Friendly Competition and Collaboration

A Question for the Port Trade appears in every other FTLOP newsletter, sharing this space with Port Personalities: In Focus. This month there were eleven responses by the trade, offering a variety of viewpoints as diverse as the grapes of the Douro.

Roy Wrote: In recent years, during travel through various wine appellations, I've been struck by the friendly competitive nature that allows large, medium and small sized producers to collaborate closely on promoting the wines from their region (as well as tourism).

The question for this month is:

Q: Could you please elaborate on what it would take for this same dynamic to work well in the Douro? Additionally, what one thing could you or your company do to promote this type of collaborative environment in the Douro?

Hugo Guimarães, General Manager, Pinalta (DOC Douro wine producer);

I would like to give you a constructive answer; however I do think this is a matter of culture. These days the Portuguese people’s view is very limited. It’s not only in the Douro region, but in other business as well. The common behavior of a Portuguese entrepreneur promoting his product is to say that their competitors are not good and that they don’t have a good product. So, instead of entering in a positive and constructive spiral of increasing the rate of Portuguese products, they do exactly the opposite. I don’t know exactly how this could be solved but I think 2 things should happen:

  • First, restore the people’s confidence and make them believe that we are not so bad after all.
  • Second, make people understand that the world is so much bigger than Portugal that we can in fact put our products in the market without needing to say “buy my product because my competitor’s product is not as good as mine”.

The last one could be solved by the IVDP if they promoted all Douro producers and not just the ones they like. In fact, the IVDP should be the first one to be educated to understand the 2nd point. As far as what my company can do, in fact we already do. As regarding the first point, we are confident in our project. About the second point, we never do say that we are better than our competitors. In fact, in most situations we do say that “if you are already buying from this company, you should not need to buy from us” and we then move on to other, of the thousands of potential customers that exist.

From Dominic Symington, Director, Symington Family Estates;

A fair answer would be to say that to a large degree this is the same situation in the Douro & Gaia where many work and cooperate well together. Clearly some will get on better with each other than others.

The clearest example of extremely successful cooperation must be the Douro Boys marketing group and the Lavradores da Feitoria company which is a grouping of independent properties who have created a joint company to give themselves critical mass, however, I think it would be fair to say that to a large degree there is a reasonable amount of cooperation between the various companies particularly with visitors.

From a more traditionalist point of view of the classical Port Shipping firms, although everyone clearly follows their own commercial strategy I think it would be fair to say that there is a certain amount of cooperation. A couple of issues that immediately spring to mind is the joint Vintage Declaration tours that Fladgate, Noval & Symington put together and a number of us not infrequently get together for a tasting or promotional event in one or other country.

A number of major tasting events have been organised jointly by my brother Paul, Cristiano van Zeller and Dirk Niepoort to present the leading wines from the Douro. We have also created a joint Vintage Port Academy in Hong Kong with The Fladgate Partnership to promote and introduce Vintage Port to the Asian market.

Just a few weeks ago I think you would have been surprised by the very close cooperation between the various Douro DOC wine producers and the Port producers at the New York Wine Experience where we all took visitors from one table to another to introduce them to the differing styles of wine etc.

Much of the cooperation however goes on behind the scenes and therefore isn’t necessarily immediately visible but I think it would be fair to say that in general there is a degree of cooperation and friendliness between most.

From Miguel Braga, Owner and winemaker, Quinta do Mourão (S. Leonardo);

Normally we seek other producers that have different types of wines in their portfolio, and then we make some promotions together. We still have not had success yet in the USA, but we did have success in Europe and especially in Brazil.

Even in Portugal we have attempted promoting our products, but on some occasions we were not well understood. Hopefully that will change. I know and you know that Douro is special in the relationships between the producers and also special with the Port shippers in Gaia.

I sincerely think that if the new generation of producers wants to, we can make some very nice products and work together in promoting Port and Douro wines. The first thing to do is to get everyone talking together, which is not easy. I know that it is very difficult to get Douro´s key people around the table, but I think that it is ultimately possible. I think it is better if a person from outside of the Douro is in place to begin these kinds of meetings for open discussions. What can we do as a company? Open our doors to those who are willing to collaborate.

From Paula Sousa, Marketing & Tourism Manager, Quinta Nova de Nossa Senhora do Carmo;

This failure on dynamics is felt by those who see us from the outside and also by all the agents who daily live and work in the region. It begins as a question of mentality and culture that disable people to work together, share contacts and follow towards a common good.

Then there is no impartial or external entity capable and available to lead the interests and more easily take the reins of a joint work. Finally, there is a weak habit of promoting, with pride, with a strong will, even with some arrogance ... it’s a lack of national self-esteem that makes us brag to others and forget ourselves. All together it is somehow resulting into stagnation.

The wine business, after all, works better than tourism, because there are institutions that traditionally provides some input with annual promotion plans, beyond the one done individually.

But there is much to do on a national and global view, in order to make Portugal to be seen as a great wine land. ViniPortugal could promote with IVDP and also with the Tourismo de Portugal, instead of doing things separately.

In the wine tourism, on our part, we’ve tried several approaches with our competitors/partners, but most of the time with little to no results. Right now there’s hope in a new private project - ALLtoDouro - of a regional company (Greengrape), that intends to group all the offers of the region to enhance, promote and sell it nationally and internationally.

With these advances the economic agents are also more motivated to actively work in the territory, to open their “quintas” doors, to sell wine to tourists ... avoiding the actual slow growth and this cycle of closed doors, little animation and weak promotion.

The important thing is to start, and to believe ... and look at who has done well and replay it here. It's not worth wasting time reinventing the wheel.

From Bartholomew Broadbent, Proprietor, Broadbent Selections, Inc;

My perception of the problems can be illustrated with several examples drawn from my experiences, during the past 30 years selling Port, observing the characters of some key individuals and some of the companies in the trade.

Port producers, in each other's presence, are a jovial, friendly bunch. Beneath the veneer there is a protective competitive nature and desperation to build their brands to the exclusion of benefitting the category. They are aggressively competitive and jealous by nature. This, combined with English arrogance, does not bode well for mutual cooperation. There is also a sense of snobbery you feel with the British shippers, a "we versus them" mentality when it comes to their regard of the Portuguese Shippers.

The Guedes Port family is Portuguese aristocracy, yet they don't show off their castles. The British Shippers are upper middle class, not aristocratic, but would perceive themselves, incorrectly, to be the Grandees of the Douro. A denial that there might be a grander Port family within the Portuguese Port community prevents cooperation from crossing the cultural divide.

During my ten year tenure working for and being trained by a British Port company, I visited the Douro probably 15 to 20 times, although I was never taught by them about their Portuguese competitors. They were delightful people to visit, welcoming me in for Christmas, Easter and other intimate family gatherings and we would be taken on social visits to see their English friends in the Port trade, but they didn't have many Portuguese friends. There was a total disconnect.

The Factory House and the British Club are classic examples of how the British Port Shippers were a closed circuit, uninterested in helping their Portuguese competition. I felt there was such competitiveness at times, that it bordered on paranoia.

I remember, in San Francisco, during the launch tour of a Vintage Port release some years ago. The tour had been arranged to include competing Port Shippers. It was presented as an all encompassing retrospective of the Vintage. All the Port houses were supposed to be there. To my surprise, the Portuguese shippers were entirely excluded. It was just the British Shippers, the Symington group, the Taylor Fladgate group, Noval and, if I remember correctly, Delaforce. It was a great idea to tour the US launching a new Vintage. However, conspicuous in their absence were all the Portuguese houses, some of whom had tried to get accepted to join the tour, but been refused.

This self promoting, protectionist tour was organized with a conscious effort to promote the English houses and specifically to keep the Portuguese shippers at bay. Heralded as an all encompassing presentation of the Vintage, it was anything but. Wine writers would call me about the Vintage and ask about the tasting. They were shocked to hear that so many great Port houses were excluded, after they'd been led to believe that it was representative of all the houses.

Yet, on the other hand, Dirk Niepoort is a true ambassador to the category, not just his own wine, and that is what all Port producers need to become. If you go to a dinner party at Niepoort's, you'll likely be served Ports from any Port house. The interest in Port has dwindled. It is now a branded concept, not a fine wine concept. The likes of Dirk Niepoort are the key to bringing back an interest in Port.

The decline of Port's growth curve was in part due to the rise in alcohol levels of table wines, but it was also because of the unimaginative marketing tactics of many Port shippers. Port is treated and perceived to be just another branded alcoholic drink. The excitement has gone. It can only be brought back if the Port shippers start talking about Port as wine, not brands, and using the characters who can unify, not alienate an audience by being ambassadorial, statesmen, artists and craftsmen. The Port producers should never speak badly of another's wine. It happens a lot and it damages the image of Port.

It will take a whole change in mentality and approach. It is hard to see this happening. Meanwhile, the Douro Boys, did exactly what the Port Shippers should have done years ago, they formed a unified body which represent each other's wines.

Get rid of the old Factory House mentality.

Bring in a fresh unified culture.

From Luisa Olazabal, Quinta do Vale Meao;

I think that the 'friendly competitive nature' is very much embodied in Quinta do Vale Meão’s promotional activities. Quinta do Vale Meão is one of the Douro Boys, a group of five family owned Quintas that promotes Douro and Port wines together. We bring a lot of people related to the wine sector to the Douro and the coordination and the sharing of information between us all works very well.

We also participate with our own stands in various Wine Fairs, and organize tastings, Master Classes and other promotional events abroad.

To add to that, I think there is a good collaboration between a larger group of wineries and as an example, just recently Ramos Pinto was so nice as to include Quinta do Vale Meão in a program of visiting German journalists organized by their PR agency. We also participate in an annual tasting in London called, “The New Douro” congregating the leading producers.

Anyway, I do not believe that a company can share all the information with competitors, there are still things that are, by nature, the matter of each company and should not be shared.

Lastly, in regards to Eno-tourism: we do not yet have a touristic operation open to the general public, but we do receive lots of wine professionals, journalists and organized groups of wine lovers, and we always try to help them in finding other places – wineries or not - worth their visit. I think in this sector the friendly competition and sharing, is even more important.

Everyone would agree that the tourist would be grateful to hear suggestions of restaurants, Quintas with tasting tours, worthwhile places to stay, etc; from no matter whom he decided to ask these questions. Only this way, will the tourist feel welcome and in a region with a good and healthy atmosphere, this is important.

There is certainly more work to be done, but for sure, the Douro Boys are a case study of this collaborative environment.

From Tomas & Miguel Roquette, Quinta do Crasto;

Thank you for your question for the Port Trade: a sensitive topic that needs indeed to be addressed.

As you are well aware, the Douro Boys were created with the primary intention of promoting Douro and Port wines in a more dynamic way. Sure this is a small group and it is our intention to keep the same size with the five producers for years to come. Nevertheless, we also interact in a very open way with many other producers and many times you will find other Port and Douro wine players visiting our properties when we have press and sommelier visits and hold other events.

In fact, I believe that the Douro is facing a true revolution in this matter. Nowadays, with the younger generations ahead of the business, there is definitely an "open mind" way to cooperate with other producers. Such behavior was unthinkable not many decades ago.

Obviously there is intense competition everywhere (including inside of the Douro Boys) but it is becoming clearer than ever that the Douro wines are in great need to create a solid critical mass around the world markets. The more we share and show, the better it is for everyone. Everyone will gain.

Regarding the Port trade I believe we are under a different scenario. Here we are talking about much bigger companies and a different reality in terms of the core business. Nevertheless, I do agree that this same approach to the business should be applied by the big players in order to collaborate closely to promote all the wines from this unique region in the world.

But I also believe that some very positive improvements have been made in the last few years and with great supporters of the Douro Valley, it is clear this reality will change sooner than expected.

From Dirk Niepoort, Proprietor & winemaker, Niepoort Vinhos, S.A.;

This is a very tricky question.

First: I will tell you my philosophy; I’m a firm believer that more can do A LOT MORE when working together than just everybody by themselves.

Off course for an area like the DOURO, it is even more important, because of nobody really knowing about it. Concerning PORT, I believe it is exactly the same.

And on top of what I’ve said, I am a firm believer that PORT – WINE – TOURISM could work wonders if using the synergies in a positive way. I have always believed in “sharing” and doing things together.

Second: HOW --

The only way (talking about the IVDP etc. …) is actually to have a very strong person guiding and understanding what this is all about (paying a professional a very good salary).

First; one should separate commercial activities from marketing activities.

Second; when focusing on the marketing, size should not be taken into account. In fact many times the smaller companies are the better ones and should, therefore, (independently of the size as mentioned) be used to help in showcasing their wines. This is not meant as a commercial help, but using the name / quality / personality / image of the good producers to promote the DOURO / PORT.

But usually there are too many, too strong lobbies which confuse commercial interests with marketing … and even worse than that, most people / companies are too greedy / jealous of the better ones. That is why I think there is a person needed (IVDP) that will be strong and stand up to the lobbying and pressures. It should be a longtime strategy.

By lifting the image all can gain commercial value, (in quantities sold and more importantly, to increase the prices). Our company would be most happy to help by being present in tastings, (not of just Niepoort but of ports and wines from the Douro in general) and of course offering to send as many samples of the best wines as needed. Help showcase the potential of the Douro.

From Adrian Bridge, CEO, The Fladgate Partnership;

There is a degree of cooperation between all players in the Douro but this will be hard to extend with the current regulatory environment.

Too many people are living in denial and too much of a system has developed based on false assumptions caused by a distorted playing field. This means getting people to agree on the basics is tough and if you do not start from a common understanding it is hard to build.

Let us take this year. The Beneficio was cut by 25,000 pipes from 2010 – more than needed but this was because 2010 was 10,000 pipes higher than it should have been. The Port trade is overstocked and this is causing downward pressure on final port prices. The sensible response is to cut production now to help sustain the future. Outcome riots. Why? Everyone screamed that the Port industry should buy more or pay more (see comments by Secretary of State for Agriculture - a good summary).

Let us look more closely at this. It costs about Euros 650 per pipe to grow grapes in the Douro. Port pays Euros 970 (giving farmers a 50% gross margin contribution) and DOC table wine pays 180 (providing a loss to farmers of 73%). Port and DOC sell for the same average price. The solution, DOC producers pay at least the cost of production – had that been done then the farmer income in 2011 would have been equal to the prior year. This cross subsidy cannot go on, many people realise this and I am heartened by the number of growers, who are making DOC, that agree with me. They are seeing their hard work to create real DOC wines, priced at high levels to reflect quality, being undermined by a flood of DOC at cheap prices. After all, the Beneficio system was introduced to protect quality not as a social subsidy, not as a subsidy to table wine producers and certainly not with the idea of distorting the economics in the region.

Once everyone accepts the need to change for the greater good of the Douro, and all players’ in its economy, then we can get some real progress.

Our group can help by continuing to call attention to this issue. Everyone will have to give some ground; further delays will cause more harm in the future.

What else are we doing – see The Yeatman, which is championing all top Portuguese wines.

From Carlos Flores dos Santos, Co-owner, J.H. Andresen, Sucrs. Lda.;

We believe that agreeing on how and what to promote among everyone involved in Port and Douro wines though probably not the most difficult part, is certainly not an easy task. Imposing the co-existence of different points of view can result in options that substantially narrow the effectiveness of promotion; but it is not "impossible".

It would be unfair to say that nothing is being done, but tight budgets do impose a lot of constraints.

Therefore, promotion questions go much deeper and do depend on how the actors look at the future of Port and Douro wines on a much more global level.

Our long standing point of view is that, by nature, Port and Douro wines should clearly assume that given Douro characteristics as a region (difficult to mechanize, with low productions per hectare, etc;…), the exceptional quality both wines can achieve and the fact that they are truly unique, they should not develop based on volumes, but obviously by setting the highest possible quality standards. It is urgent that we concentrate on managing demand, instead of managing offer.

There are of course options to be taken, and an important one is: should we keep on concentrating efforts in "generic" promotion or focus on “brand” promotion? We believe that only through brand promotion can we achieve our common goals.

There is a huge potential in the Douro, something widely accepted, and it is in fact hard to understand that we are not able to be more effective on finding common ground that allows us to better manage the scarce resources.

How to fund promotion -- has become a very delicate issue, and the recent economic crisis and developments are obviously not making it any easier. Common effort is the key to success, and the structure of our activity has led us to the need of being represented institutionally (AEVP etc.).

Therefore it is mandatory to guarantee that the institutions that represent everyone involved in Port and Douro wine are able to work together towards common goals and that they do represent who and what they are supposed to.

This is really a vast matter, and we think that although promotion is crucial, one cannot ignore that for it to exist and produce results, we must first settle on a common strategy for the Douro as a whole. At Andresen, we do our best to give a valid contribution in what concerns Port promotion. Mostly through AEVP at the institutional level, but also supporting the promotional actions, and of course in a very intense way with all people/companies we work with.

From George Sandeman, Administrador / Board Member, Sogrape Vinhos, S.A.;

This question touches on something that is in the process of happening – in evolution if you will. As you are aware the cooperation in the promotion of Port wine has been going on for years, albeit led by the larger Port houses with greater resources. Even if there are some Port house who still do not believe in the future of Douro wines, as the interest in Douro wine has grown there has been an increasing level of joint promotion with the participation of small, medium and large companies. One example is the New Douro wine tasting held in London every year, where producers show there latest releases from a recent year.

As you are well aware the subject of joint promotion in Portugal is still working itself out, and efforts by various organizations sometime end up diluting the effect. However when the leading events take place (London Wine, Vinexpo, Prowine etc.) you will always find participants from various size producers. On a smaller scale the IVDP had organized joint promotion where many of the companies take part, Port groups have done joint introductions of new Vintage Ports and ad hoc groups of producers have traveled in bands to exhibit their wines.

Historically, the competitive rivalry of the producers in the Douro (predominantly Port companies) did not create the sensation that there were benefits in working together to promote the region, a sensation that reflected itself in the area of tourism (which is a recent phenomenon in the Douro), but increasingly there are groups of coordinated efforts which are being created out of necessity and the realization that promotion of a region requires the work of more than one person or company.

The culture of local government has never been aligned with the realistic need for efficient and effective joint promotion, and a combination of lack of expertise, politics and public funds often distort the results in the medium term. However when, if and as objectives become common to all (private and public, small and large), the expectation is that joint promotion will become more visible and effective.

For Sogrape Vinhos, we have been increasingly active in the area of Wine Tourism (viz. Sandeman Quinta do Seixo) and in the joint promotion in this area, as well as the promotion of our visitor areas (Sandeman, Ferreira and Offley) in Gaia as a “gateway” to the Douro.

 

By | 2016-11-18T10:23:53+00:00 December 1st, 2011|Categories: Questions for the Trade|1 Comment

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