What’s the Big Deal about Supermarket Wine Sales in British Columbia?

vqa-surrey-save-on-foodsWhat’s the big deal about British Columbia supermarket wine sales? It is a very big deal in some circles because the stakes are higher than they might seem. Here’s my analysis of the situation.

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Supermarkets are an important wine sales vector in the United Kingdom and most but not all U.S. states, so many consumers take it for granted that they can walk into their  local Safeway, Kroger-affiliate, Whole Foods or Trader Joe’s store and be greeted by a world of wine choices.

Oh, Canada!

Things are a bit different in Canada. Provincial alcoholic beverage control regimes  apply somewhat in the spirit of Sweden’s Systembolaget monopoly, which was at one time the world’s largest wine retailer — a title that I think passed to the Ontario Liquor Control Board store system before being taken up by Tesco, the British supermarket giant.

British Columbia is moving towards expanded supermarket wine sales after some preliminary trials. The process is a bit awkward because there are many stakeholders with vested interests in the old control system of wine sales. Moving to supermarket sales may increase total wine sales, but the “trade creation” will be accompanied by a certain amount of  “trade diversion” from other retailers, who are understandably unhappy. There is lots of push back as you would expect.

The political economy of B.C. supermarket wine sales is both domestic (more supermarket sales at the expense of existing wine sales license holders) and also international. Incredibly, the B.C. regulations exclude non-B.C. wines from regular supermarket shelves (imported wine may theoretically be sold in a separate and costly and somewhat inconvenient “store within a store”). This has produced an international dust up as the United States has brought charges at the World Trade Organization over the discriminatory practice, an action that the European Union and New Zealand have also supported. The list of wine exporting countries lined up against the B.C. supermarket regime continues to grow. Argentina recently joined the US in this action and Australia quickly followed suit..

The Weak and the Strong

What is the problem? Can’t British Columbia to what it wants regarding wine retail regulations? Maybe not, because Canada (along with most of the world’s nations) is a member of the World Trade Organization (WTO) and is bound by its rules.

The World Trade Organization is actually a fairly weak international institution. It has spent the last couple of decades trying and failing to reach a global agreement on trade liberalization. But the WTO (through its predecessor, the General Agreement on Tariffs and Trade or GATT) was founded on two very strong principles: Most-favored-nation (MFN) treatment and non-discrimination.

Most-favored nation treatment prohibits a country from discriminating at the border against the goods of one WTO-member trading partner relative to others in terms of tariffs and so forth. Every country gets the deal that the most-favored country gets. You cannot single out one country for better treatment or — the real fear — impose sanctions against another except in well-defined circumstances. This was one reason why China worked so hard to get into the WTO — to limit the threat of a trade war against its products.

The MFN rule has been diluted somewhat in recent years as bi-lateral and multi-lateral preferential trade agreements like NAFTA have become more important. (The rise of preferential agreements is often seen as a reaction to the inability of the WTO to produce agreements on broader, global trade regimes) These agreements allow a certain amount of systematic positive discrimination in favor of fellow trade block members. The MFN rule still controls negative “trade war” discrimination.

The second rule, the non-discrimination principle, holds that once a product enters a country, paying whatever legal tariffs are levied at the border, it cannot suffer internal discrimination because of its import status. It must be treated from a regulatory standpoint just as domestic products are treated. That’s a powerful principle.

I am an economist, not a lawyer, but it seems to be that allowing domestic B.C. wines to be sold in supermarkets while prevented equal access to legally-imported California, France, New Zealand or Australia wines would seem to be a violation of the non-discrimination principle and actionable under WTO rules.

Principle and Interest

I was aware of some discussion of possible US action through the WTO as the BC supermarket protocols were being developed, but the US threat was taken lightly by some north of the border. The BC market is relatively small (we are not talking Ontario here) and there are substantial costs to initiating a WTO action, which can take years to resolve and burn up a lot of attorney fees in the process. Not worth the trouble! So some people in BC were surprised when the US finally acted.

But I was not surprised. While BC market losses might be relatively small for international wines, they establish a precedent that could be important if the local-product-only supermarket sales idea spreads — to Ontario, for example. And there might be other discriminatory practices that apply in Canada and its provinces that need to be studied — the supermarket rule might have been the tipping point to take action.

Finally, there is a more global concern. We seem to be living through a period when protectionist rhetoric is in the air and actions that challenge or violate the rules of fair trade are seriously proposed.

In this environment, it is in the interest of global industries like wine to resist the protectionist tide wherever possible on the grounds of both principle and interest (self-interest, that is).

South Africa Wine Industry: Serious Problems, Lofty Goals, Progress Update

rsa1I’ve been to South African twice in recent years and each visit has been eye-opening. The quality and value that the best wines provide is really world class. Wine sales have struggled to gain traction in the crowded, fragmented U.S. market, but I believe that hard work plus high quality equals a bright future for South African wines.

How is the wine industry doing in South Africa? I tune in about this time each year to hear what is being said at the Nedbank  VinPro Information Day meeting, which is the RSA equivalent of the “State of the Industry” session that I chair at our Unified Wine and Grape Symposium.

This year’s conference included an analysis of vineyard trends, a roundtable discussion by industry leaders and a enlightening long-term perspective on RSA wine industry dynamics by my wine economist colleague from the University of Stellenbosch, Nick Vink.

I was especially interested in Rico Basson’s presentation on South Africa’s progress toward the Wine Industry Strategic Exercise (WISE) goals for 2025 because it seems to me that it represents an unusually clear set of objective and  analysis. Each of the eight goals was given a green, yellow or red light rating. The discussion below is based on Basson’s presentation as reported by Jana Loots.

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Making wine in South Africa is much easier than making a living making wine.I know from my visits to RSA that while the wine can be great, the wine industry’s profitability is a serious problem. Only producers that can sustain very high yields can consistently profit from bulk wine sales. And bottled wine producers face great difficulties getting the price premium that their high quality deserves.

The WISE goal is to increase industry average profitability to a sustainable 5% real rate of return on investment and — red light! — there is a long way to go on this front. The 2016 return was less than 1%, which is even lower than 2015. VinPro data indicate that “only 13% of the 3 300 producers farm at sustainable income levels, 44% are operating at break-even and 40% are making a loss.” Yikes!

There are many regions in other parts of the world where profitability is as problematic as in South Africa. I give the RSA industry leaders credit for owning their problem and working to resolve it. Objective analysis and serious discussion, although not always easy or popular, are the necessary foundation for effective action.

Not all the signs are “red light.” There is some good news on the inventory front, for example. The overall RSA wine sector swung from surplus in 2015 to tight conditions in 2016. Elusive equilibrium is the 2025 target. It is obviously difficult to raise price or even sustain it in a surplus market, so this progress is significant.

But it will always be difficult to balance the market both because wine is an agricultural product, subject to natural output variations, and also because of market cycles. Bulk wine equilibrium is especially difficult to achieve because of large yearly swings in global production.

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The local RSA wine market provides a second optimistic green light. The domestic wine market grew more than 14% by volume over two years ending December 2016. That is very good news, but 80% of local wines are sold for less than 26 Rand (about $2) per liter.Less than 5% of wine is sold are more than 65 Rand (about $5) per liter. Early days, but moving in the right direction. Low domestic prices put added pressure on export markets for profitability.

The fourth goal is to transform the industry by increasing black ownership of wine businesses to 20% by 2025. That is a worthy and ambitious goal and certainly in line with the priorities of the South African producers Sue and I met.  The 2016 ownership level is only 2% but Basson reported that progress is being made to lay the institutional foundations for transformation. Check back in future years to see how this develops.

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Bulk versus Bottled: there is always tension between these two parts of the wine industry in any country. The WISE goals envision moving the industry from 60/40 bulk to 60/40 packaged goods. The rating is yellow here — cautious optimism due to higher export values and a new EU wine export agreement.Much remains to be done, however, both to develop new markets (see below) and to improve margins on export sales.

I think wine tourism is a key to South Africa’s future because the wine tourism opportunities are fantastic and visitors are often your best brand ambassadors. There is good progress to report in this area for many reasons. When I asked about the biggest barrier to wine tourism on my first visit to RSA I was told that there needed to be more direct flights to Cape Town. International landings increased by 22% last year. Green light.

rsa4Basson’s report ends on two positive notes. Good progress has been made in expanding both export volumes and values in the target markets of the U.S., China, and Africa (Africa represents a very solid wine opportunity today and in the future).

There has also been success in getting more producers to gain ethical accreditation for their wines. The goal of 100% ethical certification by 2025 is ambitious, but it would be both a great achievement  in itself and could be an important distinguishing element of “Brand South Africa.”

So, is South Africa’s glass half full or half empty?  Both, I think. It is critical to make progress on profitability because economic sustainability is a necessary condition for success in other areas. It is going to be difficult to achieve all these goals in less than a decade, but nothing happens unless you try. And keeping a public scorecard as Rico Basson has done here is one way to keep the RSA industry both honest and focused.

Beyond Malbec: Looking for Signs of an Argentina Wine Export Revival

catenaAbout this time last year I wrote a pair of columns about prospects for a revival of growth in Argentina wine exports to the United States. Argentina was once the fastest growing imported red wine source (New Zealand has that distinction for white wines), but sales plateaued for a variety of reasons that I analyzed.

Feelin’ Groovy?

Can Argentina get its groove back? My 2016 columns were optimistic, focusing on changing politics and economics in Argentina, but, I warned, the U.S. market has changed, too, and Argentina will need to bring different products and strategies to the game to be successful.

Argentina cannot hope to simply ride the inexpensive Malbec “signature varietal” horse to renewed export success. The U.S. market is now filled with easy-drinking  “Red Blend” wines that compete in the space that Malbec once dominated.

Argentina needs to think of itself “like a normal country,” I said, which in this case means emphasizing  wines at higher price points where the market growth is today, focusing on terroir and other elements of product differentiation and moving beyond Malbec without in any way abandoning that grape variety.

Early Evidence?

The December 2016 issue of Market Watch magazine includes an article by Angel Antin titled “Argentina Comes of Age” that provides a cautiously optimistic update analysis. No significant change in direction is shown in the data for 2010 – 2015, but lots of anecdotal evidence of new ideas and new directions is presented.

Data for Argentina’s wine exports in the first nine months of 2016 provided by Wine by Numbers shows stable total exports over this period, with lower U.S. and Canada shipments offset by rising sales to the U.K. market.

The recent success in the U.K. market is obviously welcome for Argentina wine producers, but there is great uncertainly about the future due to Brexit. It would be better to see a broader pattern of export growth. On the whole, it is still too soon to draw any firm conclusions  about the impact of the Macri policies on wine exports. Stay tuned.

Redefining Argentina Wine

A personal note: my optimism was encouraged recently when I surveyed the “South America” shelf of the neighborhood Metropolitan Market and found just the sort of wine that I called for in my analysis last year. It was a Catena Appellation San Carlos Cabernet Franc 2014 selling in the $20-$25 price range.

This wine is an example of how Argentina can add layers to its identity to expand market appeal. It is Cabernet France not Malbec and the packaging stresses terroir. The wine is from a single high-mountain vineyard (El Cepillo is at 3900 feet) in the San Carlos region. The regional element is highlighted by the label’s antique map (although the image is of Argentina generally and not the specific San Juan area).

The idea is clearly to differentiate this wine in ways that appeal to wine drinkers who are seeking both authenticity and a different experience. The Cab Franc is part of an appellation series of Catena wines that also features two region-specific Malbecs, a Cabernet Sauvignon and a Chardonnay.

Catena is certainly not alone in thinking about their wines and marketing them in this way. (We recently enjoyed a less expensive but well made and nicely packaged Santa Julia Reserva “Mountain Blend” Malbec-Cab Franc from the Uco Valley.) That’s a good thing because no single wine or producer is going to redefine and expand the market. The potential is certainly there. Hopefully we will see positive results in the data before too long.

Unravelling Global Politics & the Vineyard Mechanization Imperative

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Vineyard mechanization was a featured topic at the 2017 Unified Wine & Grape Symposium in Sacramento this year and it was a very timely choice. In case you haven’t noticed, the political framework of globalization is unraveling just now, with strong push-back against international movements of goods, services, capital, people and even information.

Restrictions on trade and immigration are much in the news in the U.S, U.K., parts of Europe, Australia and other regions. Many industries are impacted, including especially agriculture. Closing down the flow of workers means fewer resources, higher costs and greater risk.

Strategic Response?

What’s the best business strategy in the face of anti-globalization policies like immigration restrictions? The right response varies by time, place and industry. Tech giant Microsoft, for example, has responded to international worker restrictions in a number of ways including setting up a research center  in Vancouver BC in order to have freer access to the international talent it needs to stay competitive. Canada remains proud of its identity as a nation of immigrants and that’s a selling point in the technology business.

Sometimes you can shift the jobs to where the workers are as in the Microsoft case, but this harder when it comes to agriculture. As farming labor becomes both scarcer in the U.S. and less secure in terms of availability, there is a natural movement towards alternatives, including mechanization as well as shifting to foreign-sourced product.

Look, Ma. No Hands!

We usually think of mechanization as a response to higher labor costs, but in this uncertain environment the imperative is also driven by concerns about availability and security.The Unified Symposium program combined with the massive trade show provided an opportunity to get up to speed on mechanization by attending sessions and touring the show floor asking questions.

For example, Gallo’s Keith Striegler moderated a session titled “Vineyard Mechanization: Moving to the ‘No Touch’ Vineyard” that surveyed state-of-the-art practices that go beyond mechanical harvesting. As the session program explains,

The labor situation in vineyards is reaching a critical stage. Growers are faced with reduced availability of labor while regulations and costs are increasing. The economic viability of sectors of the grape industry has become more challenging. Innovative growers and manufacturers are developing equipment and cultural practices to increase efficiency while maintaining or improving yield and fruit/wine composition. An important component of these efforts is to manage as many operations as possible in mature vineyards using equipment to reduce the number of “Touches” required by labor.

In other sessions Francisco Araujo moderated a Spanish language program  on advanced technology in winegrowing and wine making and Steve Mcintyre and Cecilia Aguero led  technical exhibit floor tours to help participants connect theory and practice.

The French Connection

Vineyard mechanization technology has improved steadily over the years from the early make-shift grape-sucking contraptions to today’s efficient machines. Most people in the industry recognize mechanization as a choice involving trade-offs and labor issues are increasingly pushing producers towards the machine.

My consumer friends sometimes seem to be shocked with the idea of machine harvest comes up — I guess it doesn’t align with their image of the noble vigneron carefully tending his row of grapes. Machines — it must be a New World thing, they tell me. They would never do it in France!

That comment is a bit ironic. A 2013 Economist article (“Bacchus to the Future“) about mechanization in French vineyards noted that …

France is the undisputed global leader in wine technology … the country has a greater demand for mechanisation than America because its agricultural wages are higher. And France’s reputation means that its elite winemakers, unlike those in other countries, do not have to worry about criticism from elite French winemakers.

Some of the cutting edge technology Sue and I saw at the trade show was made by European manufacturers, which makes sense since France, Italy and Spain together produce more than half the world’s wine (and so are a big equipment market) and, as we just saw, economic incentives to mechanize there can be strong. It would be ironic if “America First” protectionist migration policies pushed US winegrowers to purchase more foreign equipment!

Lodi Night Harvest

Sue and I had an opportunity to see the big machines at work back in 2015 when Fred and Joey Franzia invited us to observe a night harvest at one of Bronco’s Lodi vineyards. Sue took the photo at the top of this column on that visit.

Cold, dark and kinda loud — it wasn’t exactly a romantic “Sideways” vineyard harvest scene. But it sure was effective.We were impressed with the quality of the Cabernet Sauvignon grapes that were harvested.

You can bet that the grapes that go into inexpensive wines like Barefoot and Two Buck Chuck are machine harvested and mechanization employed in other vineyard activities, too. But the technology has improved to the extent that it is used to for wines that sell for a good deal more.

Invasion of the Vineyard Machines?

Are the machines coming to a vineyard near  you? No, they are probably  already there and, as vineyards — even those in iconic regions — are replanted or renewed, you can be sure that one factor that will be considered is the potential to maximize technological compatibility.

Hand work in the vineyards is not going to disappear and many wineries will continue to rely upon  their teams of highly-skilled vineyard workers for years to come. But what we are seeing is that the business model associated with vineyard labor is changing rapidly. Technology, economics and anti-globalization politics are all part of the dynamic.

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It was great to see everyone at the Unified Symposium. Great sessions and an incredible trade show plus all the top people in U.S. wine. Here is a photo of me speaking at the State of the Industry session.

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Brexit Means Brexit (But What Does It Mean for Global Wine Markets?)

“Brexit means Brexit,” according to British Prime Minister Theresa May and a host of other officials. If all goes according to plan PM May and the United Kingdom will formally begin the process of exiting the European Union in March 2017 when Article 50 of the Lisbon Treaty is invoked, starting a possibly irreversible two-year ejection-seat countdown.

Know What I Know?

But Brexit isn’t as simple as walking out the door and will require detailed negotiations on dozen of issues. No one knows what the terms of the exit agreement will be, so no one really knows what Brexit really means. Brexit means Brexit? Nonsense.

Brexit is best understood at this moment as a “known unknown” in Donald Rumsfeld’s famous taxonomy (see below) and not a “known known” as some people pretend.

Britain is sharply divided about what Brexit negotiations should seek to accomplish and in any case each of the 27 remaining members of the EU (and some regional bodies, too) will have to approve the final deal. Talk about herding cats!  Who knows what the final agreement will look like?

Britain’s Central Place in Wine
How concerned should people outside the UK be about Brexit? Tbottledimporthe conventional wisdom is that leaving the European Union will have very substantial economic effects for the UK economy, smaller impacts on the remaining EU nations and smaller disturbances still in the rest of the world.

While this may be true in general, it is clear that there will be more widespread disruptions in several particular sectors: possibly for automobile manufacturing, for example, very probably for finance, and almost certainly for wine.

sparklingimportBritain is not yet a very important wine-producing nation (climate change might eventually change that), but it a key consumer of wine. Data from the UIV’s  Wine by Numbers data project for the first nine months of 2016 show the UK’s central place in global wine markets.

The UK is #2 behind the US (and ahead of China) in terms of the value of bottled wine imports, for example.It is also #2 behind the U.S. in sparking wine imports and in second place (after Germany this time) in bulk wine imports, all rankings in value not volume terms.

This makes the UK market the #1 target for many international wine companies — even more important that the larger US market because of the US market’s complex and fragmented regulatory structures. Smaller wine exporters may find that they can get access to the entire UK market for the cost of entry into a couple of US states. Then, of course, you have to sell the wine, which is always the hardest part.bulkiimport

Plunging Pound and Rubik Cube

Any significant change in UK wine imports (or imports by any of the largest markets) has a disruptive impact on the global market for wine because, as I have written before, the global market is like a giant Rubik’s Cube. When one national market moves out of equilibrium it starts a process of changing relative prices and shifting sales that cascades through various interconnected markets until a new general equilibrium is reached.

newukbottledimportWine by Numbers data suggest that the largest direct effects would be concentrated in the countries listed in the table above that are the leading sources of UK imports: France, Italy,  Spain, Chile, New Zealand. (The table shows bottled wine imports only — bulk and sparkling imports have different distributions.) These countries are where the Rubik twists happen first.
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How and why will Brexit affect British wine imports? Well, as I said, Brexit hasn’t happened yet, but the initial impact of the Brexit vote was to cause the British Pound (GBP) to fall in value on foreign currency markets as the graph above, which shows the GBP versus USD, suggests.

The GBP’s plunge makes all imports more expensive to British buyers and inflation rates have increased in the UK as a result. The degree of exchange rate “pass through” into retail prices and the timing of the increases is different in each market. UK wine prices are on the rise.

The First Shoe Has Dropped

UK wine buyers are famously price sensitive, so wine sales will fall, setting the global market Rubik Cube spinning as sellers who are squeezed out of the changing UK market look for margins and opportunities elsewhere. Falling sales in London mean that more attention is focused on the U.S., Canada, and China sales, for example.

The exchange rate effect is only the first in a series of ways that Brexit will impact global markets. The other effects depend upon what form Brexit takes, making the “Brexit means Brexit” tautology doubly annoyingly. What are the possibilities? Come back next week for analysis.

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Here is the famous “known unknown” comment in case you  missed it.

 

What Happened to 2016 Wine Market Predictions? (and How to Prepare for 2017)

As I was putting together my notes for this year’s “State of the Industry” panel at the Unified Wine & Grape Symposium in Sacramento later this month I could not resist looking back at what I had to say at last year’s conference.dollar

2016 will be a crazy year, I told my audience. Anything can happen (and it did!). Then I suggested four trends to watch. Not predictions, exactly, but pretty close. Let’s look back and see what I said and how things turned out.

Strong Dollar Double Trouble

The big news on exchange rates in 2016 looked to be what I called the Euro-Dollar twist. European banks were set to push key interest rates to zero and below while here in the U.S. the Federal Reserve had pledged to raise interest rates. That twist in interest rates, I noted, should cause a big increase in the dollar’s value, which will encourage wine imports and make U.S. exports more difficult to sell.

The dollar’s value increased all right, creating a global dilemma because so much trade and debt is denominated in U.S. currency. Most international oil transactions are denominated in dollars, for example, so the rise in the dollar’s value on top of the rise in oil’s price is  double trouble for oil-importing countries.

The dollar reached its highest level in 14 years at the end of 2016 with room to rise some more in 2017 although, as I said, anything can happen — expect lots of volatility!

The dollar’s unusual strength reminds me a little of 1971 when U.S. Treasury Secretary John Connally told his G-10 counterparts that the over-valued dollar is “our currency, but it’s your problem.”  Today it is the U.S. wine industry’s problem, too, because of the way it squeezes producers here by discouraging exports and making imports cheaper.

The Fed and the European banks were part of the reason for dollar’s surge, but the British vote to leave the European Union (Brexit) and Donald Trump’s election to the U.S. presidency, along with the collapse of the Renzi  government in Italy after a failed reform referendum, all contributed “big league” to the dollar boom. Brexit, Trump, and Renzi — I didn’t see that trifecta coming back in January 2016. Did you?china

China Syndrome?

Look out for China, I suggested last year. The economy is fragile and slowing and this could have major indirect impacts on the U.S. wine market, especially through exchange rate shifts that affect third-party countries such as Chile and Australia.

I was right about the Chinese economy and things look even more uncertain for 2017 because it seems possible that China’s credit bubble might spring a leak. And I was right that China could have a major impact on wine, but not the way I speculated.

The biggest international impact, as a recent Rabobank report documents, has been that China imports of wine increased significantly  (and not just the cheap bulk blending wines and French first growths as in some years past).

Although it is still early days, China’s bottled wine import market is making strides, developing retail sales momentum, and attracting new buyers. China passed the U.S. in 2016 to become Australia’s largest wine export market. Amazing.

Argentina Renaissance?

Keep your eye on Argentina, I suggested last year. The Argentina wine export boom of a few years ago has plateaued because of economic policies that created inflation at home but propped up the exchange rate and discouraged export industries. The new Macri government aims to reverse these policies, which will eventually (but not necessarily immediately) make Argentina wine more competitive on export markets.

The economic reforms have gone through, creating much short-term hardship but setting the stage for renewed growth. I still think the wine industry will return to good health, but 2016 was a difficult year both because economic change takes time and because of a poor grape harvest that has increased cost and limited winemaker options.. Keep watching Argentina — maybe 2017 will be the breakout year.

Keep Out!

Finally, I was concerned about a rise in protectionist trade policies that I thought might appear. My logic was that the strong dollar would put pressure on many economies, especially developing countries, and they would raise protectionist barriers, which would affect trade in wine and many other products.

I was right about the protectionism, but wrong that developing countries would be the main problem. 2016 was a year when economic nationalism seemed to catch fire in Europe (Britain, France, Italy, Germany) and here in the United States, too.

Protectionist concerns are widespread and the prospects for new trade agreements have disappeared. 2017 will be the year when we see how far protectionist policies are pushed.

How to Prepare for the Future?

Prediction is difficult — especially about the future. So how did I do? Well, I think my instincts were right — I was looking for trouble in the right places — but my logic broke down in some cases as I (we?) were blindsided by unexpected events.

This reminds me of Boulding’s Law, which is named for the economist Kenneth Boulding, who once studied the “history of the future.” He looked back what people in the past had to say about the future. When the future finally rolled around, he said, it was seldom what the experts forecast. Surprise!

The best way to prepare for the future, he concluded, is to get ready to be surprised! Happy 2017!

Old Wine in New Bottles? What’s New for Porto and the Douro Wines

sandemanAs I noted in last week’s column, the Association of Port Wine Companies roadshow passed through Seattle recently and Sue and I were fortunate to be invited to attend the Porto and Douro Wines Tasting.

Expect the Unexpected

Events like this are always appealing because they represent a chance to see old friends and taste familiar wines. But the real attraction is the opportunity to find something new. Portuguese wines never disappoint!

In fact, when I think about it, all my recent experiences with wines from Portugal have included surprises, some of which I have written about here. Portuguese white wines, for example, were a surprising discovery during our visit to the Douro and Alentejo regions earlier this year.

Here in the U.S. consumers think Portuguese whites in terms of Vinho Verde and while these wines can be delightful, we found a world of white blends made using indigenous grapes that really took our breath away. Expect the unexpected, that’s Portuguese wine, and that’s how we prepared for the tasting.

Sandeman: Old Wine in New Bottles

The first big surprise was at the Sogrape table, where George Sandeman was pouring 10, 20, 30 and 40-year old Sandeman Tawny Port (as well as other nice Ports and great red and white Douro wines). The wines weren’t the surprise — it was the bottle.

The traditional Port wine bottle is black, but these bottles were clear and let the color of the wine shine come through. The idea, according to an article in Drinks Business, is to change the perception of these wines, especially in on-trade.

Port is often stuck in a rut as a wine that you drink at the end of a meal and at Christmas, but the wines are really much more versatile than that. These clear bottles (with their elegant Vinilok closures) invite consumers and bartenders to also think of Port as a brown spirit that has many uses, including cocktails and aperitifs.

The new design does change the look of Sandeman Tawny Port and the image, too. I wonder if it will have its desired effect or if the potential consumer of a 40-year old wine, for example, might not really prefer the traditional package?sandeman-logo_use-small

It would be a mistake to dismiss this redesign too quickly. Image isn’t everything, but it is something and if you want people to think about Port differently it doesn’t hurt to change its look.

Remember that the great success of the Sandeman wine brand is due both to the quality of the Port and Sherry wines and also to the effectiveness of its advertising. “The Don” (with the Spanish hat and Portuguese student cape) is one of the most powerful images in wine and maybe in advertising generally. New bottles for old wine? I will be interested to see what happens.dalva1971

Old Wine in Old Bottles

Another surprise was in store as we looked for new types of Port to taste. White Port was one of our discoveries this year and we spent the summer introducing our friends to White Port spritz (equal parts dry white Port and tonic), which is a great alternative to the ubiquitous Aperol spritz.

I noticed that C.Da Silva was pouring older white Ports and I asked to try a bit, but nearly changed my mind when I saw the deep color of the 1971 vintage wine. It looked like a Tawny Port to me. But these old whites are aged in barrel like Tawnies and take on the dark color.

We tasted through the decades, back to that 1971, and the wines were just fascinating — familiar and different at the same time. Memorable!thumb_kopke-10-year-white_thumbnail0

We moved on to the Sogevinus table, where we tasted Kopke’s line of White Ports with 10, 20, 30 and 40 years of age. These old wines were packed in the traditional stenciled bottles. Old wine in old bottles. I found them really interesting, although Sue was drawn more to other styles, especially the Vintage and LBV Port wines.

We sat at with the group from the Rozés Port house at dinner and enjoyed their fine Terras do Grifo white and red Douro wines, which we had not had an opportunity to try before.

Portuguese Wines on the Rise

Portugal may be a small country, as we were often told, but it is big in terms of the diversity of its wines. Always something new and exciting to discover. And it is clear that U.S. consumers are discovering them. Port wine sales are on the rise, due in part to more creative marketing efforts that, as Paul Symington notes, are necessary to bring Port out of the “dinosaur age” in terms of the who, what, when, where and how of its consumption.

Portuguese wine sales in general are booming. The most recent Nielsen data (published in the December 2016 Wine Business Monthly) indicate that Portuguese wines sales have increased by 13.8 percent  in the most recent year. That growth rate ranks behind only France (15.7%) and New Zealand (15.5%) among imports, although Portugal starts from a much lower base. Outstanding!

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Thanks to the Association of Port Wine Companies (AEVP) for inviting us to the Seattle tasting and dinner. Best wishes for continued success!