"Beneficio" set at only 85,000 pipas!

[Christian]

As I just saw on http://www.ivdp.pt ("Comunicado de Vindima 2011"), the quota for the harvest 2011 has been announced: 85,000 pipas.
That is very sad news... Obviously the established port wine drinking nations have reduced the consumption, and even if countries like Brazil (volume up 30%) and China (+62%) are seeing a rising demand, this is not enough to erase the losses in Portugal, France, Belgium and Holland. Portugal of course is hit hard by a terrible financial crisis - which is visible in the sales figures for the first half of 2011: the Portuguese spend approx 18% less on Port than in 2010.
Having just traveled 3 weeks through the Douro and having met many people of the trade in Porto, I knew that the business was not doing well... but these figures are somehow shocking.
Considering that the "Beneficio" was set at 154,000 pipas 10 years ago, looking at 85,000 now depresses me...

[uncle tom]

Christian,

I think this reflects the losses caused by adverse weather conditions this year - mildew, sunburn and hail have all taken their toll - very badly so in the case of some vineyards; the only positive aspect is that these are quantity rather than quality related issues.

The beneficio figure makes me suspect that the damage overall has been really very severe, and we should all hope that the crop that is harvested proves sound and vintage-worthy, so the producers can recoup their losses.

Tom

[JacobH]

InfoPortWine is reporting that the ADVID suggested the harvest would be down 11% at the start of July which is about half the 22% drop in beneficio size from last year. Can sunburn between July and now really have made that big a difference? (This is a genuine question: I am not sure how big a problem it is).

[uncle tom]

Oscar says that the major reason for the reduction in the beneficio is poor sales data from the first half of 2011; but adverse weather conditions, and what seems like the never ending saga of the Casa do Douro stocks - and their need to be sold and bottled.. - also plays a role.

Tom

[RAYC]

Cross-posted from FTLOP, this article provides some interesting context to this.

http://www.thedrinksbusiness.com/2011/0 ... -in-douro/

[JacobH]

Perhaps I have read too much Adam Smith, but I find the concept of a beneficio quite odd. In the days before the IVDP (and its predecessors) I can see its use being reasonable way to attempt to regulate the quality of the Port. However, I’m not so sure, if it does anything to improve the quality any more, considering the testing of the final product by the IVDP and the vastly enlarged size of the Port market. What would the harm be in allowing the farmers to make as much Port as they think they can sell?

[RAYC]

As i did not really understand the Beneficio system, i just googled it. Oscar's blog contains a nice explanation - here

[jdaw1]

Jacob: it is your turn. I did the big bottles.

[RAYC]

I would have thought there is some value to established producers (and to consumers) in a system that prevents the market being flooded with large quantities of low value, low quality port (with consequent damage to the "port" brand).

[JacobH]

Jacob: it is your turn. I did the big bottles.

Hmm...I suppose I could achieve this by either a) lobbying the IVDP; or b) resurrecting the Marquess de Pombal. Initial analysis suggests (b) might be the easier option...

[jdaw1]

! or by finding some means to challenge it under EU law? If I’m allowed to grow grapes for my own consumption, but not for sale, is that a trade restriction conflicting with the Maastricht treaty? Can competition law provide an angle of attack?

[JacobH]

I would have thought there is some value to established producers (and to consumers) in a system that prevents the market being flooded with large quantities of low value, low quality port (with consequent damage to the "port" brand).

I understand the reasoning, but I just simply don’t think it holds up in practice. We have a slightly warped view in the UK because even the cheapest rubies sold in the supermarket are Reserve Rubies and (theoretically at least) in the higher of the two IVDP categories. However, if you go to a supermarket anywhere in Europe most of the Port on offer is pretty poor cheap rubies (as jdaw1 can attest, I am sure!) which is hardly consummate with Port being a quality product. If you want to experiment yourself, I recommend a trip to Lidl and a bottle of C. da Silva’s Armilar Ruby Port...

Better ways of stopping the preserving brand would be to either have a far more rigorous tasting panel where more is rejected or a much lower quota for wine which can be sold as ‟Port” meaning the shippers have to be much more selective. The excess wine, rather than not being produced, could be sold as ‟fortified Douro wine” instead of ‟Port”. I think the former happens with cheese such as Parmesan whilst the later with wines such as Rioja. In both cases the product sold under the main name is usually quite good whilst that which does not meet the standard or the quota is sold as ‟hard Italian cheese” or ‟Spanish Table Wine”. It would also mean the hit is taken by the shippers and not the farmers, too.

[JacobH]

! or by finding some means to challenge it under EU law? If I’m allowed to grow grapes for my own consumption, but not for sale, is that a trade restriction conflicting with the Maastricht treaty? Can competition law provide an angle of attack?

I have been wondering about this for a while, though it isn’t quite as simple as you might hope since a lot of wine restrictions were hard-written into EU Law (as always, the first priority of the EU is to protect the French farmers). Also, since the restrictions apply to the sale of Port both within Portugal and the EU it is not a simple trade-restriction issue. I would like to understand the detail better, though, so I should start reading through the relevant texts.

[jdaw1]

I should start reading through the relevant texts.

Mission accomplished (well, at least that mini-mission).

(as always, the first priority of the EU is to protect the French farmers)

It is always a joy to hear one’s prejudices echoed by a knowledgeable source.

Broadly, I agree with your Adam-Smith approach: label clearly and accurately, and let the consumer choose. However the small matter of subsidies will make matters difficult: paying the piper entitles the EU to a certain amount of tune-choosing.