Globalization and wine business: Port wine

Rebelo, João Fernandes
Correia, Leonida Amaral Tomas
Caldas, José Manuel Melo Vaz
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In the past two decades the world has seen acceleration in the process of globalisation, affecting virtually all industries and consumers. The wine sector is no exception, witnessing increased exports and imports, decreasing consumption per capita in the producing countries, and a wave of direct foreign investment and mergers and acquisitions in the industry. Among European wine producers the Port wine can be seen as a representative case of globalisation and as a benchmark, because almost 90% of its production is exported. With this in mind, the main objective of this paper is to analyse the structure and behaviour of the Port wine chain in terms of industrial organisation and trade. To achieve this objective a survey about the role of organisations in national growth and descriptions of the European wine industry and of the Port wine chain was conducted. Moreover, we identify and characterise the dynamics of production, price and trade of the Port wine after World War II. Despite the Port wine activity having been subjected to cycles there has been a trend toward a continued increase in production and exports, stabilisation of real market prices and a slight increase in the real prices paid to grape growers, leading to positive economic effects for Port wine firms and grape growers. The pro-active behaviour of Port wine chain agents contributed to this result, namely exporters who were able to adopt market strategies to respond to the challenges of globalisation.