Cost of brandy to push up Port prices in 2013

Rising brandy prices will increase the cost of Port by at least 9.5% next year according to Paul Symington.

Writing in the July edition of the drinks business, Symington (pictured) outlined a range of challenges facing the Douro, including the “skyrocketing” cost of brandy used in the production of Port.

Indeed, last September, db noted how the gradual withdrawal of the EU subsidy on distillation had increased the cost of brandy by over 25% from 2010 to 2011, adding to tensions in the Douro which had already sparked outbreaks of violence.

Symington commented in this month’s db: “The price of wine brandy, an essential part of Port making, has skyrocketed: Brandy will cost at least 60% more at the 2012 harvest in two months.”

Continuing he stated: “Even if grape prices remain unchanged, the cost of Port will increase by at least 9.5% early next year.

“Not an attractive proposition to take to the markets in the current recession. But, unless Port companies pass on this increase, they will quickly and most certainly go out of business as there are insufficient margins to absorb this cost increase.”

Nevertheless, he also said, “Port faces a good future – but based on sales of premium quality wines. The category will have to fight hard to retain its position in the traditional markets and to develop new ones such as Brazil, Russia and China.

And, on a positive note, he added, “It should be noted that Port shipments to the UK actually increased in 2011, albeit by 0.2%.”

Click here to read more about last year’s violence in the Douro and click here to read Paul’s detailed analysis of the challenges facing Port.