A hard blow for the Douro wine region, which urgently needs reforms.

(photo: LUSA/PEDRO SARMENTO COSTA)

The Douro region is classified as a UNESCO World Heritage site, and its vineyards are characterized by steep slopes and difficult-to-work plots. Production costs are high, among the highest in the world, with low yields. Add to this the global dissatisfaction with sweet and fortified wines: in the case of Port, sales have fallen by almost 25% in volume over the last twenty years.

Customer dissatisfaction, inadequate system

In an open letter published during the summer, entitled “The Douro deserves better” , the biggest names in the sector – Symington, Graham, Niepoort, Ferreira and other Braga – sounded the alarm. “ Despite these profound changes, the regulatory framework has remained essentially unchanged for almost 100 years. The current system promotes devastating distortions that impact not only the price of grapes, but also the socio-economic sustainability of winegrowers, companies and the future of their wines in international markets .”

In this particular case, there is a historical "benefit" system that, since the 1930s, has fixed the quantity of grapes destined for the production of Port wine, where the vineyard is structured around small producers whose profitability is very precarious.

The major problem with this benefit system is that the vast majority of Douro winegrowers have only a small portion of their land included in this system, with 80% (on average) of their production outside of it. This means the difference between the winegrower receiving around 1000 Euros (for grapes that are parceled within this system) and 300/400 euros (for those that are not) per pipe (which is equivalent to 750 kg).

The establishment of the Pombaline landmarks during the time of the Marquis of Pombal in the 18th century determined the delimitation of the areas covered by this system, based on a letter classification (ranging from A to F). At that time, the most highly valued lands were those near the Douro River, that is, vineyards at lower altitudes, with schistous soils and a plurality of grape varieties (all varieties mixed together). With the Vitis projects, which began to emerge in the 1990s, a large part of the small plots existing in the Douro were acquired by large estates (the main families and producers of Port wine in the Douro), who thus converted these vineyards, with a view to homogenizing the existing grape varieties and ensuring greater capacity for work through mechanization.

This movement led to small producers, who had been preserving their small plots, losing some of their profit, and consequently, this profit was directed to these large companies, since the productivity factor also has weight in the profit classification system.

As a result, small producers lost financial capacity, as they had fewer grapes eligible for the benefit, coupled with ever-increasing production costs (phytopharmaceutical products and labor), leading, in some cases, to abandoning the activity.

Furthermore, considering current climate change, it has been observed that, over time, the vineyards with the greatest potential for wine production (i.e., those covered by the benefit scheme) have become increasingly less plentiful. This is mainly because, due to their altitude and proximity to the river, they produce fewer and fewer grapes, which are more affected by the heat of high temperatures, and with berries that have a lower malic acid content, essential for malolactic fermentation, are more tannic, have a higher alcohol content, and lower acidity. At the same time, there is a growing tendency on the part of the end wine consumer to consume less tannic, structured wines with lower alcohol content, which is inversely proportional to the best vineyards covered by the benefit scheme.

The benefit system, after 90 years of existence, needs restructuring not only because of climate change, where today vineyards at higher altitudes produce better quality wines, but also because of viticultural practices themselves, with increasingly prepared winegrowers, machinery and equipment that allow for better harvesting, greater knowledge of phytosanitary diseases, among other reasons.

The losses for winegrowers are evident, leading to the abandonment of vineyards and the depopulation of the region. Added to all this, there is an even bigger problem: there is increasingly less labor available for grape production, "forcing" winegrowers to do everything themselves at an advanced age.

We are now witnessing some producers who buy grapes "sending information" to their winegrowers that they will not keep a considerable portion of their grapes , suggesting that they have to leave them hanging on the vines.

In the case of placing their grapes in cooperative wineries, there is the "assurance" that all the grapes will be accepted, according to the specifications and legal statutes. However, let's consider another detail:

- Most wineries don't disclose the price they will pay for the grapes. Only at the end of the harvest, and after some time, will the winegrower know if it was worthwhile to harvest their sedentary grapes, as they risk having to pay to take them away. Not only did they not make a profit, but they also had to pay to transport them.

On the other hand, wineries pay 2/3 years after the harvest, with a slight difference: inflation rates are not considered, which means that if the winery pays me €150 per barrel of grapes in two years, in 2026 I will have less purchasing power to buy my fertilizers, sulfates, and fuel than I do today. If, on the other hand, I agree with a wine sales company to pay over two years, I guarantee they will charge me for inflation and probably interest.

15 million euros for distilling the crisis in Portuguese wines.

The European Commission has announced it will mobilize €15 million from its agricultural reserves to support Portuguese wine producers who, according to the Portuguese Ministry of Agriculture, are facing "serious market disruptions."

The combination of several factors led the Portuguese authorities to request, for the second consecutive year, crisis distillation assistance. In 2023, Portugal benefited from €20 million in this regard, and this year, as the situation has not improved due to a drop in exports in 2023 and a 10% increase in the harvest compared to the previous season. Another cause was bulk imports from Spain, which contributed to inflating surplus stocks , creating unfair competition and raising concerns about misleading labeling regarding the origin of the products.

The Portuguese Ministry of Agriculture states that the €15 million support is “ a temporary and exceptional crisis measure that will not be repeated in the future .” José Manuel Fernández, Minister of Agriculture, proposed: increasing the amounts allocated to promotion, eliminating customs barriers in third countries to facilitate exports, strengthening inspections to prevent illegal wine imports, and tightening the criteria for granting this support.

Go a little further:

The major problem in the Douro region has been highlighted by the fact that the imported brandies used in Port wine originate from other countries , thus falsifying the Protected Designation of Origin of a type of wine unique in the world. The bottle contains 20% of a product originating not only outside the Douro region but also from Spain, France, and the Netherlands, calling into question the legality, specificity, terroir, or whatever name one might want to give to the final product.

On the other hand, there are others who point to the Symingtons , Sogeninus , Sograpes , and Fladgate Partnerships as the culprits, as they exploit small winegrowers. (Not in my opinion, and we'll see why later).

Historically, the Douro region has always had problems in the wine sector. Dona Adelaide Ferreirinha bought the land from the winegrowers and then donated it back to the original owners so that they could continue the legacy, instead of selling it to the English .

The origins of Port wine aren't even ours. It was the British who created the Port wine brand, marketed it, internationalized it, and promoted it; even the names are of British origin (vintage, ruby, and tawny).

I don't know of a single wine in the world where the region's name isn't associated with its origin – in Porto there aren't even grapes, and it's called Port wine, not Douro wine. Therefore, the question of whether or not we should use a 100% Douro-derived brandy as the solution to all problems is a fallacy.

Port wine, in practice, has always been a product that is not 100% native to the region.

Perhaps it would be better to "go a little further" and analyze what the real problems are in the region and which, once solved, would resolve the root cause. To do this, we need to leave demagoguery aside and have a more open vision.

· To begin with, we Portuguese don't even consume Port wine. In theory, yes, according to statistics, but in practice, no: it's consumed by tourists in the country, which is a different matter. It's the difference between regular consumption and "passing through" consumption. If we can't even "convince" our own people to consume our unique wine, how do we expect to increase overall sales?

· Then, the consumption of any type of sweet wine decreased worldwide: all of them, without exception, decreased: be it Tokaj, Muscatel or Sauternes. What used to cost 30 euros can now be bought for less than 8 euros. Therefore, there is a global and international trend of decreasing consumption. Only with this understanding can we define strategies for action. Here: either we promote wine better, or we diversify the type of wine, or we give it a different use (like Port tonic).

· And what about the problem of the "foreign" wineries in the Douro? They are essentially family businesses, and as such, some already have great-great-grandchildren who were born, married, and live in Portugal. Couldn't we say they are Portuguese? Symington donates ambulances to fire departments every year – they could take that money and spend it on parties, buying Ferraris, islands, and dressing in Yves Saint Laurent, but instead, they walk their dogs in simple clothes and in a humble manner. Around Easter time, while a certain Portuguese producer was hosting a lavish lunch with around 400 people in the Douro, Symington was gathering 4 or 5 people for a barbecue in the middle of a vineyard.

The problem isn't the "foreigners," the problem is us.

We are mentally "weak" people: I repeat what I said in another post: we have closed minds, are afraid to leave our comfort zone, and speak ill of each other, and we weren't always like this. We are the opposite of our illustrious navigators in the Age of Discovery who set sail in search of the unknown. We lack vision, unity, and analytical skills.

We manage wine companies based on vanity instead of pride (it seems the same, but they are very different things) - wine companies are businesses and we have to manage them as such, not based on egos.

· If we don't speak up, everything's fine. For example, we had elections where the political debates were marked by topics like security, health, education, tax cuts, blah blah blah, and about agriculture—I'm not even talking about viticulture—absolutely NOTHING was discussed! If it's not discussed, it's because there isn't a problem, and if a problem isn't discussed, it doesn't exist, and we all know it does. What's missing again is that unity. Our leaders all rowed in the same direction; they didn't drift aimlessly waiting for someone else to do something. The great truth is that everyone, absolutely everyone, who is part of the sector's chain has responsibilities in their actions. From winemakers and producers to distributors and business owners. And I include myself in this group. But when you have an open mind and think outside the box instead of following the herd, you can maximize how small we are. Let's leave the "pepper in other people's XXXX" aside and join forces to influence decision-making.

We are receiving funds to "burn" wines, while the French receive money to uproot vines. In Portugal, this decision-making process is inevitable: the only difference is that we are always lagging behind other countries. We don't learn from those who have already made the journey.

We're always waiting to see what happens .

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WRITTEN BY:

Pedro Fernandes

Pedro Fernandes is a Portuguese winemaker who has been involved in viticulture since he was 11 years old, where he started making his first wines with his father and doing tasks such as pruning.

Since then he has never stopped and in 2018 he decided to dedicate himself to the wine sector, starting by doing "everything backwards". He began by taking wine specialization courses such as WSET (Direct Wine) and Wine Expertise (ISAG) in 2018/2019. Then he graduated from the University of Nebrijia in Madrid, obtaining an MBA in Oenology (2020). In 2021, at the age of 39, he decided to pursue a Bachelor's degree in Oenology (UTAD), and against all odds, he finished the course in 2024.

Along the way, he created his first personal wine brand - Chãos - and completed an internship at the prestigious Chateau Latour (in Bordeaux).

Currently, he works as a consultant in the wine sector, where he plays a role not only as an oenologist, but also in creating business strategies for wine producers, with a current vision of the market, which includes resources from Digital Marketing and Wine Tourism.