Douro Boys: We’re showing we have world-class wines in Portugal

Promoting the image of the Portuguese wines as a luxury product through high-end quality and prices. This is the future for the sector forecast by Douro Boys, a group comprising five elite Portuguese wine estates, in an interview with Business Daily
The slowdown of gaming in Macau is expected to a greater or lesser extent to affect all sectors of the city. As exporters of wine to the territory, what do you expect to happen to the local wine market?
João Alvares Ribeiro: The contraction of the economy has to be put into perspective. The comparison with the previous years has a very high basis. However, there are many hotels scheduled to open and a lot of investment being made. The consumption is really large in Macau and I’m not seeing this contraction as a big threat to the local economy…
Dirk Niepoort: My view is a bit different. In recent years, the importance of the Macau market has increased for our company, mainly driven by the casino industry. However, Macau is different from our traditional markets; it is more aggressive, unstable and I fear for its future. The same way it went through such a steep growth, I believe it will also drop abruptly. The fact that there is so much investment when the market dropped almost 40 per cent is puzzling. I feel that the optimism that existed in many people until last year has gone. Investors are more nervous these days. In my mind, I’m preparing for sales in Macau to decline because I think that’s what’s going to happen. To be honest, I always thought the Macau economy would slow down after such fast growth, but I never expected it to happen so soon.
Francisca Van Zeller: For the past years we have always increased our sales in the territory. This year, we are recording a slight decline. But until the end of the year this can change. In the coming years, we’re hoping to increase our sales because many hotels are opening. There will be more venues inside hotels and, as such, there will be more people consuming Portuguese wines. It may be true that people are more cautious these days because of the slowdown but it will not be a surprise if the region will continue to expand in the coming years.
Portuguese wines are the most imported in Macau considering the number of litres. French wines, however, top imports in terms of value imported, meaning that on average the price of a French wine per litre is well above the price of Portuguese wine. Is this a reality you are trying to change?
JAR: Creating a product associated with high quality that people are willing to pay more for is the way we want to develop the Portuguese wine industry. We are not the normal Portuguese winemakers because all of us involved in Douro Boys have the highest prices in the Portuguese industry. We already have a good product but to have the capacity to target the super high-end markets we need to build a famous and strong brand for the Portuguese and Douro wines. In order for consumers to be willing to pay more, it depends not only on the quality of the product but also on the image associated with the product, which is the aspect we are working on as Douro Boys.
Miguel Roquette: We have the quality and our prices are cheaper than the French chateaux. There is room for our prices to be improved. However, some Portuguese produce wines very cheaply and without much quality and that damages the name of the country’s wines. We’re trying to promote Portuguese wines as a different product with more quality and more expensive. We’re showing we have world-class wines. For example, our wines are outperforming some Bordeaux wines in terms of quality, according to Wine Spectator magazine, but while they are able to sell a bottle for US$500 we can only sell our bottle for US$50. This new image will take time to build.
Who are your main competitors in Macau?
JAR: Oh, these four wine producers sitting next to me [laughs]… We are all competitors in this market, but at the same time we promote our wines together. The other countries competing with us here are the countries from the Old World such as Italy, France and more recently Spain.
Why are Portuguese wines so popular and consumed in Macau? Are we to expect this trend to be replicated in other Asian regions, such as the Mainland, Hong Kong or Japan?
FVZ: People come to Macau and want to try the Portuguese wines because our culture is very much associated with Macau. Also, the Ho family played a major role in maintaining the cultural connections between Portugal and Macau. In Hong Kong, for example, we are this lucky. There you have the Chinese and British communities and a huge expat community. They are mature consumers who have a good knowledge of existing wines. There we have to compete with Australian wines, which doesn’t happen in Macau. Outside of Macau it’s more difficult to replicate this model because of differences in the cultural connections with the regions and because our castes are not easily known or remembered. The lack of knowledge about our wines is often a problem because it drives the more conservative consumers away. They will prefer to have a wine they know already.
But Hong Kong and Macau are very frequently considered complementary markets. Is this not the case for the wine industry?
DN: I thought that in the beginning. But my conclusion is that we’re talking about two different markets. The Macau wine market has been developing well because of the casino industry. If it wasn’t for the hotel and casino industry, we would be talking about a little market where the Portuguese wines do well because of cultural influences. Hong Kong is a much more mature market and cosmopolitan where there is a very large competition war, much more aggressive than in Macau. Here there aren’t many more ways to expand. It’s pretty much related to the casino industry. In my view, at this point I believe the Hong Kong wine market has a better future ahead for the coming years.
Macau is often said to be a platform between the Portuguese-speaking countries and Mainland China. Do you feel that the presence of your wines in Macau creates opportunities to enter Mainland China?
Francisco Olazabal: I think it helped but not to a great extent to promote our wines because of the differences between the Asian markets. For example, the Japanese market has no connection with Macau. Singapore and Taiwan also don’t have much in common with Macau, as well. But for sure it’s a platform to go to Mainland China. However, the Macau market alone is very significant for us in terms of sales. It is worth being in this market because of its value.
MR: Macau is a door to Mainland China because most tourists in the territory come from the Mainland. We can consider it a good platform in terms of the promotion of our wines. But on the business side and for opportunities, Hong Kong works better as a door to export wines to the Mainland.
FVZ: Macau as a platform is not opening many doors in terms of exporting wine to other countries. Now the very interesting door Macau is able to open is for the niche of exclusive and very high-end wines, not only in Mainland China, but all over Asia. Wine is a luxury product and is not consumed alone. Drinking wine is also a way for people to show their status and achievement. In Macau, wine consumption is very influenced by this social side, to the point that some consumers are often tired of buying luxury products and have started asking us for personalised products. I’ve personally signed a few bottles for some special clients. Then these bottles are shown in casinos or restaurants. This is an interesting niche that can be reached in Macau.
You said that all of you are competitors in many markets. If this is the case, why did you decide to join forces and promote your products together through Douro Boys?
MR: Douro Boys is our effort to promote the best wines of Portugal and create a new brand. We believe that promoting a better image for Portuguese wines and the region of the Douro will end up benefiting everybody, which is very important.
DN: This group started mainly due to Cristiano Van Zeller – the father of Francisca – and me. Excluding the wine estate I belong to, all the others present here have family ties or have in one way or another worked together in the past. Before the creation of Douro Boys, whenever I used to meet a journalist I would invite the other producers to join us and bring some wines to promote. One day, however, Cristiano and I talked about doing this promotion more professionally and it all started in 2003. For this, my former wife was also essential as she is a brilliant and talented professional when it comes to networking and promotion. What is very interesting about our group is that as wine producers we are really very different and this makes us more special. The fact that we’re stronger together than alone also made it essential for us to join forces.
Since 2003, how much do you feel you have achieved in terms of promoting Douro wines?
DN: We’ve achieved success in not only promoting Douro wines but also Portugal, the Douro region and of course wine estates. In my view, we end up doing more for the region than actually for our wines, which is not a bad thing. But in terms of promoting Portugal and the Douro we’ve been doing well, to the point that some government officials have told us that we alone have done more for the Douro region than the promotion of the government in ten years. Of course, this is not exactly true – but we have achieved nice results!
The Douro region is very famous for its Port wines, rather than for the table wines you are promoting. Is it possible to associate the image of Douro also with this kind of wine?
MR: Port wine has always been in Douro and it will continue there for many years. However, the port business is very cyclical, with ups and downs. But the reality is changing to the point that the main producers of Port wine are also starting to develop table wines, which in my view is the future of the region. We still have a lot of work to do to promote the Douro and these wines because the production of red wines in the region only started 25 years ago, which is very recent. The good thing is that the Douro is becoming more and more popular and the tourism industry is getting a boost. At the same time, the fact that the region is a UNESCO World Heritage Site controls the development of tourism, which will guarantee that this development does not threaten the region and its authenticity.