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Symington: Cheap Douro wine is doing serious damage
Cheap Douro wine sold at discount retailers in the UK is doing “serious damage” to the industry, according to Paul Symington of Symington Family Estates.
Speaking to db after being presented with a Lifetime Achievement Award by The Drinks Business and the Institute of Masters of Wine at Vinexpo, Symington said: “Port volume sales are in decline, which is having a big structural impact on the region, as it hasn’t properly adapted to the new commercial reality yet.
“The fundamental issue is about Port grape prices, which are high, while Douro wine grape prices are sold as a by-product at two thirds less than the cost of growing them, which is a suicide mission.
Paul Symington wants to raise the status of Douro reds
“Our yields are 80% lower than in Chile and yet you can find Douro wines on the shelves at Aldi for £5.99, which is utter madness and is doing serious damage to the industry. We mustn’t devalue our region by selling our wine too cheaply.
“These extraordinarily beautiful wines should not be sold at these price points. I’m worried about the economical impact this will have on farmers and am concerned that the way things are done at the moment will damage the region’s future potential.
“There have to be changes to the way things are run in the Douro but there has been a blinding silence from the government so far. For some, there is a vested interest in maintaining the status quo, which is unbelievably short-sighted.”
Symington admitted that dry Douro wines hadn’t thus far been as successful in the UK as he thought they would be.
“I don’t think the answer is being less regulated but regulated in a more effective way. The laws need to be adapted for the 21st century rather than the 1920s.
“My big dream is that Douro wines reach the level of the Super Tuscans in terms of acclaim and recognition. In terms of quality, this is perfectly do-able, but we are tripping ourselves up at the moment, which is deeply frustrating.
“These are astonishing wines that are worthy of being considered in the same bracket as Sassicaia. I’d love to see some of the top Douro reds reaching cult status and trading on Liv-ex.
“The wines have come a long way since the early 2000s – there used to be too much wood and extraction, but we’ve learnt a lot over the last 20 years and we have the authenticity and quality for a few of the top wines to reach cult status,” he said.
There is no Douro wine on sale at ALDI at any price. There will be a Christmas offer reserve red at a (much) higher price. There is a Douro wine at LIDL called Azinhaga do Douro – it’s reserve wine at £5.99
““There have to be changes to the way things are run in the Douro but there has been a blinding silence from the government so far.”
What did he expect? The government is not a port producer.
Or was he expecting acreage quotas, price controls, or similar. n other words this is just another anti-consumer call for protectionism.
I applaud the effort to cast the dry wines of Portugal as being great, which some are definitely worthy. However, in every wine growing region in the world that has achieved a high level of sustained quality has to deal with cheaper knock-offs within their appellations. The notion of non-fortified dry red wines from Portugal is a fairly novel concept to today’s consumer. Isn’t the path to recognition tied to consumers buying the wines? At $15 a bottle the risk of trying something new can be justified, at $30+ a bottle, not so much.
These ‘mad’ prices though reflect the realities of the market. If demand was higher or volume lower things would change. It takes years to get a vineyard into production and to rip it up not only costs money but is a drastic response whih could backfire if Port volumes take a turn for the better.
Furthermore what else would these farmers grow?
Paul can bemoan these prices but that is the harsh reality. As for dreams of super Tuscan status (and presumably price) does that mean he sees the Douro as only being in the realms of those with very deep pockets? I hope not.
The counter argument surely is consumers will get to experiment and taste ‘cheap’ Douro wines and find them wonderful and be willing to trade up progressively to better quality from the same ‘unknown’ region. Bordeaux after all offers wines at prices from a few euros to hundreds of euros per bottle. Why not the Douro?
It won’t happen overnight but that surely is the right way forward. It is not Aldi’s ‘fault’ they are currently so cheap!
This is a complicated issue and commenters should have all the facts before passing judgment.
The quantity of port grapes that can be produced in the Douro each year is regulated by the Port Wine Institute, which reports to the Portuguese Ministry of Agriculture. This system was introduced in 1933 and is similar to what exists in Champagne. The annual quota (called the ‘benefício’) is based on an assessment of quality and future Port sales and stock requirements.
The Douro is a region of roughly 21,000 farmers. 92% of them have fewer than 5 hectares of vineyard. Each year every farmer is provided with a license for the amount of their grapes that they are allowed to sell (or produce themselves) as Port grapes. In a region where the economy is highly dependent on vines, the income farmers receive from their Port grapes (between €1.40 and €1.20 per kg) is absolutely crucial and our region would see widespread vineyard abandonment and economic harm without it.
In the past, there was no commercial market for the grapes that didn’t have a license for Port production, so these ‘excess’ grapes were broadly just used to produce wine for local production (called ‘consumo’). The past two decades have seen the rise of an exciting new generation of Douro wines which have received widespread critical acclaim. This is fantastic news for the region and the farmers and is a credit to the producers and winemakers.
However, as a result of the fixed market for port grapes and over-production in the region, most Douro DOC wine grapes are being sold (by farmers to wine producers) at between €0.25 and €0.40 per kg, which is well below the average cost of production of between €0.70 and €0.90 per kg. (NB: In a couple of recent low-yielding years the price received for Douro DOC grapes has been slightly higher and there is some variation within the sub-regions, but these figures are accurate estimates for the average prices across the region over the past decade).
In other words, 63% of the region’s grapes are currently responsible for 87% of farmer income, and the remaining 37% are delivering only 13% (figures based on the 2016 harvest). This means that the farmers are losing out economically and the dynamic new Douro DOC business is being built on false cost foundations.
The global Port market has been declining in standard quality volumes in recent years but it has thankfully been increasing in premium volumes and overall value, due largely to the hard work of the port producers and their customers in the wine trade around the world… innovating in both products and packaging, constantly working to improve quality, and investing in communications, education and training.
Nevertheless, as a result of the decline in standard Port volumes, the quota that individual farmers receive for their Port grapes has been shrinking (along with their income levels) and there is even more over-production in the region.
The tragedy is that a generation of wine drinkers are being trained to think that Douro wines are cheap wines – on a level with mass-produced wines from other highly-mechanised regions – when in fact we have amongst the lowest yields and the highest grape costs per hectare in the world (the Douro is the world’s largest area of mountain vineyard, mechanisation is very hard and much work is still done by hand – therefore expensive).
We cannot have a regulated market in the same region as a free market, due to the distortion that the former is having on the latter. The changes that are required will not benefit our family business, we are raising them due to our concern about the impact that the current situation is having on Douro farmers and negative outcome it will have on the Douro DOC business when the real costs of production are reflected in the prices on the shelf.
We are proactively engaging with the relevant authorities and have contributed extensively to a strategic review of the port trade. We will continue to draw attention to this unsustainable and unfair situation, to achieve sensible reform that benefits all those who earn their living from our beautiful wine region.
The “beneficio” issue has been for a long time mentioned by more than one producer as a concern for the Port wine industry. Perhaps it is the time to have a serious industry discussion about it as well as on the kind of Port wines the sector wants to make the backbone of the industry. Very entry level Ports or more premium wines that reflect much better the grandeur of Port? I also understand there is now also concern with the government’s decision to re-establish the Casa do Douro and the obligation for grapegrowers to join it. Perhaps Paul can give us extra insight on this issue too.
Agreed, Paul, entirely.
But there is surely a temporary advantage of these low price point wines in that it will encourage many more people to try them – and I considered the Aldi version actually pretty good!
To gain increased prices you’re going to have to go down the limited appellation/segmentation route, I suggest – as every other area does – and as you’ve really been doing for port.
Best wishes from someone who you were kind enough to invite to the Douro a very long, if memorable, time ago….
A couple of years ago i was invited to judge in the Portuguese Show in Lisboa and as part of that trip I spent a few days in the Douro Valley seeking out the red table wines.
Two lasting impressions were made on that trip, firstly the impressive quality of Portuguese table wines in general and the amazing potential of the Douro blended reds blended from ancient port vineyards.
But perhaps was most astounded by the low prices of theses wines.
I am with Paul in that the Duoro Valley can in time become a great red table wine region but the growers must ultimately be rewarded or the industry will collapse.
Portugal and its wine industry needs to stand up and market these wines to the world; that takes commitment and it means money must be spent but it will pay handsome dividends in the long term.
The industry and government must invest.
To me this is a really interesting, if not frustrating, topic. As someone who sits on the outside of the Douro wine region, but with their heart very much in it, I can’t resist giving a view and asking a few honest questions. I am “merely” a consumer, but one who’s spent quite a lot of time in Portugal and particularly the Douro.
There seems to be a few classic catch 22’s and grower/maker issues that creates this inevitable set of market conditions. Please excuse any naive errors that I may make without any intention. The Beneficio is a big part, as a Quinta/farm on the right land can earn decent money simply by selling their “right”. This gives a large Port house the ability to produce more volume than they have the land/vines to produce. Therefore is it not the case the farm owner can cover a fair chunk of their costs before even before selling their grapes.
Then there is the dynamic that the “big boys” are able, by nature, to drive up the price per pipe; especially when the season has created high quality and lower yield. The additional catalyst is the very high percentage of farms that do not produce wine today. A drive up the Rio Torto is a really good example… stunning top class terraces brimming with old vine …. but you can stop, look around and maybe see 12 or so farms … with only a couple maybe only one having on-site production. Granted there are producer owned farms where production is centralised to sites … but there are also many farms who are simply farms.
When yields are low, fruit can be snapped up, for the production of Port. Quality of fruit governed by the PWI is probably focused on Port production. When yield are high…. and price per pipe is low… table wine producers are able to produce high volumes of wine.
Is another unique “challenge” that of dual production, processing and storage needs. A grower/producer of table wine can not move “up” to port production without having two sets of lagars/presses, two sets of Cuba’s, two sets of stainless storage …. all in separate buildings. As I believe it is not allowed to make port on/in the same area as table wine?
From a personal perspective I totally agree with Paul that the low cost Douro wines could negate the potential of a super Tuscan style product. I am sure no-one in the sales pipe line really wants to sell quality Douro wind for £4.99 street price. But you also can’t “blame” the retailer or consumer for this. Aldi does indeed have Douro wines at £4.99, and I buy it, as it’s fabulous value for money. However they also have really good value Däo, Vino Verde, and Alentejo wines.
Portugal not just the Douro has a really interesting set of challenges breaking into the next volume or market share level. A challenge I would personally love to somehow have a hand in and feel passionate about.
Is it not the case that the consumer buys old world wines on the region name (such as Bordeaux, Chablis, Chianti Rioja etc sometimes unaware of the grape varieties in the wine) and the New World by grape variety (such as Shiraz, Malbec, Sauvignon Blanc like-wise unaware of the region the wine is from. Portugal sadly has the “double whammy” of having regions the consumer is unaware of producing wines from grapes they do not recognise.
In the UK I think Portugal still sits at around 2% market share, yet produces some of the best wines at each price point. I won’t of course name them but there are bargain wines at entry point that are amazing value for money and also higher end “garage” scale wines that are truly world beating wines. They may retail at over £50 per bottle but sit along side (in my opinion) wines at four or five times the cost.
There is no magic answer of course to the region/grape challenge … but again as an outsider … is the task of Viniportugal to invest in raising awareness and creating informed “pull-through”. I personally don’t see them doing it.
Another bug-bear is the retailers merchandising, often placing Portugal as a little brother or sub-region of Spain. To many times do you see “Spain & Portugal” grouped together even in companies I know love Portuguese wine.
There are some retailers and distributors who get it right … but in my humble opinion a significant change of gear is needed. There are lots of small contributing factors from growers, producers, port/table-wine politics & rules and market awareness that create today’s market conditions. I, with a passion, would like to see some of the creation of a market level of the Super Tuscans… with the dedicated and impassioned producer seeing a consumer being willing to pay the “right” price for their wine. Almost a situation where the consumer is hunting out remarkable wines rather than the farmer pushing out wine/fruit that they have idea of its ultimate end.
I hope my rant is taken in the right way. I am not criticising any particular element, but merely starring the opinion I have built by getting under the skin of this wonderful wine region. These views are totally my own and could I suppose be slightly subject to “updating”. I do however feel that something needs to change to enable the heart of Portuguese wine regions/industry to be appropriately appreciated by the consumer and market.
Lastly I would like to share a synergy that may or may not be relevant. The UK brewing industry went through a dire situation a few decades ago with the very large brand owners buying small/regional breweries only to close them down; as they only wanted there market share or product brand. Breweries were closing at a phenomenal rate. Today, led by some determined & individual producers together with a new consumer the country has breweries opening up at an amazing rate. A change in law, tax, costs and ultimately clever marketing has reignited that market. These craft beers are achieving high prices… representing the value of their proposition. My heart would be filled with joy to see that happen to the Douro.