The approach of a new harvest is a major concern in some wine regions, as the existence of excess wine puts downward pressure on grape prices. The government has made available 20 million to support the withdrawal of surplus wine for distillation and applications have already started. The fear is that, despite the support being “substantial”, it may not arrive. No one admits how much wine is too much in the cellars, some point to 40 million and others estimate they could be more than 70 million litres.
Last week, the government launched candidacies for the crisis distillation, the deadline of which ends on July 26. The measure, which aims to support the distillation of wine for industrial and energy purposes, is limited to 30% red wine or rosé wine eligible for certification with a geographical indication (GI) and designation of origin (DO), declared by each producer or winegrower in the last vintage. In total, Portugal produced 680.5 million liters of wine in the previous campaign, of which 625.5 million were suitable for DO and GI.
Contrary to what happened in distillation activities allowed during the pandemic, when the aid was the same for the whole country, with the exception of the increase for mountain wine-growing areas, this year the aid is differentiated and calculated on the basis of the declared prices for every region. For example, for the Alentejo it goes from 55 cents per liter GI to 65 cents for DO, while the value in the Lisbon region will be 52 cents, both for GI and DO. In the Douro, 90 cents are paid for every liter that is distilled. Liqueur drinks are not covered. If we analyze the value by region, the average price on a national level will be 67 cents per litre, which means that the available EUR 20 million will make it possible to distil, in round numbers, about 30 million litres.
The president of the Instituto da Vinha e do Vinho hopes for “good compliance” and recalls that distillation “is not intended to replace the marketing capacity of producers in the markets”, but rather “to market wines that currently no longer market under the best conditions”. And if a surplus of wines is proposed for distillation, a division will take place. “We have faith in the common sense of the producers,” says Bernardo Gouvêa, recalling that “no producer likes to distil his wines”.
The president of the Lisbon Wine Commission (CVR) admits that the measure is “important and timely” and that the 20 million is “a substantial amount despite everything”. Francisco Toscano Rico fears that given the “tremendous interest” the distillation generates, the value will not be enough to cover needs. “If so, it’s very important that it can be strengthened, otherwise we’ll have a ticking time bomb in our hands,” he says.
The region currently has “one and a half crops” indoors, about 150 million litres. “Of course these are not all surpluses, no, but we don’t know how much the surplus is either. We do know that stocks are 20% higher than last year and that there is enormous pressure on the sector,” he emphasizes.
In Alentejo, existing stocks are about 145 million liters of red wines, while before the pandemic the normal range would be about 90 to 100 million. “My expectation is that this will allow us to remove excess wine and get us to a more comfortable level. I don’t know if we’re going to be distilling 20 or 30 million, what we do know is that roughly every producer will only have a third of their production for can apply for this goal. Let’s see,” says the president of the Alentejo CVR.
As for the values, Alentejo acknowledges that the prices are the prices indicated, but only fears that if there are many applications, the 20 million will not be enough for everyone. “It made sense to look first and foremost at the regions that are in a more surplus situation. It was more balanced for everyone to tackle the problem at the source… If we do a little bit of distilling in each region, they improve all a little bit, but the situation of surpluses will persist, which will not be good for the country. But we are waiting for the result of the candidacies,” emphasizes Francisco Mateus.
The Douro is one of the other regions that have been identified as having some surplus wine, but since production and trade are not yet at the table to define the allowable production of Port wine for the next harvest, those responsible for the Douro do not want, for for the time being to deal with the surplus problem. António Filipe, president of AEVP and trade representative, believes that the 20 million is a “substantial increase” compared to the 10 million made available in the two previous campaigns, in the context of support for covid, for distillation and underlined that the unit values of support are “fairly reasonable”. Rui Paredes, production representative, agrees, but admits that it is a “quite restrictive” measure in terms of quantity. “My fear is that there has to be a big split and we move on to the issue that’s on the table,” he says.
Arlindo Cunha, president of CVR do Dão, says he has received “expressions of interest” from growers in the region, but does not know how much surplus there is. “We are all a little worried, but the measure is important,” he emphasizes.
Ilídia Pinto is a journalist for Dinheiro Vivo
Source: DN
