Horse trading in licenses to produce Port has depressed the Douro table wine market and led to artificial price manipulation, claim a number of prominent winemakers and producers in the Northern Portuguese region.
The annually renewed license, or “benefício,” stipulates how much Port can be produced from each vineyard in the valley. The allocations are so sought-after that there are reports of growers brazenly trading their benefício for five-figure sums on the steps of the Casa do Douro building in Régua — a practice that wine and Port producer Dirk Niepoort likens to “dealing drugs in front of a police station.”
Such trade is legal when the grower sells their grapes to a Port producing house, along with the accompanying piece of paper. But in many cases, the Port houses are less interested in the grapes, and more keen to acquire the additional license to be able to optimize their production.
Utilizing a loophole, which Paul Symington of Symington Family Estates claims is rife within the industry, Port houses commonly reassign such licenses to a prized vineyard parcel with an insufficient benefício, and then effectively dump the bought-in grapes by transforming them into budget-priced Douro table wine.
Some allegedly take the illegal shortcut of just purchasing the “cartão,” literally, the piece of paper, without the grapes. Symington asserts that the major Port houses participate in this trade, apart from Symington themselves. “I was talking to a major Port house who told me they spend more than a million euros a year on buying licenses without grapes,” he says. The attraction is that there are no inconvenient parcels of substandard grapes to be disposed of. And the grower, having pocketed the money, effectively walks away with a free harvest.
What does this mean for everyday wine drinkers? Potentially, bargain basement Douro wine. The complex bureaucracy and licensing keep Port grape prices high. Growers typically receive around €1.20 per kilogram (62 cents per pound). In contrast, surplus grapes that are either not suitable for Port or don’t come with an attractive benefício are frequently sold for a pittance. Prices as low as 13 cents per pound have been mentioned.
Cheap grapes mean cheap wine and, as Symington explains, there are plenty of unscrupulous negociants happy to lap up the surplus yields and then sell the resulting Douro table wines at giveaway prices. In the U.S., DOC Douro wines from well-known names such as Casa Ferreirinha, Dow’s, Real Companhia Velha, and Symington abound in the under $15 price bracket.
Perhaps bargain priced wine doesn’t sound like a bad thing, but there are questions about the long-term viability of the situation. The valley isn’t an easy place to grow grapes. Most of its vineyards are ranged on vertiginous terraces along the banks of the Douro River, necessitating back-breaking labor to prune and harvest. Even away from the river, inclines remain steep and mechanization is often impossible.
As the Douro snakes its way east toward Spain, the terrain gradually flattens out into the dusty plateaus of the Douro Superior. But here, the hot dry climate imposes its own challenges, severely limiting vineyard yields. Limited quantities of grapes and the need for expensive manual labor should translate into high prices, as they do for the superlative wines from Priorat in Spain or Etna in Italy.
Pedro Silva Reis, winemaker and part of the family who own the historic Real Companhia Velha Port house, admits that low-priced Douro wine “is not sustainable if we want growers to continue to work their vineyards in the future.” However, Real Companhia Velha’s own entry level Douro brand Porca De Murça retails for around $15. Silva Reis says that the company has significantly increased the price of its entry-level Porca De Murça in the last few years, even though “it has lost us customers — people are very price-sensitive on entry-level brands like this,” where even a price increase under $1 can make a difference.
Winners and losers
The Instituto dos Vinhos do Douro e do Porto is responsible for issuing the benefício to the 21,000 or so registered growers in the valley. The quota is based on a complex matrix of vineyard grading and market demand. The challenge, as explained by Paul Symington is that “No quinta [estate] receives a 100% benefício, so as a Port company what do you do? Throw the rest of the grapes in the river?”
To make matters worse, while the vineyard surface in Douro remains stable, the benefício has decreased by around 25% during the 21st century, in line with stagnating world demand for Port. No wonder that major Port houses have been forced to find creative solutions.
Selling the cartão can be a lucrative pursuit for a grower who might otherwise receive pennies for their grapes. Figures between $34,000 and $45,000 are frequently mentioned. This trade in the benefício often takes place in the cafes close to the Casa do Douro in Régua, the administrative headquarters that regulates the Douro’s vineyard holdings.
The illicit trade in cartão without grapes is acknowledged by many in the industry, but few will talk openly about it. The IVDP’s director of audit and control services, Alfredo José Silva, said in a statement that “all the benefício trade that exists before the harvest is with grapes. The winegrowers receive the authorization to produce the benefício at the beginning of August and trade this authorization, on the assumption that they will deliver the grapes after the harvest.”
Be that as it may, many in the Port wine industry feel that the benefício effectively subsidizes the production of Douro wine. Adrian Bridge, CEO of the Fladgate Partnership which owns Port brands such as Taylors, Croft, and Fonseca, terms it “an indirect subsidy from Port.” His point is that growers can only afford to sell grapes below the cost of production because they receive a premium for their Port grapes.
Symington highlights a further issue when unscrupulous growers take the money and run. He mentions a neighbor who he says has stopped tending the vines or even harvesting the grapes because selling the cartão on its own is so lucrative. Symington’s vineyard team must now battle mildew and other diseases which run rampant through his neighbor’s untended vines and also risk affecting his own.
Pedro Silva Reis, winemaker and part of the family who own the historic Real Companhia Velha Port house, admits that low-priced Douro wine “is not sustainable, if we want growers to continue to work their vineyards in the future.”
A path out
Niepoort defends the benefício. “It’s not a perfect system,” he says, “but without it, the price of Port will go down and the price of Douro wine will not increase.” Niepoort says that the bigger problem is the major Port houses paying too little for grapes and selling their output too cheaply. “Those that pay the least are the ones who always complain,” he adds.
Niepoort is a boutique producer of both Port and table wines which are exported worldwide, with a policy of paying its growers a much higher price than the market norm. He suggests that Port is still undervalued, saying “it needs to become more snobbish.” Niepoort also maintains that the solution to the devaluing of Douro wine is “patience and hard work. We need to bring people to the Douro so they understand how hard the conditions are. We need quality tourism, not just quantity tourism.”
Silva Reis advocates a more granular appellation system, which would add sub-regional classifications recognizing the best sites for Douro wine, and thus help push up grape prices. Currently, the only designations permitted on the label for DOC Douro wines are the three major subdivisions of the valley: Baixo Corgo, Cima Corgo, and Douro Superior. With 104,000 acres of vineyards spread across a multitude of climate zones and altitudes, Silva Reis says this does not go nearly far enough.
When it comes to institutional reform of the benefício, stasis continues to prevail. There are just too many vested interests. The major Port houses want to produce more Port from their best vineyards, but the négociants benefiting from cheap grape prices for Douro wine are also a force to be reckoned with. And no one wants the price of Port to take a tumble.
Change, as both Niepoort and Silva Reis suggest, will only come about as a result of individual producers paying fair prices and curbing a race to the bottom. There is no doubt that the stunning Douro Valley deserves to be as revered as other mountainous wine regions worldwide, not just on aesthetic grounds but also on the quality of its wines.
3 quality DOC Douro wines to try:
From the same winemaking team who produce the stellar Barca Velha, one of Portugal’s icon red wines, comes this ripe, juicy mid-priced wine which gives a great impression of the Douro’s heat and sun. The blend focuses on four of the valley’s top-quality red varieties: Tinta Roriz, Touriga Franca, Touriga Nacional, and Tinta Barroca.
An overperforming white blend from winemaker Rita Marques, whose family’s estate is situated in a cooler part of the Douro, with vineyards at altitudes of around 1,300 feet. This partly barrique-aged white manages to combine fresh, floral fruit notes with plenty of texture and power. It’s a wine that deserves a year or two of age, making the 2018 vintage a great choice now.
At a fraction of the price of its big brother, Quinta do Vale Meao Tinto, Meandro is the better choice for earlier drinking, and for fans of a less heavily oaked and more elegant style. The fruit is silky and multi-layered, and gives a wonderful expression of the Douro’s slate and schist soils with hints of graphite. This is an excellent price for the quality on offer.