Will the Port Industry Survive?

[Frederick Blais]

Same For me Roy, I haven't got the time to read this entirely. I've read it very fast, and here are some more facts that might be interesting to consider.

Concerning the tourists in the Douro. I'm not sure that we could see it grow as fast and as big as the Napa Valley for exemple. The reason is the the winery/lodges and the vineyards are separated by 150 + kilometers. The tourists industry really emphasis about attracting tourist to Porto/Gaia. This is where they have the infrastructure to receive large group of tourists. There is no place in the Douro that can receive 300 tourists/day. Will the port companies be willing to invest in the tourists business in the Douro before investing to rebuild and plant vineyards. For the next 10 years, I don't think that many tourists will go past Regua. It is easy now to get to Regua with the Highway but I'm not sure they dinamyte the 122 - the road from regua that is passing in the vineyards all the way to Spain - to build a highway to receive more tourists.

Concerning South African wines and Douro wines comparaison. I'm not sure the Douro vineyards will be able to produce a huge volume as they are producing in the SA. Most of the wines that are being produce right now are middle range to top range quality wines too. These are the hardest to sell, because people don't buy them if they don't know the wine. Yields are very small too in the Douro and irrigation is not permitted( if I'm not mistaken on this ) so it will be very hard for them to compete on the Volume/Price/Quality that we can find in many places with a hot climate like Chile/USA/SA/Autralia where irrigation is permitted.

The Douro superior is also the place where this revolution can start, everywhere else in the Douro, most of the vineyards are already planted.

Good topic Roy!

[Roy Hersh]

Having just read Andy and Fred's thought provoking and intelligent posts above, I am reminded that it is a thread like this that that I created the FORUM for. It is the kind of thread where you can pour yourself a glass of Port and even a second one, while reading very stiumulating posts on the current state and future growth of Port. I have much more to add to even earlier posts, but again, I am hoping that more people will chime in with their thoughts.

It is truly a shame that for a thread like this ... the MANY Port Trade lurkers, won't breach their hesitations, and share their insights. It would absolutely be worth their while to provide us with a glimpse into their views, even if it was the only time they'd post here. I'll pour myself another glass now.

[Roy Hersh]

A look forward:

Douro table wine production will explode within the next ten years. Even the Fladgate Partnership may change its stance to NOT produce any table wines at all, whether that happens with current properties or acquisition of other Quintas that are suited for the small production of specfic cultivars remains to be seen. I would be surprised if ten years from now, they have not become players in this lucrative market. Should they remain staunchly opposed to the Douro wine production for their company, I'd have to give them credit for being true to their word, albeit it must be tempting to give it a go. Sometimes it is best to stick to your core business. It will be interesting to see what happens.

Field blends become a thing of the past and will be seen less and less as specific site selection for varietals becomes ever more important in the Douro.

In the UK market, BOB or "buyer's own brand" is going to slowly fade away as the large producers who support this "Tesco type" offering will no longer find it worth the effort from a financial standpoint. They will therefore move to 100% branded product and let this low end 5 pound "bulk" market disappear.

LBV will continue to be a significant category, which will only get stronger in the USA in the next decade or two. Crusted will never catch on in the USA.

Education on will improve and people will understand Port here in the USA (most already do in the UK) but it will remain a niche market in the overall scheme of things, while the Douro table wines will gain the majority of the press for Portugal in years to come.

I still believe as do some in the Port trade, that attracting new and younger wine enthusiasts to drink Port is the greatest challenge the industry faces. I know that cool bottles of Raven, Otima, Portal and Solene have led the way to begin the facelift, but there is the significant need for the marketing to change, to appeal to, if not pander to the younger generations to come. Packaging is such a small issue compared to the actual attraction and retention of younger consumers.

Single Quintas will suffer tremendously. If the current economic does not change some, if not most, will probably be bought up by the large houses such as Symingtons. This type of take-over is, and has been, a trend in the recent past.

Actually this is not new or recent at all. This has been a trend since the 18th century and certainly very prevalent in the 19th century and moreso after the downturn of the 1950s. So this is not new and may continue to some degree as undercapitalized operations fail and the weak do perish. On a brighter note, I think that the nearly annual releases of SQVPs, will continue to proliferate and will be the outlet for the juice that is now sold more as lower priced wine. The SQVPs may even have two tiers in the future to appeal to those looking for a reasonably priced vintage produced wine. The Sandeman Vau and Niepoort Secundum which have paved the way for less expensive VP offerings ... are just the groundbreakers to what I believe we'll see a lot more of.

Of course my original title was meant SOLELY to be provoative, to get folks to post in this thread. That said, there are certainly concerns for the future of the Port industry. I don't think it is in any dire jeopardy, as there have been a handful of decades in the past 300+ years where there was a significant downturn in the Port trade. But like labor unions as an analogy, the pendulum of power, swings widely in both directions. This decades' downturn can easily be balanced by 2010-2020's upswing. Just as the second half of the 1990s were go-go and the first half of this decade is slow-go. The good news is that we are seeing interest by the "next generation" within the trade to get into the business. These youngbloods will bring new ideas and energy which will be the solid foundation for the future.

[Andy Velebil]

This thread has been great and because of it I started looking into the production of douro reds. I am going to have to revise my earlier statements. I had no idea how much more Douro table wine is produced than I originally thought. From what I have read, it seems a rather large amount of red table wine is produced by a large number of growers. Some from very small and old vines, and some from larger vineyards. Most of it consumed around the area, and not exported, if I read correctly. I think I am now inclined to believe that this part of the market will probably start growing at a rather steady pace sometime in the near future. Will it get as big as those Australian wines that are on every store shelf now, who knows, only time will tell.

Like Roy mentioned, I am now inclined to believe the Fladgate Partnership will have to get into table wine too. I think they would be crazy not to get into the table wine business as profits are much higher from the production of a table wine than for port. I may venture a guess that, if they do, it will probably be in more high-end reds.

Besides, table wines may be a good way to get more port drinkers. Just think if people become familliar with a producer of table wine, maybe they will be inclined to try a port from the same producer. After all, people are more likely to try things from a name they are familliar with.

[Roy Hersh]

Andy,

Don't hold your breath. Adrian Bridge (who visited here a month or so ago) who is the Managing Director of The Fladgate Partnership and David Guimaraens the oenologist who oversees the group's winemakers ... are both adamantly opposed to taking the Fladgate Partnership in the direction of Douro reds. Adrian has been very outspoken on this topic. When dining with David recently he told me that it is not an area that they want to get into, as he believes it would be a distraction from their core business of making the best Ports possible at Fonseca, Croft, Delaforce and Taylor. He also wondered out loud if a company was to make both Douro and Port wines, would they be diverting some of the top Port grapes to make the Douro reds? We discussed this in great detail and I am convinced that at least for the foreseeable future ... that they will not be changing their minds. However, both individuals are extremely intelligent and successful businessmen who could change their minds someday.

[Andy Velebil]

Thats a shame to hear.

Now, what was that old saying..."Never Say Never"

[Andy Velebil]

I still believe as do some in the Port trade, that attracting new and younger wine enthusiasts to drink Port is the greatest challenge the industry faces. I know that cool bottles of Raven, Otima, Portal and Solene have led the way to begin the facelift, but there is the significant need for the marketing to change, to appeal to, if not pander to the younger generations to come. Packaging is such a small issue compared to the actual attraction and retention of younger consumers.

Roy, I will disagree on the packaging point here. Packaging is now a very important part of alcohol sales, as is advertising. Just look at all that Vodka, Tequila, and other spirits where the competition for having the best bottle design is high. A cool and hip bottle can help sales tremendously. The younger generation is all about looks, they want to impress others. If that means chosing between several bottles of a similar product, the "coolest" bottle design will win every time. The contents could be poor, but if the outside has that WOW factor they will buy it.

I do agree the trade needs to change it marketing strategies to appeal more to the younger generation.

The Sandeman Vau and Niepoort Secundum which have paved the way for less expensive VP offerings

Funny you mention this, Sandeman Vau Vintage was some of the first VP's that I bought in my quest to get into VP's. I found 1/2 bottles for about $15.00 a few years ago. I still have a few left, keeping them more out of sentimental value. At that time, they allowed me to buy a decent VP for a low price. Now I am hooked and my cellar is growing at a quick rate

[Stuart Chatfield]

I'll agree with one of Andy's comments and not the other.

I think that the top port producers should not go into dry table wine. Long-standing businesses do best sticking with what they know and do best and the path of such diversification is littered with failure. There are cycles and port will come back. I've said it before here, but with great trepidation, that someday soon some trendy popular icon of contemporary culture is going to say they like VP and, hey presto, so will large chunks of people in the 16-24 age group. Just look what has happened to Champagne in the UK in the last 15 years.

However, yes, I think packaging does matter. (In fact, I suspect that one of the appealing things about VP is that the labels are brilliant and seem not to have changed for 50 years - my office shelf here has a row of Taylor empties from the last half century and they don't look much different!) I don't carry on buying wine because I like the label and I am immune to advertising and trends (e.g.. I like port that is un-trendy and badly advertised (barring the Richard Marner Cockburn ad as I said elsewhere) ), but a good label can induce you to buy just one bottle in the first place, just to try.

I vaguely recall a comment on jancis.com recently (don't remember if it was Jancis herself or a purple pager) about Marks & Spencer ("M&S") wines here in the UK. M&S is a highly successful supermarket (that has, agreed, had some recent problems) but seems insistent on ignoring well-known brands in favour of their own-branded and labelled products. The comment on JR.com was about how bland their labels are - it suddenly dawned on me why I never buy from M&S - you go in there and having browsed the labels feel instantly bored - they are so terrible. therefore a good wine will never get tasted in the first place.

Let's keep the excellent traditional lables for our VPs and give the youngsters brightly-coloured half bottles of ruby with a straw if they want it (don't laugh guys, that is what is happening with champagne here and it works )

[Al B.]

I had to smile to myself when I read the latest postings on packaging and marketing. Three reasons for this:

1) I absolutely agree with the view that the right shape bottle / cool and hip package / trendiest colour glass can sell more units - but there is a difficult balance to be reached between one extreme of being staid / boring / reliable and the mid-point of being updated / refreshed / current and the other extreme of being trendy / fashionable / transient. Right now, VP is clearly in the first category (hooray!) but producers are looking to move other types of port into the second category - Otima etc.

2) Packaging can give good messages but also bad messages. I recently read an article on the Symington's frustration on the poor performance of Otima in a number of recent tastings. The Symingtons felt that the quality of the wine was not being properly reflected in the comments and scores it was receiveing. As an experiment, they submitted the Otima wine in a "traditional" bottle......and it scored more highly. One conclusion that can be drawn from this is that the existing consumer or opinion setter tends to associate "trendy" packaging with poorer quality product.

3) I recently bought 3 bottles of 40 year old VP that had been stored in a private cellar. These are fabulous bottles. The labels have fallen off, they have neck labels to say what they are, the branded corks are visible through the glass where the wax has come off. What better, more cool packaging can you have than bottles with 40 years of cellar dirt and spiders webs all over them? Perhaps holding back more bottles and selling them with 20+ years of bottle age and cellar dirt is another option - let me buy en primeur and store my wine in the Quinta or the Lodge in VNdG.

But I love my dirty bottles, they create such an impact when you produce one of these at a dinner at the end of the meal - everyone suddenly stops talking, sits up and wonders what sort of a treat they are in for. You don't get the same effect from a couple of cans of Sophia, even if they do come with sharing straws.

Good thread Roy - seems to have developed a life of its own.

Alex

[Stuart Chatfield]

I'd like to re-iterate that for my taste, I agree with Alex completely. I want VP to be in dusty old bottles* with plain labels that say the minimum. No doubt professional tasters will find that Optima stuff better in a proper bottle.

However, provided they don't start competing with us for the VP, it might help the producers and us if they could find a way to sell the more of the cheaper wood ports to youngsters in whatever bottles.



*As mentioned in another string that may have got lost, however, I do wish they'd go back to the tranparent dark green bottles that UK bottlers used up to '70. I don't really like the opaque dark brown ones as they are not necessary if the wine is well stored and only make decanting more difficult.

[Nikolaj Winther]

I don't see any crisis in the port industry, and certainly not one that spell the doom of the style. If your arguments were valid, Roy, that production prices are rising and other styles are more popular, then what about Sherry? There's been a crisis in that region, sure, but there's plenty of high quality Sherry to be bought. And their production-methods are problematic too etc.

More catching would be the case with Sauternes. Extremely low yields, infrequent successful years, troublesome production etc. And sauternes has survived and is very well even 150 years after the 1855-classification.

I see the problems elsewhere: Companies buying (port)wine-companies are often in it for the money. They rarely cares about the future, as they're trying to make rather quick bucks.
Prices. Port is expensive, as is much wine. I read, that it costs less that 10US$ (ten) to make a bottle of Petrus that costs 1000 dollars. And even if you claim that Pomerol is easier to make, then consider, that petrus buys new casks every year - in wet years they have helicopters to dry the grapes on the vine etc etc. I also read, that the manager of Chateau Camensac said, that production-prices for them had risen to (around) 2$ per bottle. And it sells for something like 15-20. It's rediculous charge (in stores) +100$ for vintage port (taylors and others) and then claim that there's a crisis.

[Roy Hersh]

Nikolaj,

Clearly you are taking some things out of context. In reality, I am not advocating doom and gloom with Port. I launched this topic to be controversial and to start dialogue about the current standing and future of the Port trade and to see what interesting tangents would come to the fore. I don't want to sound defensive ... but I really think you need to read my many posts here, along with others and you'll see ... NOBODY is talking about the pending downfall of the industry, after that first salvo was fired to get people interested in posting. It was nothing more than that, I promise.

As you'll read in my article that you will receive on Monday ... I have studied the ups and downs of the Port industry over the past three centuries and know that like a pendulum, the power of Port will rise and fall and come back to rise again.

Where I disagree with your post is when you say that:

Port is expensive, as is much wine.

This is just not really the case, IMHO. When you can find 40 year old bottles of fantastic "Grand Cru" Port from amazing vintages like 1963 and 1966 for $300 and $200 respectively ... then please do your comparison to a first growth Bdx from say, 1961 or even 1966. Port now looks like a heck of a bargain eh? Recent release Taylor you mention for $100. Well maybe in Denmark that is the case. Even if it is (and you could have bought it here for $65 early on, $75 today) ... ok, so what is the top notch 2003 Bdx first growth selling for? $300-400+ right? So how is Port expensive?

Please don't compare vintage Port to Sherry. That is like comparing Chablis to California Chardonnay, except not even THAT close.

I don't think that the Port trade is crying that there is a crisis. When I speak to folks in Portugal, I never get the sense that the TRADE members feel there is any crisis at all. Are there financial issues due to a waning market at the moment? Yes. But "crisis"? Not even close.

Again, please do understand that my very first posting was just a way to get others to be involved in talking about a different topic than has been raised here before. It can't be all just tasting notes and Port tong offers.

Best regards and please do keep on posting!

[Roy Hersh]

To put things into proper perspective for those of you who may still be able to be surprised, I quote Richard Mayson in his 1999 masterpiece, PORT and the DOURO:

In an international context, the Port industry is still relatively small. In volume terms total world-wide sales of Port only amount to just over one half that of Smirnoff, the single most popular international brand of Vodka.

And so, there we have it, perspective!

[JohnG]

Certainly, a visit to my local Tesco was instructive in the context of this debate. Tesco must be the single biggest arbiter of bulk winenfashion in the UK. The shelf space devoted to port was, indeed, miniscule compared with table wines. However, the quality on the shelf was not half bad.

Around two thirds of the bottles were, to some extent, premium offerings; respectable LBVs, aged tawnies, and single quintas. No VPs as Forum members would quaff, but not very much of the lower end wines. Given that Tesco is not a charity, people must be buying the stuff.

My question about the health of the industry is whether it needs low price port (or equivalent) to maintain the critical mass one would expect to matter, or can it thrive as a niche producer of high quality wines? If the former, is the future in low price port, or table wines to feed the bulk market. I know that Mayson canvasses this question in his Port and the Douro'.

I think that Roy is too dismissive of the sherry comparison. Different as the wines are, the markets have similarities, to the extent that there are high and low quality products carrying the same label to an extent not usually seen elsewhere in the wine world. Using Tesco as an example again, their sherry offerings today were poor, and not nearly so good as the last time I looked a couple of years ago. By this example, port looks to be in rude health, and sherry looks like a sick man.

It seems to me that many people like to be served port when they are guests, but would not buy it themselves. If the port industry can get round this, its future may be even brighter.

[Nikolaj Winther]

Where I disagree with your post is when you say that:

Port is expensive, as is much wine.

This is just not really the case, IMHO. When you can find 40 year old bottles of fantastic "Grand Cru" Port from amazing vintages like 1963 and 1966 for $300 and $200 respectively ... then please do your comparison to a first growth Bdx from say, 1961 or even 1966. Port now looks like a heck of a bargain eh? Recent release Taylor you mention for $100. Well maybe in Denmark that is the case. Even if it is (and you could have bought it here for $65 early on, $75 today) ... ok, so what is the top notch 2003 Bdx first growth selling for? $300-400+ right? So how is Port expensive?

Well, comparing 1. Cru Bordeaux to vintage port (to me) is like comparing Ferrari to Porsche and then asking if the "cheaper" porsche isn't "cheap" while Ferrari is much more expensive. All the while, BMW or Honda makes cars that (in many respects) pars with those cars - but at a much lower cost. I'd argue, that both Ferrari and Porsche are cars well out of my range - especially Ferrari. Just like 1. Cru Bordeaux is out of my range. And because VP is relatively cheaper than 1.cru bordaux, as is Porche to Ferrari, well that doesn't make either of them cheap (though you can find cheap VP in denmark - just not taylors and fonseca (my favourite)).

I'm saying, that compared to the cost of production, the product is expensive. That means that there's a vast profit-margin that can be reduced, lifting whatever pressure on port. That's what I was hoping got through, by listing the poduction-costs of Petrus and lower crus bordeaux.

Please don't compare vintage Port to Sherry. That is like comparing Chablis to California Chardonnay, except not even THAT close.

Well, I wasn't comparing the very product, but more the situation in which sherry has been, and in which you (kind of) argue that port WILL be in. Even then, Sherry and Port are both fortified wines. Doesn't that qualify for comparison?

It can't be all just tasting notes and Port tong offers.

That sounds like a wager to me! (just kiddin')

Best regarts,
Nikolaj Winther

[Roy Hersh]

Sherry and Port are both fortified wines. Doesn't that qualify for comparison?

Well, in the scheme of things, I'd have to say YES, although Madeira might be a slightly closer analogy. I do get your point though.

[Roy Hersh]

Any more thoughts?

[Todd Pettinger]

Roy,

Thanks for resurrecting this "golden oldie" - I had not yet seen it when I was trying to browse through all the old archives. Sadly, I am still a long way away from completing this goal, yet the Forum charges onward.

At present, I can't chip in with anything that would resemble an intelligent prognostication, nor anything based upon fact, experience, or even plain old good luck at guessing. I have skimmed about 50% of the posts in this thread and will finish shortly... maybe then I will have something intelligent to say.

I can only hope that some of the opinions/predictions will not be correct (those that believe that Port pricings for VPs will go up dramatically over the next few years) or sadly, it will knock a whole range of potential consumers out of the market. Like Premier Cru Bordeaux, which has gotten so ridiculously expensive that even some readers of this Forum have given up purchasing new release or en primeur offerings, if VP prices elevate much higher, this guy here will likely just have a few dozen bottles in his basement plus some fond memories.

Perhaps more to come once I have finished reading ALL the posts all the way through...

Todd

[Moses Botbol]

But I love my dirty bottles, they create such an impact when you produce one of these at a dinner at the end of the meal - everyone suddenly stops talking, sits up and wonders what sort of a treat they are in for. You don't get the same effect from a couple of cans of Sophia, even if they do come with sharing straws.

I love the dirty bottles and it would be a good marketing idea for port in general. I am the first to grab a soiled label wine for 30% off- heck I think it looks better than a pristine bottle!

I have avoided Otima due to the bottle shape and size. Seems like a gimmick to me. Port does not need gimmicks.

I hand it to Taylor for not producing table wines. They recognize the bigger picture and what Taylor really means. They will be around for a long time, and even if that means losing out on a few bucks, their integrity and name will forever be unsullied.

The port industry could do some product placement in movies and TV to promote their product in a proper fashion. Let see James Bond drinking a 70 Taylor, opening the bottle with tongs and then using the tongs to save the day… Perhaps Brad Pitt drinking port behind a Portofino sunset or 50 Cent drinking a 27 Croft port in his stretch Hummer limo?

Port should market its own tradition, as that is what is special. The drink stands on its own, but people buy a lifestyle, not just a drink. Look what Johnnie Walker has done to promote Scotch.

[Luc Gauthier]

In our little corner of the world ( Québec ) , Port consumption didn't even register in the world figures ( 5 yrs ago ), but as of 2007 , we have become the worlds 4th largest market in premium Port . . . This , despite the fact that we pay outrageous prices for VP . . .