Emerging markets lift demand for Portugal wines
Source: Bloomberg News |
January 22, 2013, Tuesday
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Print Edition
Print Edition
ON the top floor of Angola's tallest building, overlooking the bay of the capital Luanda, a relatively unknown bottle of Benfeito Portuguese wine sold for a record US$21,600 at an auction.
In Sao Paulo, Brazil, a 2000 Barca Velha red, produced more than 5,000 miles away from the steep, rocky vineyards of Portugal's Douro Valley, costs 2,400 reais (US$1,175) at Restaurante A Bela Sintra - over four times its cost at Portuguese retailer winept.com. It's often sold out.
"Portuguese wines are making a comeback," Frederico Falcao, president of Portugal's Vine and Wine Institute, said in an interview. "Part of the reason is that consumers in emerging markets such as China, Angola and Brazil are evolving and buying more old-world wines."
Wine exports from Portugal, including port and table wine, rose 7.6 percent in the first 11 months of 2012 to 648 million euros (US$862 million) from the same period a year earlier, according to the country's National Statistics Institute. The sales are boosted by demand from the former Portuguese colony of Angola, China and some South American countries.
Big challenge
One of the biggest challenges facing local winemakers is not being able to increase output fast enough to meet growing demand from abroad, said Alexandre Soares dos Santos, chairman of the Jeronimo Martins retailer that owns a supermarket chain in Portugal and discount stores in Poland.
"If we want to be serious about increasing our exports then we need to produce wine on a much bigger scale," he said.
That means winemakers need to merge and invest in state-of-the-art equipment to crush their grapes instead of treading them underfoot in large vats called lagares, said Jose Hermoso, an analyst at the International Wine & Spirit Research.
"The fact that most of the wine companies in Portugal are family-owned may work against further consolidation but it has to happen," Hermoso said in an interview.
Sogrape, Portugal's biggest wine exporter, has been leading the way in terms of mergers.
After starting out as a wine bottler and distributor in Portugal in the early 1940s, the family-owned company began buying up estates in the Douro - the world's oldest designated wine region - to create some of the country's best known wine brands, including Mateus Rose, Barca Velha and Sandeman.
"It's so sweet," said Kasumi Imai, a 73-year-old Japanese woman after tasting several ports during a tour of Sogrape's Port Sandeman wine cellar in Vila Nova de Gaia, northern Portugal.
Investment abroad
Sogrape is also investing abroad. The Oporto, northern Portugal-based company has acquired Bodegas LAN, a Spanish winery famous for producing high-quality wines. Sogrape also owns wineries in Argentina, Chile and New Zealand.
Sogrape's CEO Salvador Guedes's drive to increase exports has paid off. Sogrape wine sales are forecast to rise to 210 million euros last year from 179 million euros a year earlier, according to Guedes.
Other producers are joining forces to promote their different brands of wines in markets as far away as China, where Portuguese wine sales surged 18 percent last year in the period through October, according to Portugal's statistics office.
Adrian Bridge, managing director of a 320-year-old family business that makes Croft, Fonseca and Taylor ports from vineyards in Portugal's Douro region, formed a partnership with his main competitor in Portugal, the Symington Group, three years ago to set up a vintage port academy in China, where the name Portugal means "grape teeth."
"Everybody wants to talk about China but for us it is a market that is going to take some time to develop," Bridge said in an interview.
In Sao Paulo, Brazil, a 2000 Barca Velha red, produced more than 5,000 miles away from the steep, rocky vineyards of Portugal's Douro Valley, costs 2,400 reais (US$1,175) at Restaurante A Bela Sintra - over four times its cost at Portuguese retailer winept.com. It's often sold out.
"Portuguese wines are making a comeback," Frederico Falcao, president of Portugal's Vine and Wine Institute, said in an interview. "Part of the reason is that consumers in emerging markets such as China, Angola and Brazil are evolving and buying more old-world wines."
Wine exports from Portugal, including port and table wine, rose 7.6 percent in the first 11 months of 2012 to 648 million euros (US$862 million) from the same period a year earlier, according to the country's National Statistics Institute. The sales are boosted by demand from the former Portuguese colony of Angola, China and some South American countries.
Big challenge
One of the biggest challenges facing local winemakers is not being able to increase output fast enough to meet growing demand from abroad, said Alexandre Soares dos Santos, chairman of the Jeronimo Martins retailer that owns a supermarket chain in Portugal and discount stores in Poland.
"If we want to be serious about increasing our exports then we need to produce wine on a much bigger scale," he said.
That means winemakers need to merge and invest in state-of-the-art equipment to crush their grapes instead of treading them underfoot in large vats called lagares, said Jose Hermoso, an analyst at the International Wine & Spirit Research.
"The fact that most of the wine companies in Portugal are family-owned may work against further consolidation but it has to happen," Hermoso said in an interview.
Sogrape, Portugal's biggest wine exporter, has been leading the way in terms of mergers.
After starting out as a wine bottler and distributor in Portugal in the early 1940s, the family-owned company began buying up estates in the Douro - the world's oldest designated wine region - to create some of the country's best known wine brands, including Mateus Rose, Barca Velha and Sandeman.
"It's so sweet," said Kasumi Imai, a 73-year-old Japanese woman after tasting several ports during a tour of Sogrape's Port Sandeman wine cellar in Vila Nova de Gaia, northern Portugal.
Investment abroad
Sogrape is also investing abroad. The Oporto, northern Portugal-based company has acquired Bodegas LAN, a Spanish winery famous for producing high-quality wines. Sogrape also owns wineries in Argentina, Chile and New Zealand.
Sogrape's CEO Salvador Guedes's drive to increase exports has paid off. Sogrape wine sales are forecast to rise to 210 million euros last year from 179 million euros a year earlier, according to Guedes.
Other producers are joining forces to promote their different brands of wines in markets as far away as China, where Portuguese wine sales surged 18 percent last year in the period through October, according to Portugal's statistics office.
Adrian Bridge, managing director of a 320-year-old family business that makes Croft, Fonseca and Taylor ports from vineyards in Portugal's Douro region, formed a partnership with his main competitor in Portugal, the Symington Group, three years ago to set up a vintage port academy in China, where the name Portugal means "grape teeth."
"Everybody wants to talk about China but for us it is a market that is going to take some time to develop," Bridge said in an interview.
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