The history and the quality of Portuguese wines will allow the products to secure a successful position in the growing Mainland Chinese market, with Macau an entry point, founder of Portuguese wine and olive oil company CARM Filipe De Albuquerque Madeira believes.
Having turned a family heritage of six farms in the Superior Region of the Douro River in Portugal into one of the country’s most renowned award-winning wine and olive oil producers, Mr. Madeira considers Chinese consumers’ choice of wine is usually dependent upon their recognition of a brand or its awards received, rather than the quality.
Owning 180 hectares of vineyards, CARM went from a small family company producing 2,000 bottles of wine in 2004 to a current two million. And this number is growing at a pace of around 10 per cent to 20 per cent each year, according to the company founder.
The company’s largest export markets comprise “usual wine-loving countries,” such as the United States, Canada and Japan, while the domestic Portuguese market accounts for 50 per cent of the company’s sales.
However, the Chinese market currently only represents 4 per cent of CARM’s sales due to its different characteristics from other markets, which make Portuguese products difficult to bring in, said the olive oil and wine producer.
“Japanese buyers are not influenced by international awards, rankings or what country the wine comes from. If they like it, they’ll buy it as opposed to the Chinese buyer who care more about grades,” Mr. Madeira told Business Daily in an interview.
As an example, the producer noted that the company’s sales have started to grow in the Chinese market following its wines receiving more than 91 points from renowned wine publication Robert Parker Wine Advocate.
“We’re also lucky that we have a mini entry point in the country called Macau,” he said. “The city has a Portuguese tradition that has helped boost the culture of Portuguese wines.”
In addition, Madeira remarked that the MSAR’s zero-tax policies on wine imports makes the city an even more favourable place for the business.
Currently, sales in the MSAR only account for a 4 per cent market share for CARM – the same as that of the Mainland Chinese market – but the company founder explained that is because it had not paid too much attention to the city in the past.
Eyeing the territory, he now believes sales in the local market can make up 10 per cent of the company’s total in coming years.
“This year, Macau will be CARM’s prioritised investment market. We’ve presented all our wines given more than 91 points by Robert Parker [in a local event] and we will set up a tasting dinner for the city’s [most famous] personalities in June,” said Mr. Madeira.
In the whole year of 2016, imports of red wines and white wines to the MSAR from Portugal reached 85,679 litres, valued at MOP4.2 million (US$525,028).
The numbers represent some 20.4 per cent of the total import volume of 419,030 litres, and only 4.3 per cent of the total import value of MOP97.4 million in the same period.
This suggests Portuguese wines are much less popular that those from France, whose red and white wines accounted for over half of the total imports of the city, at 213,750 litres and valued at MOP81.1 million, accounting for 83.2 per cent of the total value of red and white wine imports.
In Madeira’s opinion, this situation is quite normal since the average price for a litre of French wine in China is around US$5, while that of Portuguese wines is only around $3, a consequence of the history and brand recognition of the wines.
In fact, the same situation was also apparent in the Mainland Chinese market in 2016.
According to data released by the Chinese Customs Department, the country’s wine imports grew by 15 per cent year-on-year to 638 million litres in 2016, while total import value jumped by 16.3 per cent year-on-year to US$2.36 billion.
France, again, topped the chart with 191 million litres of wine imported to the country, worth US$954.4 million, while the volume of Portuguese wines ranked 10th with 6.8 million litres of wine imported by the country, worth US$19 million.
“Our wines are not old enough; we can only get to the same prices [as French wines] in 50 years through constant quality and branding,” said. Mr. Madeira
“In terms of wine history, France, Italy and Spain take the lead. But now it’s our turn, since we have excellent grapes and land, while Bulgaria and Romania are probably following us. After all, Baroness Rothschild has said that one of the biggest problems in the wine business is the first 200 years – after that you can sell them for any price,” he said.
The businessman added he himself has also preferred foreign wines than Portuguese wines before.
“I never drank Portuguese wines. I thought they were too rustic so I only drank French or Italian wines and my palate was used to them. People are tired of drinking Chardonnay [wines] and Portugal now has different offers with quality; we just need to do the marketing and see the eyes of people tasting it shine for the first time,” he told Business Daily.
For him, consumers want authentic quality products that are made by uncomplicated processes so that they can “smell the earth they grew in, in the glass,” he says.
CARM also owns nearly 250 hectares of olive tree fields that produce almost 250,000 bottles per year.
In terms of the olive oil business, Mr. Madeira says the company’s nearly 20-year history in the filed has helped its products gain popularity in Japan, where the company can sell 37,000 bottles in one day.
In 2016, the MSAR imported 42,428 kilograms of olive oil, worth some MOP1.6 million, according to DSEC. This time, Portugal was the largest provider, both in value and in volume, from which a total of 41,399 kilograms was imported to the MSAR, worth nearly the total.
The olives of time
The history of CARM intertwines with Mr. Madeira’s coming of age.
Families from his mother’s side had owned farms in the Upper Region of the Douro River since the 17th Century, which were primarily used for hunting and vacations, in addition to the occasional port wine production for personal consumption.
“We already had vineyards and olive trees at that time, but the grapes and olives from the trees would be sold to larger wine and olive oil co-operatives in Porto,” he said.
Mr. Madeira’s connection to that production was always tenuous, he said, as he studied medicine in Italy and had worked in the finance, besides having managed model agencies worldwide.
“When my father retired, we decided to start producing our own olive oils. So we went to Italy and asked [how] to create a quality product from the best expert in olive oil, Professor Fontanaza from Perugia,” Mr. Madeira said.
“He gave us the whole system to create an olive oil press, which we developed further when I was in my 6th year of medicine school,” he added.
Since the press was too advanced for Portugal at that time and nobody knew how to operate it, Madeira started operating it himself – and the first olive oil production came out in 1998 with an unexpected reaction.
“The first year we produced olive oil we went to international competitions and won the [award] of best worldwide product, it was like just getting my driving licence and suddenly doing the best racing times,” he said.
“However, we won not because I was an expert but the land and the olives we had were excellent. I only had to make sure I didn’t ruin it. The interesting part was not even one bottle of that olive oil was sold back in Portugal as people thought the quality had gone bad,” he said.
According to Mr. Madeira, the country was too used to low quality olive oils and thus did not accept CARM’s fresher and purer taste.
“Generally, the country had good olives but people would ruin them. However, 19 years after, it is now possible to find excellent olive oils in Portugal,” he told Business Daily.
After its initial year, CARM olive oil was considered the best in the world 12 times. Mr. Madeira believes the product’s stable ability comes from the company’s mix of traditional and modern methods during production.
“The planting system is very traditional. [We only use] natural blends with olives planted many years ago. The secret to top olive oil is to treat it like wine; we use very defined segmentations that change the olive picking days and sunlight periods, with the blends made by me and three Italian friends,” he added.
Branching into wine
CARM’s wine production also underwent a similar trajectory – from a passionate hobby to a business.
And everything was started in 2000 when Mr. Madeira rented a wine cave by using the money he made with oil production and later created a production unit in 2004.
“In three years, we reached the top 10 of world wines ranked by lifestyle magazine Wine Spectator and our ranking has been going up, using the same method of producing our olive oil advised by Italian and French consultants. CARM started with producing olive oil but it is now more famous for its wines,” he said.
The company’s best seller is its CARM Reserve – made with Portuguese traditional wine Touriga Nacional and costing around US$24 per bottle in the United States.
“In bad years no wine [whose quality] above the Reserve is made, so all the best grapes go to [the Reserve]. You can open a Reserve from any year and it will always be excellent. It’s a shame to make a US$24 wine with 100-year old grapes but it’s what keeps the quality and consistency,” Mr. Madeira added.
The secret to that consistency and quality, he believes, is the use of the best land and grapes from the outstanding Douro River region, coupled with an organic approach adapted to its production.
“We’re the only company in Portugal and one of the few in the world doing wine without adding sulphur, a product used to delay the oxidation and ageing of wine. This makes for a completely natural, healthy and organic product. If [the process] is done well it makes the wines last even longer,” he says.