by Dr. Luis Antunes

The Casa do Douro, a venerated association of Port producers from the Douro valley, has problems. Now, its endemic crisis is finally being tackled by a succession of deals. The first involved the purchase of about 9,000 pipas - the traditional 550 litre wooden barrel - from the enormous stocks of 22m litres (about 39,000 pipas) of tawny Port with an average of 10 years by the Fladgate Partnership. The second, more complex deal, involved the supposed interest of Joe Berardo, a maven whose investments have raised eyebrows in wine circles, in the purchase of Real Companhia Velha, with its many quintas and wine cellars. In a surprise outcome, Global Wines - an up-and-coming holding that includes Dão Sul and its possessions in Douro, Bairrada, Alentejo, Estremadura and Brasil – won the day.

The Fladgate purchase of about 25% of the company’s stocks was significant. Fladgate, which owns Taylor’s, Fonseca, Croft and Delaforce, is with 11.7% the fourth largest producer of Port, after the Symington group (22.3%), Cruz (20.5%), and Sogrape (15.4%). According to Adrian Bridge, CEO, the “purchase was not absolutely necessary, since our partnership already possesses extensive stocks”. However, Fladgate sells 30% of all special category Ports, and is largely responsible for the increase of almost 75% in sales of this segment over the past 10 years. Bridge believes that the group – which makes a point of not producing any table wine in order to focus all its efforts on Port - will be able to develop new markets with this stock.

Casa do Douro has long functioned as a buffer between the production up river and shippers near the port. However, its continued crisis, aggravated by poor business decisions in the 80s and 90s, has weakened that role. In addition, its enormous stocks put pressure on producers to lower their prices. David Guimaraens, Fladgate’s chief winemaker, hopes that other groups follow this example and contribute to solve the problem.

Some seem to have heard the call. Porto Gran Cruz also purchased 5,000 pipas, leaving the Casa do Dourp with a stock of 25,000 pipas.

However, the most surprising news was reserved for Global Wines. After Berardo’s interest were revealed, Casimiro Gomes and his partners announced Global Wines purchase of 51% of Casa do Douro's 40% share of Real Companhia Velha for 15.5M€. The purchase of the latter company had long been considered a bad investment by the Casa do Douro, when it paid €70m back in 1990. The remaining 49% will be used to start a new joint venture between the Casa do Douro and Global Wines. According to chairman Manuel António Santos, “this deal was the best possible. Although it serves as an admission that the 1990 purchase was indeed a mistake, it will allow us to pay a significant part of its €100m debt and to relaunch Real Companhia Velha as a privileged partner”.