Portuguese Wine

1. Portuguese Wine

2. Index • An introduction to Portuguese wines • Production organization – Appellations & production volumes • Market – Production quality vs. Export • Offer – Quality vs. Price • Conclusions • Appendix • Market overview • History • ‘Castas’

3. Portuguese Wines Introduction For such a small country, Portugal produces an extraordinary range of wines. The country is home to a huge amount of indigenous grape types (castas), which warrant Portuguese wines their character. Producers use organic methods year round, leaving grapes to ripen before hand-picking. Age old traditional methods work well with modern organic farming practices which lend much to improving the taste and quality of the wine as well as protecting the environment. The above, coupled with low production costs, makes Portuguese wines, a perfect viable alternative in the competitive international wine market. Our objective as a company, is to build up a credible portfolio of Portuguese wines, which will appeal primarily, to western European markets.

4. Portuguese Wines Production Organization In Portugal, wines are named after the production regions. Some of these include Madeira wine, Vinho do Dão, Vinho do Alentejo, Vinho do Douro, etc. There are the 47 government approved, wine producing regions in Portugal. Every region has a supervising authority called the CVR (Regional Wine Commission). The CVR’s ensure that all wine producers within these regions have to follow EU legislation concerning wine production. This ensures, that quality standards are met, throughout the production process.

5. Portuguese Wines Production Organization The CVR’s also enforce regulations that are related to the types of grapes used in production (‘castas’), which are typically linked and endogenous to certain regions, production process (vinification), strict control processes from production to consumer, color, aroma, etc. It is regulated by law, that the various CVR boards (regional boards), must periodically check, that the established regulations are strictly followed. The certification is shown in all approved wine labels, with one of the following acronyms: VQPRD, DOC, DOP, CVR. These acronyms ensure the wines carrying them have followed the above mentioned production rules.

6. Portuguese Wines Production Organization – Main Productive Regions Vinho Verde (Green Wine) - Vinho Verde wine type, is the second largest wine variety exported from Portugal, after Port. These wines are produced in the northwestern fringes of the country. Vinho Verde wines are produced from white and red grapes, which remain low in sugar content and therefore do not require exposure to the maturing or aging processes. These wines are suitably influenced by their favorable climatic conditions like high humidity and oceanic climate type characteristics which add to its distinct flavour. Vinho do Dão - Dão wines are popular variety of wines produced from both the red and white grapes. The Dao wines are obtained from the northern part of central Portugal in the Mondego and Dao river areas. These are mountainous regions with temperate climate. Some of the grape varieties used in its production, like the Touriga Nacional are only available in Portugal and in no other part of the world.

7. Portuguese Wines Production Organization – Main Productive Regions Vinho da Bairrada - The Bairrada wine, derives its name from the term ‘barros’, meaning clay, which relates to the type of soil in which its grapes are grown. While both red and white grape varieties contribute to the production of the Bairrada wines, it is the ‘Baga’ type which is prevalently used in these wines. This region is further well known, for the quality white wines it produces. Vinho do Douro – This is the region that produces Port wine, stretching the length of the river Douro in Northern Portugal. The region also produces high quality reds and whites. The Douro wines are comprised of white and red grapes and constitute one of the premier wine types in Portugal. The Douro valley wines are today regarded as one of the premier table wines of Portugal. Vinho do Alentejo – Alentejo is the province situated South of the river Tejo (Tagus). Although the Alentejo produces only 12% of total wine production in Portugal, they constitute about 47% of the quality wine market’s quota. The region is famous mainly for it’s high quality red wines.

8. Portuguese Wines Production Organization – Main Productive Regions Vinho de Lisboa - Lisboa has a long history in winemaking. Diversity of relief and microclimates help creating a great variety of quality wines. Formerly known as Estremadura, Lisboa wine region is located N, NE and NW of Lisbon. The climate here is mild due to close Atlantic influence. In the last 15 years, the vines and wineries have been restructured and modernized. Today, Lisboa regional wines are known for their good quality/price ratio and the region boasts the the highest exports volumes in Portugal. The region focused on the growing of the noblest Portuguese and foreign grape varieties. In 1993, a new type of wine was created: the Vinho Regional Lisboa (free translation: Lisboa Regional Wine). This new type of wine encouraged producers to study the potential of the different grape varieties and, currently, most wines produced in Lisboa wine region are regional CVRL

9. ‘DOC’ regions in Portugal - Denominations of Controlled Origin (Appellation)

10. Portuguese Wines Export Market vs. Quality Portugal’s productive capacity is similar to Chile and Australia. Average exports from Portugal, over the past 5 years, are only just under 17% of production. Quality is high and EU production regulations are in place Portuguese wines got 35 gold medals in the London International Wine Fair 2010 (LIWF) and occupied the third place, behind France and Australia. Considering the ratio between these awards and Portugal’s cultivated area/production volumes, we can safely conclude, that Portugal produces a good number of high quality wines and that average quality is quite high. The retail price of high quality red wines in Portugal, ranges roughly from 5 to 15 € per bottle. This wide and low price range, in similar high quality wines, is characteristic to a fragmented market production.

13. Portuguese Wines Conclusions • There are over 7,000 wine producers in Portugal • The production market is considerably fragmented • Many producers are small family owned companies, producing high quality wines • Production volumes per company are mostly below 300.000 bottles / annum • There are high quality standards and high quality wines at reasonable prices • These companies are not setup to sell outside Portugal • Only the bigger / more structured producers are consistently present in the international wine market, hence also increasing their products’ prices domestically. This poses a constraint in terms of the available choice/price in international markets • Most quality Portuguese wines are not known outside the country

14. Portuguese Wines Conclusions • The retail price of high quality red wines in Portugal, ranges roughly from 5 to 15 € per bottle • The wide price range coupled with a high product quality, provides us with a business opportunity to market these products throughout Europe as well as worldwide, making these wines known to international markets • The role of 8tHeaven is to offer a credible, high quality portfolio of products, that will enable a wider choice at competitive prices, in international markets • To this end, 8tHeaven collaborates with well known Portuguese wine experts/makers, who help us in the selection of the very best quality wines in the country • The growing Portuguese wine production and the lack of product internationalization, coupled with a decrease of local consumption due to economic reasons, generate in many cases, immediately available stocks

15. Wine Consumption per Country In L / Capita / Annum (2005)

16. Appendix History and Grape Varieties Portuguese Wines

17. Portuguese Wines – Current market trends Recognition for the quality of the top Portuguese wines has never been higher. Portugal has benefited from European funds since it joined the EU in 1986. This program of investment has funded the planting of new vineyards and the building of new wineries. Most producers became strong enough to acquire the required technical skills to compete in the international wine market. The way has been led by Portugal’s larger wine producer-exporters, a group of producers who banded together in 1992 to promote the image of Portugal’s wines in export markets. These were Aliança, Aveleda, Bacalhôa, Finagra (makers of Esporão wines), José Maria da Fonseca, Messias and Sogrape (best known for its Mateus Rosé brand). Since joining the EU, Portugal has seen a huge growth in private small estate-bottlers. In many cases these are the makers of the wines that are earning accolades around the world. The new ‘stars’ are wines from the Douro, Dão, Alentejo, Estremadura and other regions. On the whole, Portuguese wine production has risen to the challenges of the twenty-first century, recently winning many accolades around the world. Portugal has been producing wine for centuries. The Douro DOC (North of Portugal) unfortified wines are the hottest on international markets at present. Recent effective promotion, was undertaken by the five bigger producers, rather than institutional.

18. Portuguese Wines – Current market trends In the North, wines are lighter and lower in alcohol, perfect for summer drinking. There are some very good wines, from vineyards with modern trellising and immaculate stainless-steel wineries. In the Northern country border, the Alvarinho grape rules, producing young whites of poise and perfume. The Beiras is the unsung hero region of Portuguese wine. There are two famous DOC regions, Bairrada and Dão, but both have had difficult periods in recent years. Bairrada’s historic red grape, the Baga, ripens really well only about four years in 10, and then it can make wonderful wine. Dão combines relatively high altitudes and granite soils to give even the biggest reds, a particular freshness. Touriga Nacional, Alfrocheiro and Jaen grapes create blends of elegant fragrance. White Dão runs the gamut from crisp and neutral to barrel-fermented creaminess, the best probably made from the local Encruzado grape. The Alentejo is the hot south, as far as the rest of Portugal is concerned. As often, this is an over-simplification, neglecting the granite soils and high altitudes around Portalegre in the north-east of the region. But much of the Alentejo is very hot in summer, and reds have a correspondingly generous, warm-fruited character. It is difficult to make really convincing whites in these temperatures, but some producers manage.

19. Portuguese Wines – Current market trends Arguably Portugal’s unique selling point is its dazzling array of native grapes - 341 according to the most recent listings. Historical and cultural reasons have contributed to this diversity, as well as to the tradition of blending those varieties together to build up a final blend. Traditionally, this blend would have started off in the vineyard. Production For the last 15 years, wine production has been stable, with very little variation except for climatically challenging years such as 1993 and 1998. In normal years, Portugal produces on average just above 7.5 mhL of wine, all categories included, making it the tenth largest wine producer in the world, just behind South Africa and Germany. Looking at how production figures have changed region by region, the fastest growing region is the Alentejo, thanks to a very positive image and strong consumption in the domestic market. Not far off that growth rate comes Trás-os-Montes (Douro). Overall, mass production taken into co-ops is being replaced in favour of higher quality wines. According to the OIV, the consumption of wine in Portugal has been declining, and has stabilized around 48 litres per person. This gives Portugal the fourth highest consumption of wine per head in the world, after Luxembourg, France and Italy.

20. Portuguese Wines – Current market trends Export market The wine authorities in Portugal are very slow to make the latest figures available, but exports have grown steadily over the last 12 years to 2006. Most apparent is the growth in overall value, which has risen every year but one even though volume has not always increased. However, when fortified wines are removed from the equation, the picture is less rosy. Although volumes of unfortified wine have increased, their value has been dropping steadily, to less than it was in 1995. Contrast that with the average price of fortified wine, which has been inching up almost constantly over the same period. So the increase in the overall value of Portuguese wine exports has been very much supported by the fortified wine sector. The value per litre of fortified wine has increased by a full euro over the decade, while at the same time the price per litre of non-fortified wines has fallen. As for who is buying the wines, countries such as Italy, Spain, Brazil, Canada and the USA import significant volumes.

21. Portuguese Wines – Current market trends The way forward The top three potential export markets for Portuguese wines were identified in the 2006 Michael Porter Report, as the USA, the UK and Germany. The growing USA wine market has been particularly successful for Portugal for the year to the end of October 2007, with a 34.7% increase in exports in terms of value (and 11.3% in volume). This growth easily outstrips any other country among the top 10 wine exporters to the USA. Jack Couto, President of Massachusetts’ Grape Moments, was at the recent ‘Essência do Vinho’, a consumer wine show in Porto. He spoke very positively about the prospects for Portuguese wines in the US, and emphasised the importance of selling outside the Portuguese diaspora. “We sell 80% of our wine to non-Portuguese markets, in 34 states,” he explained, and commended ViniPortugal, the Portuguese wine industry’s promotional body, on the work they were doing with the press, resulting in many positive articles about Portuguese wines in the US. Danny Cameron, of UK Portuguese specialist wine importer Raymond Reynolds, argues that Portugal needs to do more to establish its cultural identity in export markets. “We need more successful brands out of Portugal,” he explains, “But most of all we need a key to unlock the door to brand Portugal. Something to raise Portugal’s cultural profile, and that’s not necessarily a wine-led process.”

22. Portuguese Wines - History Portugal has been producing wine for centuries, ever since the Phoenicians introduced vines in the seventh century BC, probably originally in the Sado estuary, near Lisbon. Regular wine production in Portugal can be traced to when the country was a part of the Roman Empire. Prior its fall, Portugal (Lusitania), exported most of its wine to Rome. Lusitania’s wines were famous then, in fact the name Lusitania is believed to have its origin in Lusus, the son of Bacchus. The ‘casta’ term (meaning the type of grape) has it’s origin in the Roman, meaning pure, without mixture - Chaste. This relates to common characteristics of a set of grapevines, proceeding from one or several morphologically similar plants. Specific ‘castas’ are authorized and recommended in each wine region, however, the same ‘castas’ in different soils and climates, originate different wines, although some of the aromatic components from the ‘castas’ will be maintained. Commonly known ‘castas’ are, for instance, Chardonnay and Pinot Noir. In Portugal, although the above ‘castas’ also exist, there are specific local ‘castas’, for rosés (20+), whites (150+) and reds (160+).

23. Portuguese Wines - History The most significant factors determining supreme quality wine production, are the type of grapes and the kind of soil and climate that they thrive in. The regions specialized in wine production, grow specific varieties of local ‘castas’. These include among others, the regions of: Porto, Douro, Dao, Colares, Bairrada and Alentejo, all of which have red and white castas. The Bucelas region grows only white ‘castas’ and generous castas are prevalent in the regions of Madeira, Setubal and Carcavelos. As an example, next are some common portuguese ‘castas’ :

24. Portuguese Wines Main Grape Varieties (Castas) ALVARINHO (white) - An old grape variety of exceptional quality, deservedly famed for the varietal wines it produces in the Vinho Verde region, specifically in the two sub-regions of Monção and Melgaço. Alvarinho has a highly characteristic floral and fruity profile with notes of lime tree, balm mint, honeysuckle, peach, grapefruit and apple, all well-married with the high acidity typical of crisp white wines from north-west Portugal. The grapes yield balanced wines with good structure and alcohol levels. Alvarinho’s qualities are being “exported” to more southern wine regions such as the Setubal Peninsula and Estremadura. ARINTO / PEDERNÃ (white) - One of Portugal’s oldest indigenous varieties, with a long tradition in the Bucelas region, it has now spread to most wine regions given its adaptability to different terrains and climates. Arinto, known as Pedernã in Vinho Verde, holds good acidity as one of its key features combined with structure and a velvety feel. Its aroma is relatively discreet, whose strongest notes are mineral, with green apple and lemon. Arinto yields wines that evolve very well in bottle, acquiring elegance and complexity. ENCRUZADO (white) - Regarded by many winemakers as one of the great Portuguese varieties, Encruzado is capable of producing excellent white wines. It is grown almost exclusively in the Dão and requires particular care and attention to extract its finest aromas. If well-treated the resulting wines are elegant and complex with aromatic mineral notes and green peppers, roses, violets and citrus fruit. Age confers aromas and flavours of hazelnut and resin and when fermented in oak, vanilla comes to the fore with good integration and unctuousness on the palate. Encruzado’s quality confers longevity to its wines, which can age well for decades.

25. Portuguese Wines Main Grape Varieties (Castas) FERNÃO PIRES / MARIA GOMES (white) - Another of Portugal’s oldest varieties and by far one of the most cultivated. It is found in virtually all winegrowing regions, being strongest in Ribatejo and Bairrada, where it is known as Maria Gomes. A high-yield vine, Fernão Pires comes under criticism for producing one-dimensional wines lacking in acidity and prone to oxidation. But attentive care can bring out its extraordinary aromas and capacity to produce distinctive wines with strong character. It shows ripe citrus aromas and notes of mimosa, lime and orange tree, putting it in the family of aromatic grapes with Alvarinho, Loureiro and Moscatel. LOUREIRO (white) - Grown mainly in the upper Minho region along the River Lima valley, Loureiro is a very old grape variety yet is largely responsible for the success of white vinho verde in recent years. Aromatically exuberant, Loureiro (along with Moscatel) is considered the most perfumed of Portuguese grapes, evoking bay leaf, lime tree, acacia, orange and peach. As with Alvarinho, Loureiro is a grape of great typicity, producing varietal wines as well as in blends. In blends with other regional grapes, its exceptional aromatic qualities construct some of the best white wines in Portugal. ARAGONÊS / TINTA RORIZ (red) - Tinta Roriz is a very fine variety of extraordinary quality, attested by its presence in two legendary wines produced on the Iberian Peninsula: the Portuguese Barca Velha and the Spanish Vega Sicilia. This grape has also been grown for centuries in the Alentejo, but under the name of Aragonês. In good years it produces full-bodied, inky and highly aromatic wines. The grape has fine and delicate aromas of pepper and berries. Aragonês has high yields and is indispensable in the blend of a good Port. Varietal red wines are also showing good results, particularly in the Dão region.

26. Portuguese Wines Main Grape Varieties (Castas) BAGA (red) - One of the highest yielding Portuguese grape varieties, spread throughout the country but most concentrated in Bairrada and Dão. The grapes come into their own when well ripe, showing wines of deep colour and great structure, with powerful tannins and everything in place to evolve well in the bottle. The aroma starts out with berry fruit developing into purple plum, tobacco and coffee, finishing in a crescendo of complexity. CASTELÃO (red) - The most widely-grown red grape variety in Portugal. It is highly adaptable to different climate conditions and its remarkable versatility enables winemakers to make distinctive wines – powerful and intense reds for lengthy cellaring. It has adapted best to the Setubal Peninsula, where it makes meaty and intense wines with aromas of red berries and forest flowers that integrate well with the wood of French oak. TOURIGA FRANCA (red) - Better known as Touriga Francesa, this is the most widely grown grape for in the region that produces Douro wines and Port. Growers love Touriga Franca as it is easy to cultivate, hardy and can produce good yields. Touriga Franca shows delicate yet intense aromas with notes of black berry fruit and flowers, combined with good body and colour. It is one of the principal varieties used in Port blends, along with other indigenous Douro varieties like Tinta Roriz and Touriga Nacional. Yet it can stand alone, having proved itself in a number of varietal wines.

27. Portuguese Wines Main Grape Varieties (Castas) TOURIGA NACIONAL (red) - In days gone by Touriga Nacional was the dominant variety in the Dão region, responsible almost single-handedly for the fame of Dão wines. Nowadays it is one of the most popular varieties in the Douro and is considered one of Portugal’s finest grapes. Touriga Nacional yields inky, full-bodied, powerful wines with exceptional aromas. It frequently shows blackberry, blueberry, rock rose and rosemary notes. Its renown has caused its spread throughout all regions from the northernmost corners and down to the Algarve, and it is even exciting the interest of vine growers abroad. Touriga Nacional wines age well and gain aromatic complexity with barrel ageing. TRINCADEIRA / TINTA AMARELA (red) - One of the most widespread Portuguese grape varieties. It shows best, however, in hot, dry and very bright areas, tailor-made, in fact, for the Alentejo. It is not easy to grow, however, having irregular yields and prone to disastrous moulds. But in good years Trincadeira will produce great wines. It has excellent acidity, soft tannins and abundant, intense aromas of plum and blackberry, producing elegant and balanced wines. A Trincadeira blend with Aragonês in the Alentejo or Touriga Nacional in the Douro will result in top quality wines.

28. 8tHeaven Trading Lda R. Ricardo Espírito Santo, n7, 2e 1200-790 Lisboa, Portugal T.: +351 91 8437388 jp.8theaven@gmail.com