Portugal: Analysis / Learning Touriga

Consumers will need tuition in the four ‘T’s (Touriga, Tinta, Tinata and Tinto) if Portugal’s fabulously exotic wines are to match their potential in the international marketplace.  Fionnuala Synnott reports

Think of Portugal, and sunwashed beaches or lush green golf courses in the Algarve might spring to mind. People who take an interest in these things might even think of Port, but few will think of wine, or at least not wine for sipping in a bar or serving with food. And yet, Portugal produces award-winning wines. In fact it won the most medals of any country in this year’s International Wine Challenge. The Douro region in particular, is becoming well known for its top-quality wines, following substantial investment in winery technology and years of experience blending Port.

Cristiano van Zeller, owner of the Quinta do Vale Dona Maria winery and one of a group of quality wine producers that have styled themselves The Douro Boys, says, “We are becoming more competitive and are able to express our uniqueness through our own grape varieties and different taste profiles.”

But despite producing some iconic examples, Portugal’s wines are still not found on every supermarket shelf. According to the latest figures from ACNielsen, Portuguese still wine is a growth category that has witnessed an increase of 7.8% in value and a 9.9% increase in volume since the end of 2004. But, despite this growth, Portugal’s share of the UK market has remained static at around 1%, with other categories such as New Zealand and the US growing more quickly – perhaps one reason why Portugal cannot seem to increase its share.

A number of Portuguese wine producers are aware of this stiff competition in the international markets and are trying to establish a business plan to target export markets. Paulo Pinto, international marketing director for the Instituto dos Vinhos do Douro e Porto (IVDP), says, “Now that they have invested in the vineyards and wineries, Portuguese producers know the commercial potential of their wine and are using more export-driven strategies.”

Variety show
One of the fundamental problems facing Portugal is that, in the minds of international consumers, it does not have a wine heritage. According to Miguel Roquette, who is responsible for sales and marketing at Quinta do Crasto in the Douro, “When people think about Portugal, they think about Port, Madeira and Mateus Rosé. Portuguese dry wines are not yet considered a legitimate category, particularly in the on-trade. This is partly due to the use of relatively unknown grape varieties.”

Indigenous varietals such as Touriga Nacional, Tinta Roriz, Touriga Francesa, Tinta Barroca and Tinto Cão are both a strength and a weakness for the category. Nuno Araújo, owner of Quinta da Covela, feels that diversity of terroir and different grape varieties can be appealing to consumers whose palates are jaded by the standard New World supermarket offerings. He says, “Diversity of terroir is one of our major strengths as it allows us to produce unique wines.”

Roquette adds, “If you use indigenous varietals the emphasis is placed on what is in the bottle rather than outside the bottle. But Portuguese grape varieties can also be tricky to remember and can put some people off by their lack of familiarity.” But Van Zeller, believes you have to turn this disadvantage into an advantage and market these varietals as part of a complex offering.

International aid
Some producers have tackled this problem by blending indigenous varietals with international grape varieties such as Shiraz, Merlot and Cabernet Sauvignon. A number of producers, such as Araújo, maintain that blends can form part of a strong marketing strategy. “We use both Portuguese and international blends because we want to express the terroir and not the grape variety. Even though they will never be as big as ‘big brand’ varietals such as Chardonnay or Pinot Grigio, Touriga Nacional and Alvarino are starting to gain fame.”

Meanwhile, Nick Oakley, owner of Oakley Wine Agencies, thinks international grape varieties are yielding great results in Portugal. He explains, “Syrah grown in the hot, dry climate of the Alentejo is producing a new style of wine that is halfway between New World Shiraz and Syrah from the Rhône Valley.” However, he is quick to add that the strategy is not to abandon indigenous varietals altogether, but to use these blends as the first step to producing a single varietal. “The French grapes will open the door on Portuguese flavours for consumers.”

But some fear that using international varietals will reduce the category to competing on price point alone, something that, historically, Portugal has not been very good at. “International varieties are easy to communicate to the consumer but then you have to compete against hundreds of Cabernet Sauvignons already on the market,” Roquette says.

Francisco Ferreira, a board member at Sogrape, sees Portugal’s native grape varieties as its real point of differentiation. He comments, “If we can combine our indigenous varietals with our blending competence then we can produce a wine that stands out in the market.”

Some producers have used English labels to create brands that will appeal to consumers who are unfamiliar with Portuguese wine. Tagus Creek, one of the few Portuguese brands, is the product of a collaboration between wine producer João Ramos in the Alentejo and his UK importer, Oakley Wine Agencies. The wine range, which is made from blends of indigenous as well as international varietals, is stocked in branches of Morrison’s, Sainsbury’s, Booths and Majestic. Oakley says, “Our wines are dressed up like New World products but our aim is not to make a New World wine.

We want  to produce a good, modern Portuguese wine.” Although Oakley sees this as a legitimate marketing strategy for his brand (the wine has doubled in sales since dropping its original Portuguese name Loios), he is not against selling wine with original Portuguese labels. He says, “Quintas can find a place in the market on the back of their reputation for Port production.”

Others favour using an English name to market wines made from a blend of indigenous varietals. UK distributor Oakhouse Wine has worked with Adega Cooperativa de Redondo in Alentejo to launch Latitude Red and Longitude White, entry-level wines priced at £3.99. Alan West, owner of Oakhouse, says “We are investing in trying to build a recognised brand with an easily pronounceable name.”

Carrie Jorgensen, owner of the Cortes de Cima winery in the Alentejo, agrees that wine labels have to be easy for consumers to remember, but they do not always have to be in English. She explains, “Montreal is one of our biggest markets, where French labels are popular.”

Quality concerns
The new generation of Portuguese wine producers is more outward looking than its predecessors and is keen to make an impression on the international markets. But open markets such as the UK and the US are extremely competitive and Portugal, like most Old World wine countries, is finding it hard to rival the litres of New World wine currently flooding the market, particularly when it comes to price points. Pinto of the IVDP says, “Quality is more of a driving force for growth than price and we are steadily improving our niche market share. But despite rising exports it’s difficult to compete with New World wines.”

This is partly due to the nature of the terroir in Portugal. The Douro region, for instance, is made up of very fragmented low-yielding vineyards on terraces. There are 39,000 independent farmers in the Douro with less than five hectares of vineyards each. This makes it virtually impossible to use any mechanization. But it is precisely this variety that allows the region to produce such high-quality wine. Van Zeller explains, “Portugal has an infinity of very small holdings. It is possible that, like Burgundy, the Douro will represent an outstanding region that can produce unique, quality wines.”

Bottling the best

When you combine the difficult terrain with the cost of using new French oak barrels it is not surprising that the wine produced is expensive. Paul Symington, joint managing director of Symington Family Estates, says, “We don’t think we’re overpricing our wine, but rather that we are bottling the best of the best.”

Araújo adds, “The top-end wines appear to be gaining momentum whereas the lower end might be fading.” In fact, anecdotal evidence suggests that the most expensive Portuguese wines sold in the UK are bought by ex-pats, who can buy them more cheaply in the UK than in Portugal. Whereas UK consumers are happy to pay £20 for a bottle of vintage Port, very few would consider paying £20 for a Touriga Nacional Reserva. However, these iconic wines help to build the image of the category. Symington says, “These high-end, quality wines allow the £8 wines, for instance, to find their niche in the market.”

Market driven
A number of Portuguese wine producers appear to have understood the importance of making wine that appeals to the consumer. Paolo Amorim, director at Quinta da Aveleda and president of G7, the group that encompasses the seven largest wine-producing companies in Portugal, says, “Most producers understand the need to follow the market, not just to make the wine they like.”

Modern Portuguese wine tends to be less tannic, more fruit-driven and easier to drink on its own than traditional Portuguese wine, which was meant to be served with food. Pinto says, “Better quality fruit has allowed us to work the wine very differently and make it more appealing to the palate.” But Portugal has no intention of creating a poor imitation of easy-drinking New World wine. “There has been an evolution in terms of the style of wine produced. We are now making more elegant wine thanks to our experience of blending Port,” says Ferreira.

Some producers are concerned that the wine industry has lost touch with elegance and favours powerful wines because they are currently in fashion. Van Zeller explains, “We should be concerned about the elegance of the wine and balancing its different components. We need something that is not too overwhelming to accompany food in perfect harmony.”

Price matters

It is clear that Portugal needs to focus on building its image if the category is to grow its presence in the international markets. When it comes to the future of the category, getting the pricing right is vital, particularly in the highly competitive UK market. Symington warns, “We have to be careful we don’t overprice our wines.” But not everyone agrees. Amorim would like to see the retail price of some wines go up. He adds, “Very good wines are still too cheap. We should try to increase the retail price of the best wines.”

Volume is also an issue for Portugal, particularly if it wants to compete against the prolific New World countries. Amorim explains, “Portugal produces a number of very good wines but we need to make more of them. If we could produce the volume of, say, Argentina and produce 600,000 bottles a year, it would be a fantastic platform for the country.”

There are high hopes that the Alentejo region, which has a flatter and more accessible landscape than the Douro, will be able to produce wine in such volumes. “The Alentejo region is a shining example of what is happening to Portuguese wine and how to export it,” states Pinto.

West thinks it is feasible for Portugal to double its market share in the next three years provided that it can double its production capacity. “Whether or not this happens will largely depend upon the commitment of the trade to buy into the category,” he says. “It is often the Iberian or South American buyers that are responsible for purchasing Portuguese wine. There is, therefore, quite a lot of pressure on the Portuguese wine industry to attract their attention.”

As Symington says, “There have been some good promotional initiatives from government bodies and independent wine-growers, but many consumers are still broadly unaware of what Portugal has to offer.” He believes, “It will take another couple of years to build awareness.” But he is positive about the category’s future and feels it has enough initial critical mass and good quality, well-made, wine from different regions to be successful in the international markets.

The wine trade and the press have been convinced for some time of the quality wines that Portugal has to offer. It is now just a question of getting the message out to the consumer.

© db July 2006