PORT: 2007 – the next Port of call

With rising prices and global recession, it may seem an unlikely time for Port to declare a vintage. But, as Gabriel Savage points out, a high-quality offer such as this could be just what the category needs right now.

A year ago, the Port industry was warning that a price increase was inevitable. Rising costs, not to mention the crippling exchange rate, had reached a level which the Port houses were no longer able to absorb. Since then, the recession has hit and the euro’s strength has reached new heights; perhaps not the ideal time to declare a vintage.

On the other side of the coin, few could envisage a better product to represent the Port industry in challenging times. The 2007 vintage has revealed an exceptional quality, with very obvious appeal to customers with either long-term or more immediate plans for their purchase. Jane Wilson, senior brand manager for Cockburn’s at Maxxium, draws attention to the ripple effect a declaration can have, with benefits reaching beyond the tiny proportion of total volume made up by the vintage sector. “In spite of the recession, the vintage Port declaration raises the profile of the Port category and attracts attention from connoisseurs,” she explains. Certainly the trade has seen strong interest in the wake of the declaration. “Orders and allocation requests have been coming in early and in good volume,” confirms Simon Gotelee, commercial manager of fortified wine at Mentzendorff. These en primeur customers could well be onto a good thing. Adrian Bridge, managing director of The Fladgate Partnership, points to the low yields which accompany this quality when he suggests, “The price could appreciate more in the future.”

Fair price

Given the pricing pressures facing the Port industry from all sides, it is evident that careful thought has been put into this vintage offer. Paul Symington, joint managing director of Symington Family Estates, is confident that the 2007 prices are both fair and commercially realistic. “If you’re talking in euros, our prices are 10% down on 2003 prices, but that’s an increase in sterling.” Putting the £40-45 price tag into context, Symington notes, “Only 900 cases of Graham’s ‘07 will be available in the UK, which demonstrates how incredibly reasonable the price is.”

This year has seen some reassuring evidence that, despite its fair share of challenges, the Port category remains an attractive, important portfolio asset to the UK trade. First of all, PLB announced that it had taken on the distribution of Delaforce Port. A few months later, right before the vintage declaration, the news came that Gonzalez Byass UK had taken on the agency for Quinta do Noval. Adam Wyartt, PLB brand manager for Delaforce, said the decision was motivated by “our over-arching strategy as a company to assimilate quality heritage brands into our portfolio”. Wyartt observes that, by happy coincidence, “The vintage declaration gives us a very clear, premium quality message at a time when we’re trying to get the brand back in people’s minds.”

For Gonzalez Byass, this partnership with a Port house marked a very obvious step to complement its core Sherry business. Jeremy Rockett, marketing director at Gonzalez Byass UK, highlights the crossover benefits, in particular the practical advantage that “we are in touch with most buyers already and have the data and the skills to offer a deeper customer relationship such as category management”. From his experience of the UK Sherry market, Rockett is also able to draw some parallels with the issues faced today by Port. “One of the key challenges is to simplify the communication; consumers don’t really understand all the different types of Port available and they’re not sitting there waiting for a lecture on it!” Wilson supports this need to demystify the Port category, explaining: “Here at Cockburn’s we don’t mind which way the bottle goes round the table or whether the Port comes out with the starter or the cheese. We just want consumers to enjoy the unique taste of Port, however and wherever they choose to drink it.”

Of course, Port has not found itself in the same depth of decline as Sherry, and indeed others within the fortified sector. Nevertheless, Nielsen MAT figures to the end of March this year show Port experienced a 5% drop in volume. However, much of this has been driven by the enormous 73% volume decline in Port sales below the £4.99 mark over the last year. By contrast, once you look above £15, volumes are up by 23%. Summing up these statistics, Gotelee comments, “It is clear that the profit opportunity for the Port industry is through well-supported, leading premium brands.”

Global expansion

From a more international viewpoint, Sylvia Bernard, group export marketing manager for La Martiniquaise, which owns Porto Cruz, outlines plans for expansion in a number of its target markets. “We are convinced that the brand will have strong international development within the next five years,” she comments, highlighting the Porto Cruz long-term marketing investment in Russia, the success of its premium ranges in Canada and the brand’s “promising start” within the Duty Free Americas network. Within mature markets, Bernard emphasises “the strong ambition to invent new ways of consuming Port”, with the brand focusing its innovation on the cocktail trend and its most recent launch, Cruz Pink.

It is this spirit of innovation which Bridge pinpoints as crucial to Port’s ability to appeal to the modern consumer in a way that some other fortified categories have failed to achieve. “As an industry, we have been extremely good at maintaining Port as a very contemporary drink,” he comments, adding, on a supremely positive note, “We’re not heading off decline with this, we’re looking for further growth like any business.”

Gabriel Savage, July 2009