Lei do Terço = Law of Thirds

Decreto-Lei n.º 166/86 de 26 de Junho de 1986

Here is an excellent explanation of one of the least understood regulations bearing on the Port wine business, the Law of Thirds; which falls under the auspices of the IVDP.  I found this document while digging through my current computer's saved files in preparation for moving everything to a new computer that is on its way.  To be clear:  I was not the writer of the text below.  However, it is important to share this information to improve the understanding of one of the single most crucial and multi-faceted Port regulations, which has a bearing on so many aspects of what goes on inside the Port wine business.  I truly wish it was possible to find who the original writer was, in order to give proper attribution.  My sincere thanks to the author.

According to the Law of Third, every year exporters may only sell wine that corresponds to a third of their stock (i.e. to sell 1 barrel you must have 3 in stock). Primarily, what underpins this law is the need to ensure the quality of traders’ stocks of old wines and the farming business.

In order for an exporter to be created, it must have a minimum stock of 500 barrels. The initial sales capacity of traders is calculated in accordance with the movements of the respective current accounts in the new financial year, a third of the wines plus one increased in accordance with the volumes declared during the harvest by the operators.

After confirmation of these amounts by the CIRDD, the IVDP will determine the sales capacity to attribute to each operator:  In order to benefit from that set forth in the law of the third, in the previous year, port operators must have acquired wines in a quantity of no less than 75% of the sales two years previously, or have reached this minimum as a result of purchasing wines that only attribute 20% capacity.

30% of the wines acquired or produced in the last harvest, as long as they are between a minimum of 75% and a maximum of 125% of the sales made in the year before this harvest;

15% of the wines acquired or made in the last harvest, in the event that the 125% maximum mentioned in the previous paragraph is exceeded, in relation to the part exceeding this limit;

The percentage of the formula A:B=30:X, if the wines acquired or produced in the last harvest do not reach 75% of the sales made in the previous year, A representing the 75% that the company should have obtained, B the quantity obtained and X the percentage of capacity that the acquired wines will attribute.

During the year, port traders may also acquire sales capacity through the purchase, from producers, of wine likely to obtain the port denomination of origin, which, according to age, attributes the following sales capacity:

  • Up to 3 years - 20%;
  • Over 3 years and less than 4 years - 40%;
  • Over 4 years and less than 5 years - 60%;
  • Over 5 years and less than 6 years - 80%;
  • Over 6 years - 100%.

At least half of the capacity awarded under these terms has to be obtained by the purchase of wines that attribute, as a maximum, 40% capacity.

By | 2014-01-16T20:33:09+00:00 February 11th, 2012|Categories: Port, Roys Blog|0 Comments

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