SPOTLIGHT: A Port is not just for Christmas
By Chris Losh | 25 September 2007
The Port industry has managed to maintain volumes through a period of significant transition but growth remains hard to come by. Key to driving up sales, writes Chris Losh, will be establishing new consumption occasions and drinking styles for the Portuguese fortified wine, and convincing consumers that it can be enjoyed at any time of year, rather than simply at Christmas.
As crazy as it may sound, given that the sand is barely dry on summer holiday swimming costumes, the next few weeks herald the start of the run-up to the Christmas trading period, probably the most important three months of the year for many drinks categories, and certainly for Port.
Port remains a highly seasonal drink, particularly in the US and the UK. Indeed, in the UK, two-thirds of all sales occur in November and December. So any attempt to reinvigorate the category has to take that into account, and also if possible aim to reduce the drink's reliance on one period of the year.
Port sales are currently flat and have been since the start of the millennium. While this may not sound particularly encouraging, given that comparable fortified wines Sherry and vermouth are in steady decline, Port is, at least, bucking the trend.
To an extent, the last six years of flat-lining may well be partly attributable to the consolidation that has taken place within the industry, as the multinationals have divested themselves of their Port interests. The advantages of Port being a locally-run industry once again are obvious; the downside is several years of transition as companies bed down their new acquisitions, and smaller distribution networks and marketing budgets.
So all in all, no growth - but more crucially no decline - over the last seven turbulent years represents something of a triumph. What is far less clear, however, is how the category is going to push on from the period of change and begin growing again.
The most obvious challenge is at the volume end, where ruby, tawny and cheap own-label Ports have been struggling.
"There's a polarisation," says Adrian Bridge, managing director of the Fladgate Partnership. "At the top end there's growth - the consumers are there. But at the bottom end it's ugly. Those who are simply using price as their communication tool and cutting corners are losing out."
Port's problem at the moment is that the buyer's own brand (BOB) price battle is acute across three of its key high-volume, low-price markets, namely France, Belgium and the Netherlands, while the UK is engaged in what one shipper describes as a "turf war between Sainsbury's and Tesco, using wine as the weapon".
The result? Industry insiders estimate that the bottom 80% of the Port category is struggling, and the knock-on effects in the Douro have been significant. Grape prices have fallen and, according to one source, "half of the co-operatives in the valley are bankrupt". The situation has not, it must be said, been helped by the decision to increase the beneficio (the number of growing licences) by 25%. Increased supply and falling demand is a recipe for economic meltdown, and it's the cheaper producers and smaller growers who are feeling the pinch.
"It's highly probable that there will be half the number of co-ops in five years time,'" says George Sandeman of the eponymous Port house. "They'll either go out of business or consolidate to become viable."
Of course, if 80% of the Port category is doing poorly, and sales overall are flat, then 20% must be doing well, and certainly the 'special categories' section - late bottled vintage (LBV), aged tawny and vintage - has seen good growth. LBV, in particular, has proved successful at hooking in new consumers who want to buy quality year-defined port without spending big on vintage.
But LBV was created more than ten years ago and, in any case, it's a small category that simply makes traditional-style after-dinner Port consumption more affordable.
There are plenty in the Douro who argue that what the category needs now is a more radical shift; something that is going to speak to the lifestyle of the 21st rather than the 20th or even 19th century and get volumes moving again. "Port needs to reinvent itself," says Sandeman. "The main issue is recruiting new consumers and finding new consumption occasions."
Paul Symington, managing director of Symington Family Port Companies, agrees. "We have to find the right moment for Port to be served or we will die just like the traditional London clubs," he sighs.
This, though, is proving to be easier said than done. A lot of work, for instance, has already been put into trying to 'de-seasonalise' the drink and reduce its reliance on the Christmas period. But for all the time, money and marketing messages, the public are proving hard to convince.
Meanwhile, drink-driving laws and smoking bans have accelerated the drift away from after-dinner drinking, leaving Port to try and claim market share from other occasions in which it is less comfortable.
Markets like the US may hold the key to any reinvention, since they are more open to new ideas and less hung-up by the kind of accompanying traditions that hold back places like the UK or France.
Sandeman, for instance, has been working on getting younger consumers (20 to 25-year-olds) to drink young Ports chilled, over ice or even with 7-Up, while Warre's elegant Otima 10-Year-Old tawny (aimed at women, and promoted as a chilled aperitif wine) was one of the first genuine brand innovations in the category.
On the plus side, Port has strong brands, decent quality more or less across the spectrum and a flavour profile that tends to be readily appealing to many consumers. The problem lies in getting the uninitiated to reassess the drink and in encouraging established Port lovers to break out of the 'just for Christmas' mindset.
These are significant marketing challenges, even without the looming problems of overproduction and price-cutting that threaten to undermine more complex messages. Nonetheless, the shippers appear at least to have recognised the extent of the challenge before them and are prepared to face it head-on.
"It's a long hard road," says the head of one Port house. "But the fact that it's difficult doesn't mean you shouldn't take it. You can't just give up."
View next/previous articles
25 Sep 2007 -
Currently reading -
SPOTLIGHT: A Port is not just for Christmas
25 Sep 2007 -