Brandy price surge costs Port extra €14m

The rising price of brandy in Europe has forced Port producers to pay an extra €14 million for the fortifying spirit this year on the back of a near €21m rise in 2012.

Port uses around 16 million litres of brandy each year

The impact of short harvests across Europe in the last two years, a reduced vineyard area and the removal of an EU subsidy for the distillation of excess wine stocks back in 2008 has caused the price of brandy to rise from around €2.60 per litre in 2012 to over €3.50 this year.

Port, which is requires brandy to arrest fermentation and fortify the wine to 20% abv, uses around 16 million litres of the spirit each year, and the rise in price of just under €1 translates into a cost increase of €14m for the region, or almost €0.15 per bottle according to Symington Family Estates.

This follows a significant rise in brandy prices in 2012, which meant that Port producers had to pay €20.8m more for the spirit than in 2011 (see chart below for brandy price trends since 2010, when a litre of brandy was less than €1).

This year’s Port harvest was 70.3 million litres, over 10m litres below estimated sales for 2013 and, because this year marks the fifth consecutive harvest where demand has been greater than supply, Port stocks are now at a historic low according to Symington Family Estates.

As previously reported by db, the increase in brandy prices, when coupled with a decline in production, is causing prices to rise sharply for Port for the first time in the last ten years.

Paul Symington, co-chairman of Symington Family Estates told db in June this year that the Port trade is putting through “really big price increases for the first time in a decade, which the supermarkets have had to accept in the last six months.”

“There are two major things happening,” he said. “One is the horrendous increase in brandy prices, and the other is the reduction in stocks.”

Meanwhile, speaking about this year’s harvest, Symington noted that “Some very fine looking Ports and Douro DOC wines have been made this year.”

You can read a full harvest report from Paul Symington on the next page.

Below are Port production and brandy price trends supplied by Symington Family Estates.

Port production and brandy price trends. Source: Symingon Family Estates

2013 harvest report by Paul Symington, co-chairman of Symington Family Estates:

This year we had a real Douro winter. Good levels of rain fell throughout the last quarter of 2012 and both January and February 2013 were very wet. March had the heaviest rainfall for 12 years with 176 mm, more than three times the average, and serious damage was caused not only to the roads but also to the stone and earth terraces on which our vineyards are planted. In fact dangerous rock avalanches occurred, including one between Sabrosa and Pinhão that blocked the road for several hours, thankfully occurring when no vehicle was passing. Some of the Douro’s vineyards planted over the last twenty years have been set out without care for the natural slope of the hills and with more regard to the power of a bulldozer, so when heavy rains come these errors are fully exposed.

After two drought years with 40% less rainfall than average, this year’s winter rain was of the utmost importance, giving our vineyards an abundant supply of water. Many Douro vines are not irrigated and rely on the water retained in the schistous rock and soil. April at Bomfim was cool with an average 13.8°C compared to a mean of 15.0°C. May continued much cooler than average (16°C vs. 18.4°C), so the vine’s development was at least 10 days late by early June. A delayed cycle is not a serious problem in the Douro and we and our neighbours were very optimistic at this stage. Seldom have the vines looked so healthy, especially after two drought years.

The next three months showed us that no year in the Douro is ever quite like a previous one and that no judgement should be made until the grapes are under cover and in the wineries. In June, July and August just 4.6mm of rain fell at Pinhão. This is effectively no rain for 12 solid weeks. Although these three months were only marginally warmer than average, the lack of rain was extraordinary. One tragic result of this period was that forest fires became a daily feature on every horizon as the parched woodlands were tinder dry right across Portugal.

The ability of the Douro grape varieties such as Touriga Nacional and Touriga Franca to cope with such prolonged periods of drought and still nurture fine bunches of ripe berries is extraordinary. Their well-established root systems draw in the necessary water and nutrients from deep in the soil, unlike most other Vitis vinifera which would look very sorry in these conditions. Our vines had lovely dark green leaves and fine looking bunches in late August. The young vines had a tough summer and had to be watered, many by hand.

The crucial month of September started with the maturation still some 10 days behind recent years, measured both by the technical analysis as well as by the traditional tasting of berries in the vineyards and the feel and look of the skins between fingers. Some important rain fell on the 5^th September (14mm at Malvedos and 13 mm at Bomfim) which was most welcome. This was more rain in one day than had fallen in the previous three months.

Charles Symington and our viticulture team fixed the picking for Port at Vesuvio and at Senhora da Ribeira in the Douro Superior for the 19^th September and for the 23^rd at our other vineyards in the Alto Douro. These dates were based on several preceding weeks of careful assessment of grape maturity and the scene was set for an exceptional year. The picking for our Douro DOC wines had started several days earlier.

By the afternoon of Monday 23^rd September, with the pickers already in the vineyards picking the Barroca and some other varieties, the long-rang forecast began to show Atlantic rainstorms coming into the Douro on the afternoon of Friday 27^th, with wet weather predicted to persist for 6 days. By sunrise on Tuesday morning, Charles had changed the entire picking order that had been so carefully decided just a few days previously. All the pickers were asked to go immediately into the Touriga Nacional, Souzão and Vinha Velha vineyards. During the next 5 days, and in perfect sunny weather, some of the best grapes were picked and brought into the wineries. The lagares fermented during this period are really exceptional, with wonderful colour and aromas. Amongst several great looking wines, two lagares at Senhora da Ribeira made with a blend of Souzão and Touriga Nacional, have really delighted us.

Sure enough rain came in late on Friday, although sparingly in the eastern part of the valley. The unsettled weather persisted until Thursday 3rd, although on the Sunday and Monday there was no rain to speak of. We picked much of our Barroca and Roriz during these unsettled days and their tougher skins and higher Baumés did not suffer much. Some grape varieties did naturally register a drop in sugar readings at this stage, and in the lower-lying and more enclosed vineyards, careful work was needed by the pickers and on the sorting tables.

As from the 4^th October, the fine dry weather returned, accompanied by a healthy wind that dried the vines and the top soil. In this phase our pickers started harvesting the Touriga Franca which gave excellent colour, with berries in very good condition. This was good news as Franca with its fragile skins, can be susceptible to excess moisture.

An advantage of our steep Douro vineyards is that the land drains very well after rain, which prevents the damp earth from creating problems in the very ripe berries. Towards the end of the harvest, we returned to our higher vineyards of Touriga Nacional (300 to 450 meters up the valley sides). These grapes came into the wineries with very healthy 13° and 14° Baumés and the fine weather continued until the 13^th October by which time all our best vineyards had been picked.

Thus by the judicious use of the long-range weather forecast, quick decision making and a willingness to change the picking order, some very fine looking Ports and Douro DOC wines have been made this year.