Visionaries: 2010-2020 and the Port Trade

[Roy Hersh]

If history has taught us anything; it is that history itself, is a great and inspirational teacher. Looking back on the first decade of this new millennium, it is interesting, no, actually amazing, to see how far reaching the changes have been. Several examples:

From significant replanting in the Douro to consolidation of companies into the "Big 5", to the introduction of a new generation of younger winemakers ... that finally includes women, to the quickly changing landscape in Vila Nova de Gaia, to Pink Port, to robotics incorporated into the production process, to a plethora of growers gone wild and becoming Port producers, to new categories of Port like Rosé and Old White Port "with an indication of age", to the proliferation of Portmakers also focusing attention on Douro wine production and sales worldwide, to extraordinary viticultural improvements ... I can go on and on.

This has been an extraordinary time for historic advancements within the Port business. In my opinion, I still see the greatest need as being: improving the process for the education of the retailer/restaurant staff/consumer communities and sadly, with all the money and power and agencies involved in the Port world, this glaring need is often talked about -- but very little develops. What will it take and who will lead this effort? If the Port trade wants to hire me, I'd chuck my writing career and gladly head up a cross-organizational Commission to tackle this singular issue!

Moreover, I would be most interested in listening to those of you ... folks new to Port wine as well as long time collectors and enthusiasts: What do you believe will be the most innovative change(s) that we'll see over the next decade, which will have the greatest impact on the Port business as a whole?

Put on your thinking caps and dazzle us with your predictions!

The MOST INSPIRATIONAL response between now and the release of the AUGUST newsletter will win a really nice and significant Port-related present from yours truly. Feel free to enter early and often.

[Derek T.]

What do you believe will be the most innovative change(s) that we'll see over the next decade, which will have the greatest impact on the Port business as a whole?

Doesn't this imply that we have to wait around 20 years for the prize to be awarded? :devil:

I think the biggest change that will happen to the Douro and VNG in the next 10 years is in the tourism industry. We have already seen a few new grand hotels opening but at the moment there is a huge gap between the 5* giants like Romaniera and Aqua Pura and the comfortable, traditional and friendly places like Passadouro and de la Rosa. No one is filling the gap at present and there is little in the way of stellar wine tasting experience to be had unless you have good contacts or significant amounts of cash* for an organised tour like those that Roy provides. I think some of the middle tier producers will eventually fill that gap with visitors centres, good quality hotels and collaborations with other producers and tourist organisations.

In itself this evolution might open up the world of Port and Douro wines to a whole new audience and make "the good stuff" more accessible. It may even go some way to educating the restaurant and retail trade if it opens up the possiblilty of people in tose industries accessing the producers and their wines. However, I hope that it does not spoil to peace, tranquility and friendliness of the Douro as it really is a very special place to visit for those reasons alone.

Derek

* Just to be clear: I am not suggesting that Roy's tours are not good value for money - they are!

[oscarquevedo]

I think the biggest change that will happen to the Douro and VNG in the next 10 years is in the tourism industry.

Derek, I think the tourism in the Douro and in Port/Gaia is something underway. There is currently over 100 units between hotels/ small hotels/ houses spread all over the Douro valley. The occupation rate is quite low, even between the most known and prestigious, but the facilities are built. What we need is more demand, more interest from the Portuguese and the foreign market. I agree with you that the Douro has to improve the accessibilities, offering more services and having more information available. But the bases are created and the movement already started some years ago.

What I will add, as my vision for next decade, is not something completely new but I think it will intensifies immensely during the next years: Port producers generally speaking and big shippers in particular, will increase their own area of production, at the same time as the very small vine growers will abandon and sell their properties.

I do not have exact numbers but there are over 20,000 vine growers in the Douro. Any of the big 5 buys at least 70% of grapes/ Port to sell with its own brand. They want to reduce the dependency of the small growers and have a better control of the quality. One of the big problems they used to face was the workforce. Currently there are several companies offering their services to work on the vines, so the owner just has to hire one company (which will bring as many workers as necessary) to undertake a certain task, in a short period of time.

The concentration of property is not new and has already started. But will speed up dramatically during the next years.

[Tom Archer]

Change is a good thing in the port world - but only in moderation..

A generation ago, foot treading was derided as being out of date, and auto-vinification systems were hailed as the way ahead..

..only belatedly did the big names concede that they didn't actually deliver quality wines.

- Oops!

Championing the involvement of women is a popular notion, but there is nothing a successful women hates more than being thought of as 'only being there because of her gender'

- Tread carefully!

Port production is not immune from periodic fads, and Pink or 'Blush' ports are the latest of these. The appearance of these products was long after the fashion for Rose wines first appeared, and I notice that the supermarket shelf space for Rose wines (in the UK, at least..) is now shrinking.

- Too little, too late , I suspect - pay more attention next time..!

Tourism in Portugal is horribly compromised by their use of the euro, which (along with several other countries) they entered at far too high an exchange rate; or, to be more precise, an inflexible exchange rate - a natural consequence of sharing a currency with nations with whom you have no economic convergance.

It's a very serious mess, and while there is a solution, none of the five members of the eurozone who have critical, currency related problems; looks keen to throw the towel in first.

- When one starts, others will probably follow..

The education of restaurant staff is a really difficult aspect. Restaurants are masters of producing food with exceptional speed, and any process that does not deliver perfect results in minutes is not of serious interest. Top ports fall foul of that test.

The only way to persuade them is to convince them that there is only one correct way forward; that any other approach will damn them as ignorant philistines.

To do that however, we have to expunge the philistine attitudes of the producers themselves.

Within the last fortnight, I have heard one of the most eminent producers say "we don't decant"

- The job starts at ground zero..!

Tom

[Derek T.]

I notice that the supermarket shelf space for Rose wines (in the UK, at least..) is now shrinking.

I think this just isn't true, Tom. My partner, Jo, drinks pink stuff all the time and I buy it every week. The choice available today is staggering compared to just 3 or 4 years ago. I remember the days when the only pink wine UK supermarkets sold was Mateus Rose or Mateus Rose :help: Pink wines now have 3 or 4 times as much shelf space as fortified wines in all of the supermarkets I have visited recently. My local Spar mini-market has a chill cabinet dedicated entirely to pink wines which is around 1/5th of the entire chilled drinks space in the store, including beers!

There is most certainly a place for pink wines in today's market - just not in my glass

Derek

[Tom Archer]

I think this just isn't true, Tom. My partner, Jo, drinks pink stuff all the time and I buy it every week. The choice available today is staggering compared to just 3 or 4 years ago. I remember the days when the only pink wine UK supermarkets sold was Mateus Rose or Mateus Rose Pink wines now have 3 or 4 times as much shelf space as fortified wines in all of the supermarkets I have visited recently. My local Spar mini-market has a chill cabinet dedicated entirely to pink wines which is around 1/5th of the entire chilled drinks space in the store, including beers!

There is most certainly a place for pink wines in today's market - just not in my glass

UK fashions tend to start in London and move north - in Tesco, Saffron Walden; Rose is vanishing rapidly..

Tom

[Derek T.]

UK fashions tend to start in London and move north - in Tesco, Saffron Walden; Rose is vanishing rapidly..

Someone better tell Laithwaites (the largest online wine retailer in the UK, based in Reading, not far from London) that the marketing brochures that they send me almost every week that are currently jam packed with pink wine, that apparently no-one wants to buy, need to be put in the shredder !!

[Andy Velebil]

Change is a good thing in the port world - but only in moderation..

A generation ago, foot treading was derided as being out of date, and auto-vinification systems were hailed as the way ahead..

..only belatedly did the big names concede that they didn't actually deliver quality wines.

- Oops!

Championing the involvement of women is a popular notion, but there is nothing a successful women hates more than being thought of as 'only being there because of her gender'

- Tread carefully!

Port production is not immune from periodic fads, and Pink or 'Blush' ports are the latest of these. The appearance of these products was long after the fashion for Rose wines first appeared, and I notice that the supermarket shelf space for Rose wines (in the UK, at least..) is now shrinking.

- Too little, too late , I suspect - pay more attention next time..!

Tourism in Portugal is horribly compromised by their use of the euro, which (along with several other countries) they entered at far too high an exchange rate; or, to be more precise, an inflexible exchange rate - a natural consequence of sharing a currency with nations with whom you have no economic convergance.

It's a very serious mess, and while there is a solution, none of the five members of the eurozone who have critical, currency related problems; looks keen to throw the towel in first.

- When one starts, others will probably follow..

The education of restaurant staff is a really difficult aspect. Restaurants are masters of producing food with exceptional speed, and any process that does not deliver perfect results in minutes is not of serious interest. Top ports fall foul of that test.

The only way to persuade them is to convince them that there is only one correct way forward; that any other approach will damn them as ignorant philistines.

To do that however, we have to expunge the philistine attitudes of the producers themselves.

Within the last fortnight, I have heard one of the most eminent producers say "we don't decant"

- The job starts at ground zero..!

Tom

So do you have anything good to say about what they've done? I'm sure there has to be at least one thing

[Moses Botbol]

Consistency: Making a good product every vintage: If the consumer can buy any bottle of Port and find a good value at the price point, they will continue to buy more. Not worrying whether the vintage is good one or not and not relying on salesperson who may or may not know. Products like pink/rose ports, as well tawny blends like Otima that cater to a modern taste and aesthetic.

Tourism: More people visit the Douro, the more they will be nostalgic and buy Douro wines and ports. Their friends will try it, and it all starts from there…

Internet: Port wine manufacturers getting involved to promote their products in a way that were unavailable to them 15 years ago.

What I would like to see happen is Symingtons, Taylor… Get involved in sports sponsorship to promote their products. Football and Cycling are ripe for them to get their name out to a public who does not know or may’ve forgotten about Port. Ronaldo with a glass of Port advertisement could go a long way… One can only dream about Niepoort – DeRosa Cycling team, lol…

If you told music industry or Cognac houses that the rap music world would embrace Cognac 20 years ago, they would've laughed like no tomorrow...

[Tom Archer]

The greatest achievements of the last decade are perhaps some of the less visible ones from the everyday consumer's point of view:

- Improvements to hygiene
- Better temperature control during fermentation
- A more scientific approach to wine-making generally

- and of course, the evolution of robotised treading systems..

Looking forward, a wish list..

- Recognition perhaps, that it is time to move on from the declared years system, or at least to contemplate consecutive general declarations.

- A review of distribution systems, so that more of the consumer's money goes to the producers, and less to distributors.

- Consideration of the potential for very small volume bottlings, when a single pipe or single lagar has exceptional and distinctive characteristics - something the Scots Whisky industry has found very rewarding.

- A return to high fills on newly bottled VP...

..that's probably enough wishes...

Tom

[Glenn E.]

- Consideration of the potential for very small volume bottlings, when a single pipe or single lagar has exceptional and distinctive characteristics - something the Scots Whisky industry has found very rewarding.

I think this is the big one - "boutique" Ports to cash in on the same craze in wine. It seems like it has to be highly profitable, and the Port industry has already taken baby steps in that direction (Vargellas Vinha Velha, Vesuvio Capela, et al).

I suspect that boutique Ports that are part of a larger producer/shipper will fare better in the short term than very small independent producers - mostly due to the need for name recognition to get started - but that ultimately there is room for all of them as long as the quality is appropriately high.

[Derek T.]

I think Noval may make a solid argument that "boutique" port from a small part of a larger shipper's estate production isn't really an innovative concept

[Glenn E.]

Aren't they the exception that proves the rule? They were a single-Quinta producer long before that was easy to do, too.

[Moses Botbol]

Looking forward, a wish list..

- Recognition perhaps, that it is time to move on from the declared years system, or at least to contemplate consecutive general declarations.

I sure hope not; at least with their main Vintage Port. I think the system has been good and a Vintage should mean something and still be exclusive like it's a product that doesn't have to be made every year. I like the SQVP's and would keep that for non-declared years. I don't see the current system as a roadblock to selling more Port.

- A review of distribution systems, so that more of the consumer's money goes to the producers, and less to distributors.

For that one!

- Consideration of the potential for very small volume bottlings, when a single pipe or single lagar has exceptional and distinctive characteristics - something the Scots Whisky industry has found very rewarding.

Lot's of opportunity within this segment, but I think that won't expand the market much. Stores may not be able to carry so many different products and further confuse the consumer that I would like help (at least in USA). I would like to see boutique and specialized bottles for own selfish reasons.

[Roy Hersh]

It is nice to see this thread take off with well thought out posts, I really do believe that between us, we could come up with something worthy for the Port trade to consider implementing at some point, or at least an experimental trial.

[Tom Archer]

I sure hope not; at least with their main Vintage Port. I think the system has been good and a Vintage should mean something and still be exclusive like it's a product that doesn't have to be made every year. I like the SQVP's and would keep that for non-declared years. I don't see the current system as a roadblock to selling more Port.

Declarations need not be more frequent or less exclusive, but the desire to have declarations that are fairly evenly spaced does result in many good years being passed over.

In the last 120 years, there has only been one declaration in the second year following an unsplit general declaration (1975 - 1977 : an abnormal period in the immediate aftermath of the revolution)

It follows that there is very little chance of 2009 being declared, even if it proves to be an exceptional year.

That, I feel, is a shame. I would like to feel that this year's vintage has as good a chance of being declared as any other.

Tom

[Derek T.]

That, I feel, is a shame. I would like to feel that this year's vintage has as good a chance of being declared as any other.

The notion that full declarations happen in "exceptional years" doesn't really stand up to the common sense test as it is almost inconcievable that nature would provide exceptional years at a rate which also happens to meet economic needs. I think the reality is that general declarations occur in "exceptional years when there is no economic or marketing disadvantage in doing so" - but that isn't as snappy a phrase as the one that is generally used

To be honest, I don't think there is much wrong with that. Classic VP production is a specialism that only few have ever mastered and it is essential that it is an economically viable process. Modern production methods and scientific knowledge probably mean that the top producers could make an outstanding VP in all but the very worst of years (like 1993), even if only in very small quantities in the years that were not truely exceptional. But would that dilute the marketing appeal, and therefore the return on investment for the producer, of the classic vintage? Yes, I think it would.

The positive outcome of the current approach is that we are likely to be able to buy 2008 and 2009 SQVP and second label offerings from the top houses at around half the price of what has become the "normal" classic VP release price. Not only that but they will be kind enough to cellar it for us for 10 years before offering it to us at that very same price in real terms. The quality differential between the classic blends and the SQVPs seems to be narrowing so there is the prospect of picking up gems of similar quality to the likes of Vargellas 1987 at comparitively very low cost.

I think there is a good mix at the moment with brands such as Noval and Vesuvio filling the shelves year on year with great quality SQVPs (which are their equivalents of classic blends) whilst other houses stick with the traditional approach whilst upping the quality of their SQVPs in non-classic years. I think if everyone followed the same path, ie declared every year, we would end up paying a similar (higher) price for the not so good years as we would for the exceptional years. The SQVP v Classic Blend appraoch gives the producers the opportunity to have a significant price differential between the two products which, sometimes, goes in our favour as consumers and gives them 3 or 4 opportunities per decade to charge the premium rates that infrequent classic declerations can stand in the market.

Derek

[Roy Hersh]

So far this is one clear winner with some truly outstanding suggestions. At the time when this "contest" ends and the best submission is decided, I will probably consider adding this into the newsletter, to gain a larger audience and have the Port trade made very aware of it.

[Adrian Bridge]

I think that we will see more consolidation in the Douro - there is probably little left to happen in Gaia at the moment. This will be driven by the lack of profitability of quintas - a farmer will be making less than half the money per hectare this year than 5 years ago. This is a result of the beneficio that limits Port production being reduced and then spread accross more hectares - planting has increased by over 25% in the last decade as lower grade areas have been transplanted to high grade where they get more beneficio. Few people wish to talk about the problem because it produces table wine grapes at below production cost. However, as commodity Port sales decline so will the cross subsidy from Port to table wine. The farmers cannot survive if this trend continues and will be forced to sell. I feel that the beneficio system will not exist in 10 years time.

People are right to point to tourism as a way to diversify the Douro economy. A great deal has changed since we opened The Vintage House Hotel in 1998 - it was the first quality hotel in the heart of the region. There is now plenty of choice of where to stay but the next decade will need to see increased occupancy of all tourist facilities to make them profitable - new entrants need to expand the market.

Ofcourse, what brings the tourists is the beauty of the place and that requires the continued work in the quintas (farm profitability).

It is important to consider politics as we have elections this year that will set the tone for the next decade. Many institutions have been under the same political control for some time and any change will have an impact. Think about the Co-Ops that produce a great deal of Port but sell very little directly to customers - Government intervention here could have a major impact. The Casa do Douro may well reappear as a force.

Finally, there may not be more consolidation to come but there are too many brands which fragments Port and makes marketing efforts difficult. Do the maths. In 2008 there were 100 shippers - so 100,000 cases per shipper - but actualy only 11 companies sell more than 100,000 cases. However there must be over 1,000 brands. Re weight this for big brands and the large own label customers then you get the sense of how small some brands are. Finding your niche has never been so important.

And I firmly believe that the special category Port will grow even if 'commodity' Ports decline. As the creator of Croft Pink I would argue that it has been positive for the sector as it has produced incremental growth. It is not VP but it may help to introduce a new generation of consumers to the category and all additional sales will be good for the sector and the farmers.

Adrian

[Tom Archer]

Adrian,

Very interesting to get your input and perspective on this issue. I cannot think of any port producer who has come vocally to the defence of the industry's regulatory establishment in recent years; yet it is clear that the industry does need sound regulation.

It must be a huge irritation to companies such as your own who strive to produce the very best Vintage ports; when some other companies gain vintage approval for wines that are no better than a reserve; products that will ultimately damage the overall reputation of Vintage..

On the other hand, what is the net benefit of the Beneficio? Original good intentions appear to have given way to political manipulations.. Better, perhaps, to let market forces prevail, and be the better judge.

On tourism, I agree. When I first visited the region I found the hotels to be of doubtful quality, and not very good value. Things are now improving.

Amanda Brunner was kind enough to show me the detail of your project in Gaia, and I was very impressed; not only by the scale and ambition of the project, but also by the fact that you are not putting all your faith in the wisdom of the architects, by investing in a full scale mock-up of a room in your offices; and inviting comments..

Bidet or no bidet, that is the question..!

Tom