Jan. 21 (Bloomberg) -- On the top floor of Angola’s tallest building, overlooking the bay of the capital Luanda, a relatively unknown bottle of Benfeito Portuguese wine sold for a record $21,600 at an auction.
In Sao Paulo, Brazil, a 2000 Barca Velha red, produced more than 5,000 miles away from the steep, rocky vineyards of Portugal’s Douro Valley, costs 2,400 reais ($1,175) at Restaurante A Bela Sintra -- more than four times its cost at Portuguese retailer Winept.com. It’s often sold out.
“Portuguese wines are making a comeback,” Frederico Falcao, president of Portugal’s Vine and Wine Institute, said in an interview. “Part of the reason is that consumers in emerging markets such as China, Angola and Brazil are evolving and buying more old-world wines.”
Wine exports from Portugal, including port and table wine, rose 7.6 percent in the first 11 months of 2012 to 648 million euros ($862 million) from the same period a year earlier, according to the country’s National Statistics Institute. The sales are boosted by demand from the former Portuguese colony of Angola, China and some South American countries.
One of the biggest challenges facing local winemakers is not being able to increase output fast enough to meet growing demand from abroad, said Alexandre Soares dos Santos, chairman of the Jeronimo Martins retailer that owns a supermarket chain in Portugal and discount stores in Poland.
“If we want to be serious about increasing our exports then we need to produce wine on a much bigger scale,” he said.
That means winemakers need to merge and invest in state-of-the-art equipment to crush their grapes instead of treading them underfoot in large vats called lagares, said Jose Hermoso, an analyst at the International Wine & Spirit Research.
“The fact that most of the wine companies in Portugal are family-owned may work against further consolidation but it has to happen,” Hermoso said in an interview.
Sogrape, Portugal’s biggest wine exporter, has been leading the way in terms of mergers.
After starting out as a wine bottler and distributor in Portugal in the early 1940s, the family-owned company began buying up estates in the Douro -- the world’s oldest designated wine region -- to create some of the country’s best known wine brands, including Mateus Rose, Barca Velha and Sandeman.
“It’s so sweet,” said Kasumi Imai, a 73-year-old Japanese woman after tasting several ports during a tour of Sogrape’s Port Sandeman wine cellar in Vila Nova de Gaia, northern Portugal.
Sogrape is also investing abroad. The Oporto, northern Portugal-based company has acquired Bodegas LAN, a Spanish winery famous for producing high-quality wines. Sogrape also owns wineries in Argentina, Chile and New Zealand.
Sogrape’s Chief Executive Officer Salvador Guedes’s drive to increase exports has paid off. Sogrape wine sales are forecast to rise to 210 million euros last year from 179 million euros a year earlier, according to Guedes.
Other producers are joining forces to promote their different brands of wines in markets as far away as China, where Portuguese wine sales increased 18 percent last year in the period through October, according to Portugal’s statistics office.
Adrian Bridge, managing director of a 320-year-old family business that makes Croft, Fonseca and Taylor ports from vineyards in Portugal’s Douro region, formed a partnership with his main competitor in Portugal, the Symington Group, three years ago to set up a vintage port academy in China, where the name Portugal means “grape teeth.”
“Everybody wants to talk about China but for us it is a market that is going to take some time to develop,” Bridge said in an interview from his family’s Yeatman Hotel, overlooking the city of Oporto. “We’re taking a long-term view that we have to develop that market through education.”
The Douro Boys are doing the same. They are five of the Douro region’s top winemakers: Dirk van der Niepoort from Niepoort Vinhos, Miguel Roquette from Quinta do Crasto, Francisco Olazabal from Quinta Vale Meao, Joao Alvares Ribeiro from Quinta do Vallado and Cristiano van Zeller from Quinta do Vale Dona Maria.
“We formed a partnership about 10 years ago to promote our wines and the Douro region in foreign markets,” Cristiano van Zeller said in a telephone interview. “We’ve managed to put Douro on the map. It’s been a huge success.”
Yet some winemakers have remained successful going at it alone in key markets such as Brazil. Piriquita red, a table wine, is today the bestselling European wine in the former Portuguese colony, according to Antonio Soares Franco, whose family-owned company Jose Maria da Fonseca produces the wine from grapes that grow in the plains of Southern Portugal.
“It’s our best export market,” Soares Franco said.
Others prefer to ride on the coattails of the bigger companies who spend millions of dollars promoting their wines in foreign markets such as Brazil, China and Angola as opposed to merging with these bigger companies.
Pedro Tamagnini, whose Quinta dos Avidagos estate produces just 80,000 bottles a year, sends international wine brokers video footage of his green-terraced vineyards along the Douro river to explain his production process and increase sales.
“The trick is to be creative when you have a limited budget,” Tamagnini said.
Ricardo Guerra, the entrepreneur who helped produce and sell the bottle of Benfeito wine in Luanda in 2011 for a record price, is another case in point. After the auction, he set up his own wine distributor in Angola, which last year bought more Portuguese wine than any other country except for France, according to the statistics office in Portugal.
“Business is going well,” the 32-year-old Guerra in a telephone interview from Luanda. “People still refer to me as the guy who sold the $20,000 bottle of wine.”
Muse highlights include Scott Reyburn on the art market, Warwick Thompson on London theater, Erika Lederman on London going out and Shaun Walker on the Bolshoi ballet.
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