glasses of fortified wines

Fortified Wine, What Future?

David BECK Academic - Economics, Society and Political science - Environment and Technologies (AI, blockchain)
1. Lower-ABV wines
2. From Fortified to Dry
3. From Premium to RDT

What are doing regions, such as the Douro and Jerez, to survive in a market increasingly hostile to fortified wines? Port, for instance, is heading in two diametrically opposed directions: simplification and premiumisation, with new categories that span from youth-friendly RTDs to Tawny 50 Year Old and White 50 Year Old. Sherry meanwhile, has just changed a number of its regulations and now embraces unfortified wine.

Alcohol moderation was already firmly in motion prior to the Covid outbreak. Health concerns have become an even greater focus for consumers as a result of the pandemic however, and are now paramount issues for businesses. For the drinks industry, the trend translates into an increasing demand for lower-ABV and lower-sugar products. Clocking in at a higher ABV and often with a higher residual sugar than their unfortified counterparts, the likes of Port and Sherry have long suffered the consequences of this tendency.

So what can the fortified wine world do about this sharp sales volume decline, and have their efforts so far been effective?

For many fortified wine producers, the answer is to take spirit and sugar out of the equation. Pellegrino is purposing increasing amounts of its Marsala and Pantelleria grapes to the production of dry, unfortified wines, which Benedetto Renda (Pellegrino CEO) claims have been growing steadily over the past five years. Benedetto Renda believes that Pantelleria’s table wine will reach 30% or 40% in a matter of years. 

Fortified wine - global markets share in 2020

The Right to sale Unfortified Sherry Granted

With the legendary Barca Velha’s first vintage dating back nearly 70 years, the Douro pioneered table wine production in fortified wine country, yet the success of the region’s dry reds is a much more recent story. “There has been an extraordinary explosion of quality of these red wines in the last few years,” says Christian Seely of leading Port house, Quinta do Noval.

In 2020, the region’s table wine sales were up 130% compared to 15 years ago and in just a decade, the number of companies involved in table winemaking has nearly doubled. This is a remarkable achievement that partially offsets Port’s declining business, down by a whooping 26% since 2006.

Sherry bodegas see in table winemaking a profit opportunity, too. The Consejo Regulador (Jerez and Manzanilla) has recently granted producers the right to commercialise unfortified Sherry as part of a wider regulatory revamp that the Consejo itself describes as “a key factor for propelling our designations into the future”.

Today’s consumers are embracing lower alcohol drinks, so fortifying for the sake of it seems out of step with their needs.

Alison Easton, Bodega Gonzalez Byass

Once the new regulations will come into play in 2022 (they are still pending regional, national, and EU approval), producers will be allowed to bottle unfortified Sherry, provided that wines reach naturally the required ABV, 15% for Finos and Manzanillas, 17% for Olorosos, and other oxidative styles.

“The extension to unfortified wines is the consequence of a number of experiences by local winemakers who are running quality practices in the vineyards aimed to obtain wines at natural strength. If these wines comply with the required minimum strength, then why fortify?” says president, Cesar Saldaña (Sherry and Manzanilla wine board), adding that the modifications could even lead to welcoming unfortified wines below 15% ABV as part of future regulatory revisions.

Portonic, a RTD made with Port

While the overall fortified category might seem to be losing appeal, its premium end is experiencing an opposite trend. “The lower-end has had some difficulties for quite some time, [but] commercially, premium Port is very dynamic,” argues Christian Seely (Quinta do Noval). Last month, the Instituto do Vinhos do Douro e Porto (IVDP) offered producers further opportunities to up their premium game by creating new categories such as 50 Year Old Tawny; 50 Year Old White Port; and the very old Tawny category, destined for wines older than 80 years of age.

Sherry too, has looked at the upper end of the market as part of its recent regulatory modifications, with the launch of new labellings such as single-pago, made with grapes from specific “viticultural districts”; Jerez Superior, produced with fruit from higher-quality vineyards; and Fino Viejo, for finos that are 7 Year Old or older.

Sherry and Port’s new premium categories are designed for an affluent, older audience, yet the fortified universe’s innovation efforts look at the younger segment of the market as well. “Mixing different styles of Sherry with refreshing drinks such as soda, lime, or tea is a very common practice in the local market,” says Cesar Saldaña (Sherry wine board). “Cocktails are a key part of our business in markets like the US and I believe that it will definitely be a critical factor to help us enroll younger audiences.”

RTDs are a great new avenue to explore and reach new consumers who previously have not been engaged with the fortified world at all.

Alison Easton, Bodega Gonzalez Byass

Port was the latest to enter the RTD (Ready-To-Drink) category when, last May, the Instituto do Vinhos do Douro e Porto gave producers the green light for the commercialisation of bottled versions of Port’s classic cocktail, Port & Tonic. Dubbed as Portonic, the opportunity is being swiftly seized by a growing number of houses including Sogrape-owned Offley and Sandeman, Symington’s Cockburn and The Fladgate Partnership’s Taylor, whose CEO Adrian Bridge was instrumental to bringing the RTD project to life.

Academic - Economics, Society and Political science - Environment and Technologies (AI, blockchain)