"A Wine Concept Bet
He wants to duplicate his production capacity throughout the next 3 years and prepares himself to combat his competitors with more wine and better prices. José Neiva spoke to Enovitis about his tailor-made wines and the market opportunities. An option that makes him have to manage more than 30 brands and about 300 different references at DFJ.
In our last interview your declarations motivated a big controversy, when we spoke about the entrance of new investors in the wine sector…
The people that entered to ennoble themselves did not make it. There are exceptional cases of investors that came from outside the wine sector and have committed themselves. I can give you a good example, José Luis Oliveira da Silva (Casa Santos Lima), he came from the banking business and entered the wine business because of family issues. Another case is Alexandre Relvas (Herdade São Miguel). They entered in the market with successful companies.
They are people with a rational philosophy and entered the business without the lyricism of “I’m going to make the best wine in the world…”
They entered the wine business in a different form, not to ennoble themselves. They already had their parchment, they didn´t need the wine, and they are people without complexes, very intelligent, pragmatic and they know how to do business. They also know the risk of bad made businesses. They’ve surrounded themselves with competent people and have done a good journey along the way. I have done the same. I never wanted to personally enhance myself through my company. I am, how they usually say it “in all of them”, I have an enlarged view of the sector, I’ve always been consulted in the oenology area, worked with high dimension companies and realized what were economies of scale. I know that in order to cultivate 30 acres of vineyard I need a tractor, two men and the respective implements. But if I have 3 acres I need the same. Therefore, in this competitive world, I have to offer a product with a good price quality and that is easy to transact, otherwise we will not grow.
This national competition of people that came from the outside has brought problems, because until very recently my competition was the Chilean, Argentine, Californians and South-African producers, in general the new world producers.
You continue to export almost everything…
I export 90% but I have to export 100%. But I was saying, today my competition are the Portuguese. They are people that entered the sector without any knowledge, and arrived with their products but don´t know what to do with them. They want to sell them so they approach my clients and offer it at a very cheaper price, dumping it…
They are ruining the market?
Precisely. There will come a day when they will not have capacity to have their wines at home because they do not have the money to buy more tanks. And so they have to sell it with nothing to trade, they deliver the wine on consignment, they are not careful with credit insurance nor bank guaranties, they do not demand nothing and make prices that should not be practiced. This is my current my competition. So I had to turn to other solutions: wines tailor-made and concept wines. I made Pink Elephant, which was my first concept wine, made by this house. We verified that 50% of England’s restaurants were Indian, in consequence to that they have spicy foods and there was a lack of wine for this kind of food.
Concept wine only for the external market?
Yes, absolutely. In Portugal the people don’t even know what a concept wine is. Pink Elephant was made for a determine consumption but it also can be drank with other types of food. But, fact is, it makes a perfect relationship with spicy foods.
So do you have more concept wines?
I have also made Point West, which is a wine that has to do with the new fashion that explores the Atlantic influence. Our vineyards in the Lisbon region are on the most western zone of Europe and that influence is very positive on the current concepts of quality.
Also for the English market?
For any market. People speak a lot about the English market, which is good, although it’s a difficult and demanding market on a global level. But we cannot limit ourselves to only have success in the English market, because when this is concurred the Commonwealth doors are opened. Since all the buyers in this country are English, it’s easier to sell and that is very good. England is the country where there exists more opinion leaders, that write to the entire world and are read by everyone. It’s a cheap way to promote ourselves. I have a novelty to come out shortly which is a wine called Slow Wine. It’s a wine designed to be consumed with slow food, that begins to gain an interesting force, this movement is expanding and so I´m preparing its launch in Canada…
Because Canada has an interesting gastronomy and many Portuguese have had success in that area. It also facilitates the entry into the USA. Only after am I going to launch it in England. It’s a different strategy than usual, because normally I Launch in England first. It’s a feeling…
I´m looking at Pink elephant, with a screw cap. Does a cork screw not make sense?
My business is selling wine and is not selling wine seals. Although I am Portuguese and have a special affection for cork seals, it’s a verified fact that in determine markets the screw cap helps me to sell, so I will not hesitate. I normally have the two options in most of my brands. In reality I’m starting to have 50% in screw cap.
But the cork seal industry has made a great effort in the last years to improve, especially Amorim & Irmãos, that have been the great engine of this improvement.
But as a technician, do you think it makes a difference or is it just a question of image?
At this moment we have as options the natural cork, the technical cork, the synthetic cork and the screw cap. The natural cork seal, has reduced a lot of its incidents with tricloroanisol, although there are still some cases of polluted wines. Never the less there are advantages, it has a great longevity, and for a lay down wine that has to intern for more than 5 years, I do not see another option other than the natural cork seal. Especially the image it causes to the consumer that is buying an expensive wine.
Also in a functional level, in order to exist a normal evolution and to have the exchange of gas, we need a natural cork seal, although a technical cap has the same advantages and very few consumers can perceive if it’s a technical or natural cork seal. Most consumers think that a technical seal is a very good cork seal. Nowadays Amorim, who is my supplier, can make agglomerated cork seals practically free of tricloroanisol. There are still some cases, but I think that in the future they are going to make the depollution of natural cork sealers in the technical seals, which will give full guaranties to the producers.
The synthetic seals have a problem: the bottles have to be very well made, because this seal has low elasticity, and if bottle is imperfect that can bring sealing problems and ruin completely the filling. It is necessary to pay attention, because the glass industry is not the most strict.
As for the screw cap it has had a lot of success because it does not require any equipment to unroll the seal. A corkscrew is not necessary, it’s easy and practical so that anyone can open the bottle. It just has one disadvantage which is the fending, it practically does not allow any gas exchange through this capsule, but there are some technical solutions for this. When we do the filling, we do not know what will happen in terms of sulfur compounds, the thiols, that appear between 6 months and a year after filling and that can give the wine a bad smell. The thiols can be combined with copper if this exists in the wine, but we can only add 1 milligram of copper and most wine-makers are not prepared to dose this quantity without exceeding what the law allows. If we know how to manage well this dose, we have 90% probability of not having problems within a year or two. If we do not do anything, there can be complications after six months.
But you only use the screw cap for wines with rapid consumption?
Normally its only used with rapid consumption wines, but I have done experiences with aged wines and they behaved very well.
What I pretend is that if my client makes an order every three to three months, then I hope that the wine he buys is consumed within three months. If he makes an order every year I hope that the wine is consumed within a year and a half. At first we will not have problems with the screw caps. But I never make pressure to be with cork or screw cap. I´m Portuguese and I know that the cork sealer is best for our industry and if they ask my opinion of what is the best solution I normally recommend the natural cork or the screw cap depending on the range of the wine.
You do not feel pressure from your clients?
It depends. Some clients define: I wan screw cap. But when they leave it to me to decide I normally use a cork sealer. I don´t see how nowadays it will give me problems.
The presume that exists is because of the price?
The price of a screw cap or a technical cap is just about the same, maybe the screw cap is slightly more expensive but that is not how I make my options. The cost differs on whether the cap is printed or not.
This policy of making wines in function of the client and concept wines, it implies a lot of diversity and the creation of a lot of brands. How do you manage such diversity?
I usually say that this is a business on which you do not make a lot of money but you have fun with everything that involves creating and with the client relationship.
But in practice, isn’t hard to manage the stocks of bottles, labels and caps of so many different wines?
We have to adapt our business to the existing conditions. If I was a rich man and had money to put behind the products I would only have 3 brands, it would certainly give me less trouble. Since I´m not a rich man, I have 33 brands with about 100 references. The companies have to adapt their conditions, adapt to the country they live in, adapt the image, the money that they have and their dimension. Sograge can go that way, they can put money behind their products, they can promote their Mateus Rose, by making publicity and marketing, but for that its necessary to have large volumes. I have a product where I try to do that, I always leave a few cents made by Pink Elephant to make publicity. We sponsor a feminine volleyball team and we sponsor a association for the protection of Asian elephants, the English are very sensible to those kind of things.
It’s a very timid form of making a big volume brand, where part of the bottles price is going to be invested in promotions. But this is an exception in our portfolio.
How many bottles of Pink Elephant do you produce?
The project was of 1 million and we just about there. Portuguese wines have a hard time being commercialized in other producing countries because Portugal does not have a brand. Not good not bad, it just doesn’t have one.
It’s difficult to sell Portuguese wine so we have to offer better and cheaper conditions. Just because its Portuguese it has to be better and cheaper. Because Portuguese wines are exotic wines, that’s the shelf they are on…Portugal should have done something to combat this, partnerships with Spanish, for example. They do not have big problems with that.
But if we cannot organize ourselves to sell together in Portugal, how will it be with the Spanish…
It’s not the same. I´ll give you an example. There was a annual gastronomy festival in Montreal and it was proposed that the Portuguese take their kitchen chefs and wine producers. The ICEP didn´t want to go, either did ViniPortugal so the producers got together and went.
How many producers?
18 producers who paid everything from their pockets. We took 2 kitchen chefs and wines to make the connection to the menus. I was already selling there but I started to supply the place where we presented our wines, Portugal was prestigious in that market. That action reveals how the Portuguese feel and how they do their work. All of this was done directly by us. When we want to do something we do it.
But going back to the number of references of DFJ, either you put money behind your wines or you have to have market opportunities. And the market opportunities are made through concept wines or wines directed to the consumer. Like I usually say I´m a wine tailor. We can make adapted blends and corrections directed to different markets. The English market is very different from the Polish market and this one is very different from the Japanese. A polish consumes wines with 40 grams of sugar and they call these wines medium sweet…because they also have the sweets, with even more sugar…why complicate? If that’s what they want, that’s what we should give them. For that we need to have technology and know-how so that we can make these wines without risks. Because when I send a wine to Poland with 40 grams of sugar it cannot have any yeast or bacteria.
How do you control all of this?
No one does anything alone. It’s a question of organization and teamwork. Working with me are 4 technical wine makers. It’s a question of creativity and the liking of creating. I´ve already been called magician and the guru of grapes, this has to do with my capacity of creating and adapting. It’s easy to comprehend, the wine-grower only exists as long as the economical activity is profitable. There comes a time that they start to lose money and disappear. The same way that the farmer has to adapt his land to the cultivation and get the most profitability. The businessman of the business, and I am a producer, winemaker and merchant, have to make the most profit with the conditions he has. I have to adapt and that goes through the creativity and creation of different products…
Do you still hot bottle?
Yes, this technique is not made to ruin or to improve the win. It’s to solve the microbiological problems. Despite there being some collateral damage and for that you need to have suitable equipment. This has brought lots of businesses to use the “José Neiva” method. I was the first to use this method but nowadays many people use it.
Do you receive visits from other colleagues so that they can understand the method?
Yes, just as I am at ease to visit other people if they have something innovating. There is no need of having complexes and secrets in this area. Nowadays there is a very big transparency.
Let’s talk about the castes. You were one of the first to bring Alvarinho to Alenquer region, a caste that starts o migrate to a lot of regions, like Alentejo. Does that make sense?
Alvarinho is a cast of a very small cycle and should be on a place where they are Atlantic influences and low temperatures. It does not make sense to make Alvarinho or Pinot Noir in the Alentejo. Just like a kitchen chef, he aims is to have the food cooking during the most time, the maturation is the same thing, the more time the grapes take to mature the better.
We have a conditioner:the 21st of September, the equinox. The probability to rain on that day is very huge and so we have to harvest before that date. The pretended alcohol and the phenolic ripeness should be made before that date, and we should adapt the castes to the cycles that make that possible. If we can get the grapes to stay more time repining without the risk of rain, we can make them better. But it doesn´t make sense to have small cycle castes in a place with the climate of Alentejo, where the ripeness is made without risks.
In Torres Vedras, for example, a fresher and more humid area, I can have castes of a small cycle like Pinot or a Chardonnay or even and Alvarinho.
You do not have preconceptions with the castes leaving your region?
No and I think that that should happen. I cannot accept that a sub-region like vinho-verde wants to have a cast just for themselves like the Alvarinho. It does not make any sense. What would be of the wine world if Bordeaux clamed for itself the Cabernet, if the Spanish wanted the Tempranillo and Borgonha the exclusivity of the Chardonnay or of the Pinot. Want would be of the world of viniculture?
But sometimes we make mistakes when the castes do not have adaptations. To bring Alicante Bouschet to Torres Vedras, for example, does not seen like the best solution.
Are you using new castes?
I am making a Dornfelder, a German cast with a small cycle, good for soft wines, with a lot of fruit and color intensity, that often embarrasses the Alicante Bouschet.
I have a big area of vineyard, in Portugal (200 acres), and I need to have the harvest done before the 21st of September. I have a great capacity of work from my cellar but if I want to increase my production I need to have small cycle castes so I can start harvesting earlier. And the Dornfelder allows me to start harvesting earlier, just like Alvarinho, the Pinot and Chardonnay.
Returning to the Dornfelder, it can be an improved cast, it gives color and its soft. And I like to make improvements and adjustments without having to put stuff in the wine. The corrections should be made in the blends.
The first pure Alicante Bouschet made in Portugal and assumed, was made by me. Well vinified it makes excellent wines. For that it is necessary not to have complexes and to assume that we can make stuff that is going to be criticized by others. I often say that no one is going to bring me money and so I have to think with my on head, which makes me do stuff in a different way. II also do not have complexes in making stuff I consider good and that other people are also doing and should be copied. I do not do anything with the necessity of needing to be original.
How do you see the focus of Touriga Nacional being the flag of the Portuguese wines?
I think it´s very reducing. If I had to make a choice I would chose Touriga Franca that adapts better to the international market. I think that the Touriga Nacional is to the wine as the Bovril (concentrated salt beef) is to soups. The Touriga Franca is for me an improved caste that we have, it’s a caste that benefits the blends, even in a small percentage, it’s a good crutch for winemakers. Although per se , its sometimes a little concentrated, especially in the areas where there´s tendencies of appearing floral aromas making it a little nauseating. In the Douro it makes a beautiful wine but it’s a little sickening, in the Alentejo the same happens. And these things have to be more subtle, a wine has to be finesse. In the future the great wines of Touriga nacional are going to appear in the most improbable places. It will not be in the Dão or the Douro nor the Alentejo. In the Lisbon region for example the caste is more on the limit and can have interesting results. As it is obvious I am not analyzing if its rentable or not.
A blend of wine is richer or when a caste is good you prefer it pure?
The varieties have a didactic function, they help people to know more about wines. But as the consumer learns, we want them to enjoy a good blend. But we have a big diversity of national castes that need to be introduced and made known. How? Since most of the consumers already know the so called international castes, if we make a wine with a international caste allied to a national, it’s a way of promoting our castes and entering their markets. Whoever tries a Touriga Nacional /Shyraz gets to know different castes and later on will want to try other things.
When we sell wines we sell dreams and sensations. This has to do with the location, the tourism, the fashion and the arte. Until now we have promoted Portugal with Eusébio, Amália and Our Lady de Fatima. This hasn´t been enough. We now have to involve Mourinho and Cristiano Ronaldo…
Your increasing the production and adapting the cellar for this growth. Why?
DFJ has come to a crossroad. It started to receive the attack of the other Portuguese producers, economical agents from our country. And we had to react to this. Just calling them names does not solve the problem. Since our wines are adapted to the market and we know how make to them , since we use adapted technologies to make wines for different consumers, we cannot improve, so much, as to the point of causing a visual modification from one moment to another. The only thing that can be done fast is changing the price, that’s where they try to beat us. I believe the I know better the sector then they do, because like I said before I am a producer, consulter and a marketer, I have a very wide experience, and I have got to the point where I decided that I have to be more competitive. For that, and because we do not make a lot of money, we have to have equipment that will allow us, with the same costs, people and a little more outlay of energy, to produce more. We are going to replace a filler of 20 nozzles for one with 50, a corking machine of one head to one with 4 heads, and so on…
It’s a big investment?
No, it’s not as great as that, it’s a calculated and pacific risk. By the end of the summer I hope to have 90% of this implanted. Since I have a golden team so I just have to make the wine as good as I have made it until now, but just with more quantity. And all the administrative costs are going to be charged at a higher volume.
How many bottles do you make at this moment?
We have a production capacity of 6 million bottles, but we have to make a leap. I hope to duplicate it in the next 3 years.
It’s a big leap. You will have to buy more grapes?
Yes, but I already have grapes from all the regions of Portugal. I have to do what the competition cannot, because my investment is already made. Now I’m going to start shooting at their hunting grounds…"
in Enovitis Magazine September 2011