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Port Tries to Turn the Corner: Tawnies Lead Comeback Effort, As the Category Continues to Evolve

Posted on  | February 24, 2012   Bookmark and Share
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When your business hasn’t been going that great, even a modest 3.2% uptick in sales growth can look awfully good. At least that’s the thinking these days in the tradition-laden Douro Valley of Portugal, where the last few years, while not the worst of times, have certainly been quite lean.

Production of its primary product—Port—has had a substantial drop-off of about 11% between 2005 and 2010. Big-volume markets such as France, Holland and Belgium have softened considerably. At the same time, sales to the United States, a reliable but smaller consumer market, has seen a steady decline of more than 10.2% during the same period.

But now, the Port industry sees signs that this decline may have bottomed out. “Port sales to the United States and Canada have started to boom again,” says Rupert Symington, whose family owns one of the two largest portfolios of Port brands. “Sales of all Port to the U.S. were up last year. But, then, that’s after we’ve had a few bad years.”

The unanswered question, of course, is whether this one-year increase represents a market correction, such as restocking of inventory, or the leading edge of growth in real demand. “Sales of all Port to the U.S. were up last year. But, then, that’s after we’ve had a few bad years.” The good news as of now is: the better the Port, the better the numbers. IVDP figures on total exports, by market, for 2011, show United States sales up 8% and the premium Port category up 15%; making the United the second largest premium market (232,000 cases) after the United Kingdom (527,000 cases).

Either way—market blip or economic trend—everyone agrees that the Port business continues its path through an evolution, both in the relative importance of each product category in its overall market basket and in the ways customers are buying and enjoying Port products.

For example, even though Vintage Port—the region’s highest-priced and most pedigreed product—is currently seeing good sales response to its stellar 2009 vintage, the category continues to decline in importance relative to other Ports, in part because it is a forceful and tannic product at release that requires several years of cellaring for optimal enjoyment. Today, Vintage sales by volume are only about 3% of total Port sales, being superseded in importance by another quality category that, while less pricey than vintage, still fetches a considerable sum: Tawnies.

Frank Pagilaro of Frank’s Wine Mart in Wilmington, DE, says that he has in inventory 92 different bottlings of Port dating back to a 1970 Dow’s, but “Tawny outsells vintage by at least three times, mainly due to price. Factor in LBVs (Late Bottled Vintage Ports) and Rubies with those Tawnies, and I’d say that Vintage is about one tenth of my Port sales.”

Tawny Time (On-Premise Too)

“The consumer interest is coming from the aged Tawny category that in 2011 grew 7% and, over the last 10 years, by 41%,” agrees Robert Bower of the Fladgate Partnership, the other major producer of quality Port brands. “We would sell 3,000 to 4,000 cases 10 to 20 years ago,” Symington adds, “but now we sell around 20,000 cases.”

Part of this Tawny demand in the U.S. has come from the cultivation of on-premise or restaurant and bar sales. Port-by-the-glass programs favor the ready-to-drink, cask-mellowed Tawnies, whether they are 10, 20, or 30 years old.

Sandy Block, beverage director for the Legal Seafood chain of restaurants, says that only one of his eateries carries Vintage Port, primarily to sell by the bottle at large dinners. By contrast, all of his restaurants sell Tawny by the glass on their dessert menus, he says, “and we have popular tasting flights of 10-, 20- and 30-year Tawnies.”

Some U.S. restaurants and bars have been experimenting with Port-based cocktails, brought on in part by the introduction by Fladgate Partnership in 2009 of the first Rosé Port—Croft Pink. As the after-dinner drink market declines, due in part to stricter drunk driving laws, Port has tried to follow Cognac’s similar move to being a before-dinner mixed drink.

And there are other emerging categories, as well. “Apart from the Rosé or light Ruby style, which is becoming increasingly popular, the whites can now be found as a special category section,” says Louisa Fry of the Instituto do Vinho do Porto or IVDP. Those include “reserve white,” “aged white” and “colheita.”

Additionally, Port has continued to heavily promote its drinks in the U.S., both by individual companies and by the IVDP, which has a variety of co-promotion activities sponsored in conjunction with the Center for Wine Origins. Most of the activities feature wine education programs for trade professionals.

The Fladgate Partnership, whose brands are Taylor Fladgate, Croft and Fonseca, has been working to expand its U.S. lead in entry-level Ports with its flagship Fonseca Bin 27, according to Bower.

For its part, Symington (Warre’s, Dow’s, Graham’s, Smith Woodhouse, Quinta do Vesuvio) recently added Cockburn’s to its portfolio and is giving special attention to refreshing the brand, according to Rupert Symington. Additionally, the Symington company—unlike the Fladgate Partnership—has for the past several years expanded into the growing Douro table wines markets, which are not considered a part of Port production.

Symington, who partners with Bordeaux’s Bruno Prats in Chryseia and some other Douro table wines, often uses the same grapes picked from its prized Port estates or quintas, such as Vesuvio, in the production of both Port and table wines. Industry restrictions on Port production make this alternative especially attractive.

Finally, Port is finally taking agritourism quite seriously, both as a revenue generator in itself and as a way to promote Port overall. Of all of the world’s major wine regions, Port and the Douro Valley outside of Oporto city are famously picturesque but also among the most isolated by geography—it’s not easy to get there.

The relative lack of travel and hospitality infrastructure has begun to change. The region takes pride in the upper Douro being designated a UNESCO World Heritage Site in 2001, and in its membership in the international promotional organization called Great Wine Capitals. Although train travel up the Douro is basic but generally reliable, and travel by cruise boat is becoming more popular, getting up river by car involves driving along precipitous, winding, two-lane mountain roads. “We are building a new highway,” Symington points out, although the economic climate has forced delays.

In Oporto itself, the talk of the town is the Fladgate Partnership’s new luxury Yeatman Hotel, nestled amid the Port aging and blending warehouses of Vila Nova de Gaia on the south side of the Douro with great views of the city across the river.

Of course, Port is not the only wine category to face hard times during the current worldwide recession or the only one to go through historic cycles of boom and burst. Champagne regularly experiences such fluctuations. And sommeliers and retailers are both wondering if the high-end cult wine sales will ever reach pre-recession levels. Add Australia, which has practically fallen off the map but is charting its return.

So Port is happy for its modest increase and has programs in place to build on it. For the moment, it will welcome its 3.2% increase.


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