Bridge predicts further consolidation for the Douro

Further consolidation within the Douro Valley’s Port industry is likely in the near future, according to Adrian Bridge, CEO of The Fladgate Partnership.

Blaming pressures both within the industry and external factors, Bridge also suggested that Portugal’s elections on 5 June would have important implications for the region’s producers.

“Expect to see further transactions in the next 18 to 24 months”, Bridge warned; although he added: “I don’t know who those buyers will be; most Port houses are financially quite stretched”.

With regard to potential acquisitions by his own company, Bridge remarked: “We’ll always look at anything that comes along”.

However, in addition to the €35 million that The Fladgate Partnership has already invested recently in The Yeatman Hotel, he outlined a current focus on rationalising two bottling lines and further work to “improve customer experiences”.

With the current pressure on margins, Bridge also argued the need to relieve the Port trade’s current regulatory burden.

“We don’t need as heavy a regulatory body as we have and many millions of euros are being spent on it that could be spent on brands”, he maintained, adding: “I don’t believe regulators are good at marketing – brand owners have much more at stake and are more careful at getting value for their money”.

In the run up to Portugal’s election at a time when the country faces enormous economic challenges, Bridge expressed hope for a change in government. The Socialist government collapsed at the end of March after Parliament rejected a proposed austerity package to slow the country’s deficit.

If re-elected, Bridge fears “the old government will continue to support a more socialist agenda, like saving the co-operatives”.

This lack of confidence follows the furious reaction by Paul Symington, chairman of Symington Family Estates, to the news that the Portuguese government had taken as much as €8m belonging to the Port and Douro Wine Institute in an effort to pay off its debts.

However, Bridge was hopeful that the Social Democrat opposition party would “be much more proactive in supporting brands and businesses”.

He continued: “They will recognise that we need to grow our economy and preferably do that through exports. We’re 85% export as a group, so we’re in the van guard of people trying to get us out of these problems”.

Optimistic that the Social Democrats will win “by a strong majority”, Bridge concluded: “Portugal has got to be radical”.

Gabriel Savage, 26.05.2011