People have been making wine in the verdant hills of the Douro Valley in northern Portugal for almost 2,000 years. Nowadays, the region is home to more than 19,000 winemakers and 1,000 companies cultivating terraced vineyards that overlook the Douro River below.
Hundreds of these vineyards are small, often family-run, properties called Thursday, many of which produce port: a syrupy, sweet fortified wine. As a product with a protected designation of origin by the European Union (similar to French Champagne or Italian Parmigiano-Reggiano), the production, labeling and sale of port are heavily regulated, sometimes to the detriment of small-scale operators who they keep cultural practice alive.
When I visited the Douro Valley this fall, the owner of a quintana shared that he couldn’t officially sell the port due to burdensome government regulations. All port vendors are required to keep a reserve of at least 75,000 liters at all times, he explained, a standard that large producers can meet, but which could bankrupt a small fifth like his. Indeed, she could only participate in this important cultural heritage as a black market seller.
Francisco Montenegro, owner of the Douro Valley-based company Aneto Wines, notes that aspiring port sellers are faced with several regulations that make it difficult for them to enter the market. In addition to the minimum stock of 75,000 litres, port producers can only sell or market a third of their production, “thus forcing the producer to leave [two-thirds] of the age of their wines.” They must register with a specific tax status “since they work with spirits,” which requires them to “pay more customs taxes.” Government regulations also require that producers “wait at least 3 or 4 years if I want to bottle a regular tawny port,” Montenegro says.
An extensive regulatory regime dictates the types of grapes producers can use, how many grapes they can harvest in a year and when they can bottle and sell so-called vintage ports. These regulations largely come from the Instituto dos Vinhos do Douro e do Porto (IVDP), or Institute of Port and Douro Wines. The IVDP claims to be a government body that “supports the quality and quantity” of Port and Douro Valley wines through “binding specifications.”
“We must take into account that not all countries in the world recognize or protect designations of origin as an intellectual property right,” according to the IVDP.
A 2016 Cato Institute report by policy analyst K. William Watson questions the argument that these regulations protect intellectual property belonging to traditional manufacturers. Basically, patents and copyrights provide “monopoly privileges … to ensure that people have adequate incentives to invent new technologies or create art,” he explains. But geographical indication protection “does exactly the opposite” by rewarding companies that “maintain old ways of doing things while making it more difficult for innovative competitors to communicate product qualities to consumers.”
A champagne enthusiast may not care that a product specifically comes from the Champagne region of France and meets all the regulations required by the name, and that person would not be harmed or deceived by a product labeled “Portuguese Champagne.” He AND harmed by this barrier to entry into the market, which limits his options as a consumer.
The EU’s “aggressive approach” to geographical indications serves “as a way to monopolize certain markets in commonly produced food categories, confiscating generic terms such as parmesan and feta, even if such terms entered generic use generations ago”, said Shawna Morris, former vice president. for trade policy at the U.S. Dairy Export Council, she told The Associated Press in 2018.
“For centuries, Douro has always meant Porto,” reported wine writer John Sumners VinePair last year. But the situation could change in favor of less regulated products: “Dry table wines offer much greater visibility in the market” and “require less tied up capital,” Sumners explained. According to a wine expert interviewed by VinePairport sales have declined by about 30% over the past two decades.
There are many reasons for this decline, but a regulatory regime that keeps new entrants out of the market cannot help. These restrictions aren’t just to prevent foreign counterfeiters from flooding the market with low-quality ports. They can hinder the efforts of innovative producers and traditional small-scale operators, people with a passion for culturally important products who simply cannot afford to shoulder a huge regulatory burden.
Alcohol protected in Europe
As of February 2023, the European Union has listed 3,500 food and drink products in its three registers of geographical indications, which regulate the naming, packaging and sale of some culturally important products. According to the European Commission’s Directorate-General for Agriculture and Rural Development, of these 3,500, 46.6% are wines, 46% are agricultural and food products and 7.4% are alcoholic beverages.
This article originally appeared in print under the headline “Portugal: how much does a glass of Port cost?”