Fortified wines have been hit by a disproportionate duty increase which will do nothing to help the category this Christmas. But there are plenty of reasons why merchants should continue to get behind port and sherry, as David Williams reports

With the exception of sparkling wine and no/low producers, the new, abv-tracking duty regime has been a hugely unwelcome development for wine businesses, with its timing in the midst of generationally high rates of inflation and a brutal cost-of-living crisis only adding to the feeling that a teetotaller-led government really doesn’t like or understand wine.

But the changes have been particularly tough on fortified wine. When the new rates came into effect on August 1, duty on a traditional 15% abv bottle of fino jumped by a whopping 98p – or 44% – to a total of £3.21; for ports, with abvs around 20%, it’s a 43% rise of £1.30 and a total duty of £4.28; and for those products that come to the upper limit of fortified wine at 22% it’s a 58% rise adding an extra £1.72 and a total duty of £4.70 per 75cl bottle.

With none of the staggered introduction that has at least given some breathing space to producers in the 11.5% to 14.5% bracket (where a blanket 20%, 44p rise has been applied until February 2025), fortified producers have been left to cope with a price shock that, as Fells executive chairman Steve Moody puts it, “will drive a coach and horses through these fragile supply chains”.

It has also left both producers and importers such as Moody with an almost-impossible dilemma. Do they take the hit on margin? Or do they pass the costs onto an increasingly cash-strapped consumer base? The latter, certainly, is a huge risk, given that the £300m British fortified wine market saw a 10% drop in volume and 7.4% in value in 2022. But given the already wafer-thin margins that many fortified producers are currently working with, asking punters to cover the cost may be the only choice they have.

Opening the table wine Fladgate

Earlier this year, the Fladgate Partnership, Fells’ eternal rival as the leading British port shipper, hosted a dinner marking the 650th anniversary of the signing of the Anglo-Portuguese Treaty, the longest continuous alliance between two countries anywhere in the world. The celebrations were a reminder of just how significant the £80m UK market is to port producers, and specifically premium port producers with strong British links.

It was hard, then, not to wonder if the current state of play in the UK fortified market may have played a significant part in shaping the developments that led to one of the biggest stories in port this year: the Fladgate Partnership’s acquisition of table wine producer, Ideal Drinks, from the Portuguese luxury goods entrepreneur Carlos Dias.

The deal takes in the full Ideal Drinks inventory: its brands, wineries and more than 200ha of vineyards. What marks the deal out from any of the many table wine acquisitions involving port producers in recent years, is that the Fladgate Partnership had always resisted the move into table wine and was the last of the big port producers to stick exclusively to fortified wines.

How much of an effect the deal will have on the Fladgate Partnership’s port operation remains to be seen, however, given that none of the vineyards acquired from Ideal Drinks are in the Douro. But the likelihood is that the name of at least one of the Fladgate Partnership’s historic port brands – Taylor’s, Fonseca and Croft – will grace a label of table wine from somewhere in Portugal sooner rather than later.

A good age

Given the range and extent of price pressures, producers are inevitably finding it tougher to make the sums add up at the lower end.

Some are still ploughing away sub-£10 – although how the major supermarkets are able to offer more-than-respectable finos at around £7.50 a bottle when duty accounts for almost half the shelf price is a question for someone much smarter with a calculator and a spreadsheet than this correspondent.

It’s not at all surprising, then, that much of the excitement in the fortified sector is focused on higher, and sometimes very much higher prices. This is a part of the market where price sensitivity is much less marked, and where fortified wines’ remarkable ageability is often at the heart of the marketing matter.

In sherry, that can mean examples of older age statement blends, such as Valdespino’s VOS and VORS Collection series, which includes the Wine Merchant Top 100 Fortified Trophy-winning Don Gonazalo Oloroso. Or it can mean single-vintage Añada wines, such as Gonzalez Byass’ acclaimed series (including last year’s 1975 Gonzalez Byass Palo Cortado Añada) or Lustau’s 125th-anniversary series, which took in a 1996 Añada Vintage Sherry.

Port shippers, meanwhile, have been targeting the lucrative collectors’ market with sometimes exceptionally venerable cask-aged ports, with standouts including Taylor’s Very Very Old Tawny Port, a blend of wines going back to before World War II, and Graham’s ultra-limited edition Ne Oublie, a wine from 1882 aged in cask for 130 years.

Vintage highlights in non-vintage years

The extraordinary run of great vintage port years between 2016 and 2019 came to a halt with the 2020 and 2021 vintages, neither of which led to classic, unanimous declarations. But while the heat of 2020 and the cool of 2021 may have presented a range of different challenges for growers, both years have yielded some exciting, small-production, single-quinta and single-plot bottlings.

Serious port enthusiasts are likely to be most excited by a rare appearance of the Symingtons’ “micro-terroir” Graham’s The Stone Terraces Vintage Port, with the 2021 only the fifth edition of a series that began with the 2011. It’s sourced from a 3ha plot covering two old-vine vineyards in the shipper’s Quinta dos Malvedos estate, and production runs to a mere 4,800 75cl bottles and 280 tappit hens (225cl).

Other 2021 highlights included a full set (Quinta do Noval Nacional Vintage Port, Quinta do Noval Vintage Port, and Quinta do Passadouro Vintage Port) from the independent-minded Quinta do Noval, which has declared each of the past 11 vintages. Explaining the latest declaration, Noval managing director Christian Seely said: “The wines have a marked stylistic individuality, reflecting the particular conditions of the vintage; very elegant and balanced, with great finesse and very pure floral and black fruit aromas. Strongly aromatic, with dense firm fine tannins, the purity of the fruit and the elegance and balance are among the most striking characteristics of this lovely vintage year.”

As for 2022, we’re still some way off the traditional April 23 declaration date. But, with reports from the Douro suggesting that a hot year has delivered a small but concentrated harvest of, in more than one shipper’s words, “exceptional quality”, the odds on a first universal declaration of the decade seem pretty good.

Focusing on fino

The revival of sherry has been talked about for at least as long as some of the wines now marketed as VORS were aged in their soleras. But if a lasting, broad-based revival were ever to take shape, you get the feeling that the dry, lighter styles – fino and manzanilla – would have a central role to play.

It made sense, then, that the latest generic campaign for sherry launched by the Consejo Regulador DO Jerez and ICEX Foods & Wines from Spain should centre around fino, with two waves of digital activity promoting the style and its food-friendly capabilities.

The first stage, which kicked off in the summer, ran under the Fino for Foodies tagline, and saw retailers and restaurants encouraged to share fino food pairings and recipes on a dedicated website, which also directed consumers to buy the wines from participating outlets’s websites.

The second stage, meanwhile, is timed to coincide with this month’s International Sherry Week, which runs from November 6 to 12.

Innovation in port

The cliché with port is that it is a terminally conservative trade, with a somewhat stuffy approach to marketing that befits its rather mature customer base. But if the port world is still not totally free of the whiff of the gentleman’s club and the Oxbridge college cellar, recent years have seen it loosen its tie considerably with some genuinely creative new launches and approaches.

Among the more striking examples is the Blend series from Graham’s, which comprises two ports – the white No 5 and the ruby No 12 – that have been designed to act as the base for lower-alcohol alternatives to gin and tonic or spritz cocktails, and with bottles and marketing that are very much targeted at a younger drinker who is more likely into premium gin than premier cru Bordeaux.

With The Fladgate Partnership having made similar moves with its Taylor’s Chip Dry & Tonic cans, these launches show a category that has learned to adapt. And in an age in which consumers (and the taxman) have never been more preoccupied with alcohol levels, that kind of flexibility is only going to grow more important.