Friday, October 30, 2015

Portugal wine producers invest in cheaper brands

Coming out of the economic crisis, although slowly, Portugal Brazil search refuge for their wine production. The Setúbal peninsula wine region South of Lisbon, are betting that Brazil will be their biggest export market outside the European Union-post occupied by Angola this year, despite the recession in the Brazilian economy. To do so, companies investing to improve the distribution and cheaper brands.
The penetration of Portuguese wines in Brazil is behind the South American country. Last year, the Brazilian imports of wines from Chile and Argentina accounted for five times the volume of Portugal, which until quite recently also lost to Italy.
Any minimum expansion in the Brazilian consumption of habit of 1.8 litre of wine per capita per year, would have a major impact for a country the size of Portugal. The country, which has annual consumption of 43 liters per capita, has population 20 times lower than the Brazilian.
To gain space in the Brazilian market in times of crisis, the winery Casa Ermelinda Freitas has released a unique label for the Country, with most affordable prices. Call Old Farm, the brand is sold about a year ago in Brazilian supermarkets about $ 18 a bottle, in red, white and rosé. "We're happy, but don't stay with Brazil. We know the difficulties in the country, so we're going constantly trade shows and restaurants, "says Leonor Freitas, owner of the business.
The Casa Ermelinda Freitas exports 40% of production and sells the remainder on the Portuguese market. According to Lancaster, the company seeks to reverse these proportions and account with the help of business in Brazil for that.
The crisis in Portugal, started in 2008 and worsened in 2011, has forced companies to seek overseas market, which justifies the fact that wine exports to Brazil have more than doubled in ten years.
As the Portuguese is faithful to the habit of consuming wines, domestic volumes remained. But prices fell in line with wages. A wine that was sold at € 5 came to be sold for € 3, explains Luis Silva, oenologist of the Winery of Palmela, a cooperative that brings together more than 300 members. "The banks have tightened, many companies went bankrupt. The most well managed and capitalized concentrated the market that broke, "he says.
Behind the regions of Alentejo and Douro, the peninsula of Setúbal is the third largest producer of certified wines (with seal of designation of origin and geographical indication) in Portugal. Represents 5% of the volume of all the wines in this category in the country and 12% in value. The numbers indicate that the region has perception of added value higher than the national average. Are 25 million litres per year of certified wines, plus 15 million of table wine.
Disregarding the exports to the European Union, the Brazil consumes about 35% of the production of the Setúbal peninsula wines, which brings together 150 companies, mostly family management. The Brazil is still behind Angola in the ranking of major consumer markets of Portuguese wines. Everything indicates, however, that Brazil will at least draw with Angola this year, according to Henrique Soares, Chairman of the Regional Wine of Setúbal (CVRPS).
Jorge Lucki, wine columnist, says that Angola is the first market for Portuguese wine. Most high-income consumers in the country doesn't know how to appreciate a good wine, but buy a lot.
In 2013, the year of record sales in the Setúbal Peninsula, have been exported 1.1 million liters of wine for Brazil. Soares says it will be "a good result" If the region achieve repeat 2013 numbers this year. In a period of seven years, predicts, it will be possible to increase the volume to the Brazil at around 36%.
For Sh, companies are "absorbing" the Exchange variation to not increase the Brazilian consumer prices, so far. However, some wineries already design adjustment. The cellar José Maria da Fonseca, one of the most traditional, owner of the Periquita label.
The Brazil is the main market of the Periquita brand, which is also the best-selling Portuguese red wine in the world. Domingos Soares, owner of José Maria da Fonseca Winery, says that the company does not change the price of the Periquita in Brazil eight years ago, but that there may be increased if confirmed the expectation of tightening of import taxes.
Is applicant the lodgement of businessmen of the region against growing protectionism of Brazil with the local brands and a big competitive disadvantage in relation to MERCOSUR countries.
To circumvent the difficulties, José Maria da Fonseca switched to Diaggeo the brand as a distributor Interfood in Brazil. "We chose a closer relationship with the consumer, with a distributor specializing in wines. It is not possible that with a multinational, "says Miguel Azevedo, Director of marketing and sales of the winery.
In the cellar Bacalhôa, one of the few corporations of the wines of the region, the change of distributor in Brazil worked. "The Brazil returned to make orders," said Felipa Tomaz, Winemaker of the House.
The Brazil is the third largest market of Bacalhôa, second only to Angola and Canada. The company exports 40% of production and search more. In the Portuguese market, the signs of economic recovery are subject to suspicion of executives and entrepreneurs in the wine. Portugal, Felipa, is a very expensive State, which spends more than it collects. "I think the signs of recovery are lie and in two years the country will be in the same why didn't the reforms needed," comments.
In 2014 Portugal left the rescue program of the European Union and the IMF, but remains under surveillance. In the past three years, there was a significant drop in the quality of life of the Portuguese. The businessman Antonio Saramago, owner of a winery that bears his name, believes that his country repeats the same situation today in Brazil: "the middle class is disappearing." However, the luxury market, niche in which Saramago works in Brazil, if not shattered.
The reporter travelled at the invitation of the Setúbal peninsula Wine Commission
Valor Economico
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