............................................................

FOR MANY, Christmas is not Christmas until a glass of port has been poured and savoured. It’s the after dinner sweet wine that is a fitting end to a rich meal. For others, it’s the aperitif of choice, growing in popularity. And this doesn’t show any sign of changing, despite some saying that the cocktail movement will be the leg up port needs, for want of a better word, to be hip. What is changing, however, is the global port market. It is shrinking and volumes have taken a hit, shedding half a million cases in recent years. Port is now a 8.6 million case market but that’s not the headline.

“Everyone wants to write the story that port is in decline but that simply isn’t the case,” Adrian Bridge, Fladgate Partnership chief executive officer, says. “It is suffering in the commodity end but not the quality end.” Port is in a transitional period from a volume-based category to a value one, Bridge says. “Within the port industry, not everyone has adjusted their strategy. Some people are chasing volume by lowering prices but they won’t make a lot out of that chase.”

According to the latest Instituto dos Vinhos do Douro e do Porto figures (Jan-Sep 2015), port has increased slightly in value and decreased in volume, 0.7% and -2.2% respectively.  

In the UK — port’s third largest market — the category has been a growing share of the fortified wine market and will, according to Charlotte Symington, port brand manager at John E Fells, increasingly become a larger sector of the fortified market by volume. “Comparing against table wines which overall is in decline, port is doing extremely well,” Symington says. Increasing in volume and value at 2.7% and 6% respectively (Nielsen, Jan-Oct 2015). 

“What’s happening in the UK is being reflected globally,” she adds. “Although we’ve seen the global port market slowly shrinking, we continue to drive the premium port market and as we continue to see a pronounced decline in sherry, port continues to enjoy positive growth.”

In the top ten markets for port — together accounting for 90% of total sales value in 2014 — there are marked preferences. There are markets where the share of premium ports, which accounted for 20.6% of the total quantity sold in 2014, is well above average — UK (60.7%), US (57.9%), Canada (71.9%) and Denmark (45.7%). 

In others, standard ports are predominant — France (92.0%), Holland (89.7%), Belgium (93.9%) and Spain (93.1%). Even among these markets, there are differences in the style of port that are more popular. Among the top four premium port markets, the UK imported mainly Reserve Port, while in the States, Reserves and Aged Tawnies are preferred and in Canada, LBVs and Aged Tawnies are best sellers. As far as the standard port markets are concerned, France imports more Tawny while The Netherlands prefers Ruby.

Adapt to survive

So, port isn’t in trouble, but it might be if it doesn’t adapt. “Regulations in the region are some of the strictest in the wine world and it will take time to adjust”, the Fladgate CEO says. “We still operate under a regulatory base that was outdated in 1983. It is failing to reach its potential and it needs to be liberalised. 

“It will happen because the market ultimately requires it.” Bridge says that people will resist this, in part because they don’t like change, but ultimately it will happen because the market demands it. “It will take some time to adjust,” Bridge says. “People know the tanker needs to move and have decided which way it needs to move but it will take some time because it is a big tanker. Inevitably though, it will happen.”

Progress has been made in other ways. “We have come a long way,” George Sandeman, seventh generation of The House of Sandeman, insists. “When I first started out I repeatedly had the same heated discussion with people about what to call port. It took a long time to get over that.” 

This argument might have been settled but there are still challenges. “Particularly in the UK, a challenge is to change the image of port. People think of port as seasonal, like Christmas pudding or turkey. Normally people drink port at the end of a meal because that’s how they were shown how to drink it. It is port’s fault: it’s how we told people to drink it,” Sandeman says. “It is about getting people to taste port again. People have this concept that port is very sweet but it isn’t, well Sandeman isn’t.”

Gonzalo Pedrosa, CEO at Sogevinus agrees. “The image of the category is very conservative and at times old-fashioned. Port is often seen as an after dinner wine with lots of rituals associated with it, which can discourage younger consumers. We think there is an opportunity to develop this category and introduce new consumers by positioning port differently.” 

In the UK, people are beginning to see port differently. “They are starting to understand that tawny isn’t just a sweet wine to be drunk at Christmas,” Sandeman says. “The US is much more advanced though,” he adds. So much so that Sandeman started promoting 20-year-old in the US in ’88 or ’89. “And people got the concept,” Sandeman says. “It will take time for port’s diversity to be embraced everywhere.” 

Open market 

Belgium is an important market for the 225-year-old brand. France is also doing reasonably well, according to Sandeman but he admits the French market is changing a lot. “But all of the markets have changed a lot,” he confesses. In terms of developing markets, Austria is important because it is premium, Sandeman says. “We’ve always done well in Japan and Canada is a good market, but it is all monopoly.” 

Asia is starting to develop for the port house and Sandeman thinks the market will come back after the
“predictable overheating with China.” The brand also has a scattering through South America but it’s reputation for volatility is an apt one, Sandeman says.  

For Symington, the greatest challenge is the wines themselves. “The real challenge is ensuring the wines made in the region — Port and Douro DOC — match the demands of an increasingly competitive world market,” Charlotte Symington of Symington Estates says. 

Still wines will help this cause, according to Symington. “They will help make consumers more aware of what our region has to offer and the fact that wonderful still wines can be produced from the same region as port. We believe that this has and will have positive implications for the category as still wine from the Douro gets more and more recognition it deserves.”

Sylvia Bernard, Porto Cruz group international marketing director, says that the growth of Wines from Portugal, and from the Douro will have a great impact on port. “In the US, we have identified that the success of the wines from the Douro is a unique opportunity to relaunch the port market,” she says.  

It might have helped, but Fladgate’s Bridge says it is important that Douro table wine steps out of port’s shadow. “I think a lot of people are talking about Douro table wine. It has been the teenager supported by the parent: port. Table wine needs to come of age and that needs to happen if this region is going to have a sustainable future.”

The global port market has changed, but it would appear that port is up for the challenge. The niche category’s future might look set to get more niche, but don’t pass on the port yet.