For The Love Of Port

The IVDP has released the first half of this years sales. Overall quantities sold of Special Category Ports are down by a huge 9.8% Wonder if the worlds economy is starting to have a significant effect.....

Port that was bottled was also down by -8.2%

Standard Ports (the basic stuff) were down by -8.0%

For premium Ports:
the USA was down -12%
Greece had the highest down turn at -64% (bet you can find some good deals there )
Interesting in that Ireland was the largest up-turn at a staggering +93.8%
http://www.ivdp.pt/pagina.asp?idioma=1& ... &codPag=73&

I'm not surprised. Lately I've noticed that the wine shops that I frequent seem to have much less foot traffic than I've seen in the recent past. Economic downturns, like the current one, have ripple effects that can be felt around the world. The questions is if the softening demand will result in lower (or even stable) retail prices for the average consumer...

Marc

Andy Velebil wrote:Ireland was the largest up-turn at a staggering +93.8%

Tesco must have opened a store in Dublin

I guess the Irish have figured out that Port and cold rainy weather are a good match

Just a thought, but are these figures showing the change between the first half of this year with the first half of last year, or with the second half of last year?

Given that markets such as the Uk are heavily Christmas focused, one would expect lower sales in the first half of the year.

Tom

Tom,

The legend at the top of the data sheet says "Comparison with volume sold same period last year" - which I assume means it is apples and apples.

Derek

says "Comparison with volume sold same period last year"

Not cheerful numbers then - suggests that the distributors are anticipating recession in the key markets, and are reducing inventories..

Tom

uncle tom wrote: Not cheerful numbers then - suggests that the distributors are anticipating recession in the key markets, and are reducing inventories..

Tom

Did anyone else immediately think of the phrase "50% Off" when they read that quote? :twisted:

I can definitely see some sales coming in the future if sales continue to slow. Its hard to justify taking up valuable floor space on something that has been siting in a store for months on end

Andy Velebil wrote:I can definitely see some sales coming in the future if sales continue to slow. Its hard to justify taking up valuable floor space on something that has been siting in a store for months on end

It might also not be a bad thing for the trade (and certainly a good thing for the drinkers) if some of the release prices of the special category Ports came down a bit too. I can’t imagine the shippers want to be sitting on lots of unsold bottles either.

-Jacob

Start combing the clearence bins for port.

Even though there's a 3 tier system in the US, around Boston there's a few stores that seem to have grey lines between each tier and their distro warehouses overstock make it to their store seemingly easy.

The newer vintages are just too expensive for my taste. Why pay $60-100 on a 2003+ when stuff from 80-90's cost that or less?

Of course ..most of the world markets are in the hopper and will probably continue to be for the next few years!
I could buy a '63 Fonseca instead of driving my car for 4 hours!

SEAN C. wrote:I could buy a '63 Fonseca instead of driving my car for 4 hours!

Good point. That is why I sold my car and have become a full time bike (and bus in the winter because I am sort of a wuss) commuter. I tell myself I will still be able to afford VPs now that I am not paying a car payment, insurance, fuel and maintenance. Of course, you drive your car for 4 hours to afford a '63 Fonseca in the US. I would have to drive it for a MONTH to afford a '63F here in Edmonton!!!!

Todd

Todd , don't have to look in Montréal, I won't find any Fonseca '63 .
I'll just drive the five and a half hours to Sean's place . . .

A reality check on the vintage port market would be no bad thing - something needs to happen to prod the producers into distributing their top products more efficiently.

In commercial terms, money tied up for twenty years needs to more than double in real terms, and the cost of storing and insuring bottles is not insignificant.

Without adjusting for inflation, it would be optimistic to expect the UK trade price of the 2003's to average more than £40/bottle in twenty years time, and it could be much lower. Back calculate to take account of storage and capital tie-up, and you arrive at an In Bond trade price of around £10 - £12/bottle today.

That might seem an implausibly low sum to expect to pay, but it is not that far removed from the sum the producers currently receive from their distributors.

The current fad for investing in wine has all the hallmarks of a bubble waiting to burst. When it happens, there will doubtless be a rush to offload classed growths and DRC, with predictable consequences for prices. Port will be less affected, but there will doubtless be some contagion.

In recent months there have been huge variations in port prices at auction, with some investment buyers pushing prices to absurd levels at some sales, while at others, prices have been noticeably soft. I have also been told by Strakers that they are 'swamped' with wine to sell. This suggests to me that the smart money is getting out of the market while the fools rush in - a classic precursor to a crash.

If the port producers are to weather this storm without suffering a collapse in vintage port sales, they will need to cut the dead wood out of the distribution system, and start dealing with the likes of us directly - on sensible terms...

Tom

It would certainly be nice to see that happen, but probably will, around the time that pigs fly.

when the next generally declared vintage rolls out, it will be very telling for the Port trade at what price point they sell en primeur and then pre-release to their importers/distributors/agent network. In fact, this is going to be quite fascinating ... especially observing some of the newer SQVP players who will be launching their first VPs.

Roy,

While old habits die hard, the present distribution structure for VP has only really existed since the mid 70's when bulk shipments ended, so it's not such a sacred cow to kill.

I don't think it does any harm to keep reminding the producers that the distribution system serves neither them nor us - and needs to be fixed.

Tom

I have also been told by Strakers that they are 'swamped' with wine to sell.

I've seen a lot of wine being dumped onto the auction market here in the US recently. I know several people around my area that have, or are doing, some major spring cleaning of their cellars. If the current poor economy continues into next year, which I think it will, Port companies would be stupid to jack up prices. I think we've all mentioned it before, but serious wine buyers generally don't buy a lot of Port when things are good and the first thing they cut out when times are tough (us Port nerds excluded). So why release at a high price only to not sell your product, which then leads to it being dumped on sell a year later...

Tom,

Do you feel this is a "Port producer" issue, or a broader issue with wine in general? I am all for lower Port prices. However, as you well know, the vast majority of the profit on a bottle of wine is realized by the importer/distributor/retailer (trio in the USA) and two tiers in your country. In 2003, I was given the specifics of what Noval, the Symingtons and the Fladgate Partnership had raised their prices to over and above the 2000 VP. It was a rather paltry increase on a % basis. However, when 2003 was released, I was pretty surprised at the seemingly steep price increases. I had reported what I had been told early on and it was quite obvious the augmentation that took place, was done by the 3 tiers and was not the "fault" of the aforementioned (and others too) shippers. Let's face facts though, the shippers have too much vested in their "agents" to sell to us directly. Keep on trying though.

Cutting out some of the profiteering by the rest of the "chain" would be fantastic, but I am not sure (at least in the USA) that it will ever happen in my lifetime, or that of my child. However, I applaud your efforts and hope when you are in the Douro next month ... you are very vocal about this!




Andy,

Given the economic climate and especially the majority of W. European countries which are teetering on the brink of a malaise that already has hit hard here at home due to the banking/mortgage/real estate and oil issues ... it is my belief that there will be great restraint in price increases with 2007 VPs or whatever the next generally declared vintage winds up being. Again, what price the Shipper suggests as the MSRP (and is told to journalists pre-release) may be way different than that which Port lovers actually see, but again, shippers can't control the other tiers as to pricing ... IN GENERAL. It would be great if that was the case, but should you add this topic to your list of "talking points" when in Portugal in Sept/Oct., it will make for very interesting discussions.

Do you feel this is a "Port producer" issue, or a broader issue with wine in general?

I havn't given the other wine regions anything like the same scrutiny, but I don't view the other quality wine markets as pinnacles of excellence and efficiency.

With the possible exception of New Zealand, where the pursuit of good quality, sound marketing, and efficient distribution have overcome a huge geographic disadvantage; I don't see any role models for the port producers to emulate.

Let's face facts though, the shippers have too much vested in their "agents" to sell to us directly

Few businesses are more likely to put their faith in the old adage ' if it ain't broke, don't fix it' - and while the sun is shining on the quality wine markets, attempts to improve the distribution system are likely to fall on deaf ears.

But with storm clouds gathering, sales falling and the balance sheets looking less healthy, the producers are likely to be much more interested in new marketing initiatives.

Tom