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R .E .S .P .E .C .T

06 September 2005 By db staff writer

“standfirst”>Port producers must encourage consumers to be a little less respectful towards vintage Port, and remind them of its great value for money, if they are to reinvigorate the category, says Patrick Schmitt

Vintage, as is well known, is the pinnacle of Port, and for that reason treated with the utmost respect by consumers in this country. It’s stored until the label is barely legible, opened only when the occasion is celebratory, then decanted ceremoniously, and passed right to left, clockwise round the table. But this reverence, reflected in archaic custom, is actually starting to hinder, not help the category. It has meant that vintage Port is now so highly regarded, people dare not drink it, unless it’s Christmas or someone’s birthday. The Brits also hoard it, fearful of consuming it too young, meaning not only are the opportunities for enjoying vintage declining but people are keeping it for longer, and the result is a stagnant, even declining market for this carefully crafted product.

This is affecting the price of the latest declaration – 2003 – as well as the value of back vintages, of which “there are still a lot around”, according Dan Connolly, international sales director for Noval. This means as a short-term investment Port is perhaps not as attractive as it once was, although for the keen consumer, vintage currently represents a good value product – that is compared to other fine wines. But sensible pricing has ensured en primeur 2003 offerings are moving, anecdotal accounts suggest. As Sarah Woodward, Port brands controller at Mentzendorff says, “We’ve found the retailers are buying more this year after the vintage declaration than in previous years because price points are more accessible.” Similarly, Danny Cameron, at Raymond Reynolds, Niepoort’s UK agent, reports a healthy demand for Niepoort 2003 but wonders, “If we had tried to put three years of price rises into place maybe our 2003 wouldn’t have been as successful. The mood in the market certainly seems to be a little bit more sober compared to 2000 and 1997 declarations.”

Vintage variations

This could, of course, be because the market is saturated. As Cameron explains, “A couple of declarations ago people would buy two cases – one to pay for the other in the future – so there’s a lot of mature and semi-mature Port on the market. This is either undervalued or en primeur is overvalued, depending on which viewpoint you take.”

On the other hand, Ben Campbell- Johnson at John E Fells, Symington’s UK agent, believes, “We are beginning to see back vintages drying up. Certainly 10 or 15 years ago there was a big surplus of vintage Port on the market – a lot of vintages from the ‘70s and ‘80s were floating around – but our stocks are drying up. There aren’t going to be any bargains for much longer.”

Nevertheless, Campbell-Johnson does concede there’s been a “slow decline in vintage Port sales over the last two to three decades” and the challenge is to try to increase the consumption of vintage Port. A declaration in itself can certainly stimulate interest in the Port category as a whole, and vintage within that, but is announcing a new one enough? Certainly the ripple effect of a vintage release is surprisingly far-reaching considering “the vintage sector is only some 1.5%-2% of total Port volume”, according to Nick Heath, marketing director at The Fladgate Partnership. But, unlike Bordeaux, Port’s vintage releases occur, on average, three times a decade, resulting in a somewhat cyclical market. “A new release represents a certain amount of business in itself but also stimulates interest in the older vintages,” says Heath.

Of course, the very fact that Port’s vintage releases are occasional and that, according to Simon Gotelee at Paragon, the UK agent for Quinta do Noval, “There’s this notional idea that they are all declared on St George’s day,” means that it’s “an exciting moment.” This explains the impressive trade and press following when declarations are made – a useful platform for any Port company looking to generate interest in its brand. However, as Heath says, “Declarations do revive interest in vintage Port but they are probably proportionately less important today because there is a groundswell of interest in single quintas, which are not really influenced by declarations; they have a much more regular consumption pattern.” In fact, to turn to the leading brands in the vintage sector, it’s the single quintas which top the charts, with Taylor’s Quinta de Vargellas in pole position and Dow’s Quinta do Bomfim just behind. “These Ports fulfill an important gap in the market, they allow you for a fairly accessible price to have a high quality vintage Port which is ready to drink,” says Heath, “and the market is beginning to recognise classic quinta names like Roêda and Vargellas.”

Interestingly though, Heath points out that the single quinta concept is much better understood in the UK than the US “where the consumers tend to stay on the well-beaten path of the classic declarations”. Nevertheless, where the UK could learn from the US, it is hoped at least, is in the consumption of classic vintage Port, as Americans tend to drink it younger.

Drinking up time

As Christian Seely, managing director of the AXA wine portfolio, which includes Quinta do Noval, said in May this year at a Noval, Symington, Fladgate event, “It is important we move vintage from something that is talked about, stored and treasured, to something that is actually drunk, and follow the American model because in the US vintage Port is drunk much younger; they like upfront fruit.” Continuing the plea, he pointed out that most modern consumers are brought up on alcoholic, rich, fruity reds with soft tannins and possibly a bit of sweetness, and, “That’s what vintage Port is, so let’s make it part of the repertoire”.

To do this, Noval’s Connolly, at least, is encouraging consumers “to see Port as a glass of good wine, rather than something separate, kept only for special occasions”. After all, he points out that “good vintage Port is around the £20 mark – and compare that to Bordeaux at that price…”

He and others are working hard to challenge the perception in the UK that vintage Port must be kept for some 20 years before it can be opened by conducting seminars, holding dinners, serving young Ports with cheese, and doing tastings. As Cameron at Raymond Reynolds says, “We do tastings, we fill the room with people in their 20s and 30s, and try different styles, and present Port as a fine wine that happens to be fortified.” Furthermore, the Symingtons are organising a vintage Port roadshow for October, with the aim “to reinvigorate the image of vintage Port, and we won’t just be showing 2003 Ports, but also vintages from the last 40 years as well”, says Campbell-Johnson.

What is apparent is the lack of understanding when it comes to all styles of Port, not just vintage. In fact, the trade needs to help consumers understand all Port styles as the vintage message can only be explained in the context of the rest of the category, otherwise there is a danger of isolating one style at the expense of another. “If people understand the difference between vintage, LBV, colheita and crusted, not only might we see more LBV and crusted sold, but more vintage sold as well,” remarks Cameron, adding, “It’s about people having a greater understanding about everything to do with Port, rather than one stand-alone element.” A sentiment supported by Jo Smith, Cockburn’s brand manager, who notes, “There is some confusion among consumers as to the difference between vintage and other styles of Port and we’re trying to overcome that by producing the Cockburn’s Guide to Port Styles, a neck booklet which will be available on Cockburn’s Special Reserve, Cockburn’s LBV and Cockburn’s Fine Ruby from October 2005.”

Followers of fashion

But aside from educating the consumer, there’s also an argument for enthusing the shopper. Cameron is a strong believer in the need for some innovation in the Port category, citing the positive effects of striking packaging, for instance, Warre’s Otima Tawny Ports or Niepoort’s Junior and Senior Ports. “Something radical encourages inquisitiveness in the consumer and that can lead through to a sale,” he says, while suggesting Port needs to consider a “younger, more styleconscious audience”. On the other hand, he and others are also firm believers in the need for retailers to really explain not only the diversity in the category but also the finer details about vintage Port. “There is a lot of victory of brand over style,” Cameron says, referring to the fact that a lot of people just ask for a bottle of their preferred brand, without specifying any particular style.

As for vintage Ports that are arguably more suitable for a younger audience, and certainly designed for drinking when young – while proving the category can innovate – there are a handful out there. For instance, Sandeman, which is owned by SoGrape and whose distribution has switched from Pernod Ricard to Stevens Garnier in the UK earlier this year, has Sandeman Vau, which, as Stevens Garnier’s Johnny Powell says, “is made with a blend that is meant to develop quicker than the classic style but in every other way is made in the same way as a traditional vintage Port”. Similarly, Noval has Silval, which is priced at the single quinta level and like Vau is a blended Port, and made specifically for consuming sooner than the likes of Noval’s Nacional.

Half-bottle hopes

Another increasing innovation is packaging vintage Port in half bottles, which not only reduces the potential for wastage but also allows vintage Port to hit lower price points. Vau, for example, comes in half bottles “which means it can hit below the £10 price point,” says Powell. Selling Ports in such formats can also be useful in the on-trade, where Mentzendorff’s Woodward suggests “offering half bottles [of single quintas] on a promotion with the cheese board”.

Overall, Woodward reiterates the need for education in the Port category, as well as the role of promotional ideas “to reinvigorate that post-dinner Port and cheese or dessert type occasion”. She sees it as a case of “reminding people who had maybe forgotten about Port and introducing them to its flexibility”.

As for vintage specifically, it appears drinking it younger is key to getting the category moving again. However, it does leave one wondering whether the effect would be positive in the long run. For Paragon’s Gotelee, one of two scenarios could arise: “Either there would be less vintage around so demand would be contracted and prices would increase, or prices would come down because vintage would not represent such a long-term prospect.” And if there’s something vintage does offer the investor, it is guaranteed ageing potential. Sadly however, that can’t be said of vintage Port’s current consumers. One can only guess their age , but the fact that much of vintage Port’s on-trade sales are through gentlemen’s clubs certainly provides a clue. Connolly memorably mentioned that Piccadilly’s East India Club, of which he’s a member, gets through 200 cases of vintage Port every year in its one and only dining room – that’s more than is sold to the whole of Denmark.

MARKET CLOSE-UP

According to ACNielsen, which groups vintage and crusted Port together, the vintage category’s share of the overall Port market is 5%, compared to LBV which has a 30% share, Standard Ruby 30%, Premium Ruby 20%, Tawny, standard and aged, 9%, and white Port, just under 1%. To focus on the market for vintage alone, however, Mentzendorff’s Sarah Woodward points out that the Nielsen vintage data includes Cockburn’s Treaty – a limited-edition Ruby Port specifically developed for Morrisons pre- Christmas two years ago (2003) to celebrate the Treaty of Methuen. However, it is not a vintage Port, and while sales of vintage have dropped by £695,000 (MAT 9.07.05 vs MAT 10.07.04), sales of Cockburn’s Treaty have fallen more than £500,000 over the same period, therefore accounting for nearly all of vintage Port’s decline.

Sales Value (£000’s) Total Port

MAT 10.07.04 – 74,668

MAT 09.07.05 – 73,740

Vintage / Crusted Market Share – 5% Sales Value (£000’s) Total Vintage/ Crusted

MAT 10.07.04 – 4,041

MAT 09.07.05 – 3,346

Sales Value (£000’s) Cockburn’s Treaty (included in Vintage/Crusted stats)

MAT 10.07.04 – 608

MAT 09.07.05 – 107

Sales Volume (000’s 9-litre cases) Total Vintage / Crusted

MAT 10.07.04 – 24.2

MAT 09.07.05 – 16.4