Guardians of the Douro

Adrian Bridge, managing director of the Fladgate Partnership (owner of Taylor's, Fonseca and Croft ports), discusses what the future holds for port producers facing a brave new world
27 August, 2008
Page 22 
As the debate starts in northern France over how to divide up the newly increased demarcated area of Champagne, it is worth considering who might be the best guardian of this re-zoned land . Should it be placed in the hands of the small grower, professional farmers, or the brand owners who create demand ?

It is an issue that affects many wine regions, especially in the Old World where small holdings are the natural result of the Napoleonic code.

In the Douro, this is a central issue as regulators struggle to create a road map for the future. Regulators are controlled by politicians and the forces are strong. Do we back the 38,000 small growers as traditional subsistence farmers rather than the face of a modern, efficient economy? Should support be given to the brand owners or does a partnership with professional farmers work?

As the oldest demarcated region, and until recently one of the most remote, the Douro valley has had time to fragment and fossilise. Demand has been there, production sold and the desire to maintain the status quo is strong. Couple that with its status as a World Heritage site and you've got an instant wine museum. However, it has not yet become one, largely due to the efforts of shippers over hundreds of years to amplify its message, beat a path to consumers and create demand. That job is getting tougher.

The golden years when the region was well known and consumers faced little choice ha ve passed. The emergence of new wine regions, combined with an increasingly complex and dynamic choice and a much more fickle consumer means that nothing can be taken for granted. In this new world, demand must be created every day and shelf space in wine shops justified. Port is a small niche product that must explain itself to consumers who know little about the basics of wine.

In this age, the brand becomes the signpost and the vehicle for exploration of a category. It is not surprising that the investment by well-known port brands is paying off. We have demonstrated that a brand such as Taylor's has been able to grow the special category port segment where the margins remain - for example vintage, single quinta vintage, LBV and aged tawny - to ensure the economic viability of the region's future.

As we create this demand, we must back it with reserves of ageing stocks and this means capital expenditure on aspects such as production , advertising and, if we are lucky, vineyards. In fact, it is vineyard ownership where mutually beneficial partnerships are formed. Shippers have always sought to protect the origin of their most iconic wines and invest ing in grade A vineyards helps to define and preserve quality and house style. However, genuine economic value for the region can only be created via a productive alliance with other substantial land owners, the professional farmers .

In the Douro valley it is argued that only 1,475 producers work at a scale sufficient to run a grape-growing business - that's less than 5 per cent . These growers understand the brands' contribution to the value chain. By investing their capital in vineyards and focusing on the production of quality grapes, they can secure their future and maximise economic returns. Our group has pushed this partnership further by providing technical viticultural assistance throughout the growing cycle. Our success has been such that, despite tripling our business in the past decade, we have cut our grower base from 850 to 73 key suppliers.

It is a partnership that works because each party understands its role and the mutual benefit of the union. Without the brands, the route to market is now closed. The job of selling requires so much effort that a brand owner must be confident that quality grapes can be supplied to produce the outstanding port that the market demands .

When considering the future of our region and its regulatory framework, it would be unwise to overlook this winning formula - which is one that underpins the phenomenal success of Champagne.

Comment

Christian Davis

Drinking Danishly

So, Danish brewer is spending £15m on revitalising its flagship Carlsberg Export brand (see news story) and at the core of activity is emphasising the company’s Danish origins.

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