a buyer for a cask or two for my children. Even if I had to sign a contract which committed me paying an annual service fee to cover rent / maintenance of my cask. Just so long as all the costs were fixed up front when I bought the cask.

[Lucas S]

Came across this chart:

[Frederick Blais]

The image does not seem to show for me..

[Lucas S]

The image does not seem to show for me..

Can go to this link, https://porttoportwine.blogspot.com/202 ... 90000.html

[Roy Hersh]

I remember what happened in 2011 from the decrease that took place from 2010. 15k pipe decrease caused riots in Regua at the HQ of the IVDP. People were in the streets, many were growers and literally the mob turned violent. Many arrests took place. Rocks were thrown through the windows of the IVDP and it was blamed on the incompetence of the man in charge who was fired. In November of that year, Manuel Cabral was named the new IVDP President. Inside his first year, one of his major achievements was to nearly immediately increase the Beneficio for 2012 by almost 12,000 pipes. Shocking I say! I had a lot of respect for and liked Sr. Cabral a LOT, and he won over many fans from Durienses with that move (and Port producers too).

Now we have had a 14k pipe downturn in Beneficio and while some growers (and a few producers are seething) ... the error was that there was no adjustment downward LAST year which would have mitigated the NEED for the extreme downturn in 2024.

But the saddest part for us Port (and Douro wine lovers) is that this is shaping up to be the FINEST vintage in years, and producers will have to make very small quantities of "potentially" EXTRAORDINARY VP. It is sad for an industry that has not had a GREAT VP year in quite awhile. Along comes a stellar growing season? As it appears to be in Setubal, Lisboa, Dao, Alentejo and Bairrada as well) ... at least at the end of the first week of September, when I reached out to friends here.

The consumer may have stopped buying recent vintages of Port, which have been modest at best in overall quality, for the past several years. And along comes what may be the next great year, and quantities are going to be kept to a minimum and I expect that in a couple of years when the 2024's are released in 2026 ... depending on the health of the world's economic situation; (and global wine prices in particular) we could potentially see prices increase based on these factors: demand high vs. supply low.

Don't be shocked if this scenario does play out. We are in a downward CYCLE with a glut of grapes in CA as well as throughout Europe and an epic downturn of global consumption of wine. But I have seen that in previous decades too. Everyone starts grubbing up old vines and all vines in their vineyards and then that cycle turns and consumption rises again and so do prices and finally replanting. In this current situation, I expect that whatever has come down ... will go up again. And it is usual not that easy to see that coming when it happens; but it always has happened in the past. Not to get off on a tangent, but I think the generalist wine writers and some in the medical field have really gone out of their way to turn against past efforts to point out the many health benefits of drinking wine and all of a sudden, it feels like prohibition is back and the anti-health of wine articles are everywhere and with testimonials by respected doctors and supposed "studies". I needed to get that off my chest. Sorry. NOT!

That said, while not privy to mention names ... I have heard from a small number of owners of properties (that shocked me), because they are so well-known for great quality ... that they are interested in selling, while wanting to maintain their brands. Wanting to and finding a buyer in this kind of economic cycle ... is not all that easy. The Branco family was quite lucky. Having great vineyards in 5-quintas and a hotel on their Portal property, plus a skilled winemaker with 3 decades of ties to the property, not to mention one of the top chefs in the entire regions --- were certainly key factors for TFP making the offer they did, to Pedro's father.

I for one and keeping my fingers crossed that 2024 turns out very well. It is always fun when the two last digits turn out well, a century apart!