Analysis: Once tainted, Portugal's cork industry fights back
09/05/2017 11:08
* Portuguese cork producers rally in battle with screw-top
makers
* Industry invests in research to eliminate cork taint from
wine
* Some influential wine critics are still not won over
* GRAPHIC - World cork exports: http://tmsnrt.rs/2qRYhP8
By Andrei Khalip
LISBON, May 9 (Reuters) - A decade ago, shares in the
world's largest cork producer, Corticeira Amorim CORA.LS ,
didn't look like a great bet.
Its biggest customer, the wine industry, was flirting with
cheaper products that threatened cork's dominance: screw tops
and plastic stoppers. Many premium wine-makers had spurned cork,
blaming it for occasionally tainting wines with a mouldy taste.
That was then. The cork industry has since staged a
comeback: Lisbon-listed Amorim's share price has soared almost
six-fold and cork exports from Portugal, the world's dominant
producer, have just regained their peaks of 15 years ago.
"When you go back 12, 15 years, the forecast for cork was
anything but optimistic. Where we are today is a completely
different territory from what most people thought possible
then," said Carlos de Jesus, Amorim marketing director.
Sales of plastic stoppers shaped like a cork and aluminium
screw caps, made by firms such as Australia's Amcor AMC.AX ,
surged to account for almost half of the U.S. market, the
world's largest consumer of wine, in 2009, according to the
U.S.-based Cork Quality Council.
Screw tops took over the Australian market, and are now used
to seal most bottles produced in South Africa and Chile too.
However, cork has rallied, partly by investing in research
to eliminate cork taint - a dank, mouldy smell sometimes caused
by microscopic fungi found in cork-tree bark - and persuading
some wine-makers to ditch aluminium and plastic.
Cork has raised its U.S. market share to around 60 percent,
and its share of the global market, which Amorim estimates is
worth about $1.3 billion a year, stands closer to 70 percent.
But the battle for market share has only just begun.
China is emerging as a huge new market as its middle class
of more than 100 million people develops a taste for wine. Cork
and its rivals are engaged in a battle for the hearts and minds
of China's wine lovers - and for now cork seems to be winning.
"It is a tradition. It represents prestige," said Matthew
Gong, Shanghai-based spokesman for major Chinese wine importer
ASC Fine Wines.
However, he added, Chinese consumers would become less
sensitive to the question of cork or screw cap as the market
grew, especially younger people drinking cheaper wines.
"More and more consumers don't mind as much whether the
closure is a cork or a screw cap," he said. "But for top wines,
clearly cork is preferred."
Cork exports to China jumped 22 percent in 2016, according
to cork makers' association APCOR. As the biggest buyer of
Australian wines, China also has the potential power to
influence how producers seal their bottles in that predominantly
screw-top market.
Amcor did not respond to a Reuters request for comment.
However, The Winemakers' Federation of Australia denied cork
makers were making inroads. "It's definitely not a move in
Australia or New Zealand. We are still very much screwcap for
its convenience," said Chief Executive Tony Battaglene.
He said about 90 percent of the estimated 5 billion full
size bottles produced a year in Australia are sealed via screw
top.
LASERS & ROBOTS
In the war with screw tops and plastic, Amorim has recruited
robots, lasers and a battery of chromatographic analysis
machines which can detect the almost invisible signature of
taint - the chemical compound TCA - in a few parts per trillion,
or equivalent to one drop in enough water to fill 20 Olympic
swimming pools.
Bark is carefully stripped from cork oak trees in Portugal's
central-south Alentejo region. Then at Amorim factories near the
northern city of Porto, equipment processes it into slabs that
are steam-treated, cut into smaller pieces and fed by robotic
arms into machines that punch out stoppers. These are sorted and
polished using lasers.
The finest-quality stoppers are still punched by hand before
passing through the humming rows of chromatographic analysers.
Amorim's NDTech process is among the technologies that
sprang from more than 700 million euros ($766 million) invested
by the Portuguese industry in new equipment and research, and
other companies hope to catch up soon.
The industry has also launched cheaper TCA-free stoppers
made from shredded cork for lower-end wine makers. They are made
by Amorim and others such as French-Portuguese Lafitte Group.
The R&D drive was a response to the industry's cork taint
crisis, which peaked in the early 2000s when even European
makers of premium wines began joining the switch to screw caps.
In 2005, Laroche Wines, owned by AdVini ADVI.PA , sealed
all of its Chablis, including high-end Grands crus, with screw
caps. But 10 years later, the French winery, which has annual
sales of 25 million euros, has switched back. It uses cork for
all its Grand cru, Premier cru and most selection wines. At the
end of last year, it started sealing its top wines with NDTech.
"After the big cork pollution crisis, the cork industry was
on the defensive. The incredible work they did changed things...
The cork quality increased drastically in the last 10 years,"
said Gregory Viennois, technical director at Laroche.
Joao Rui Ferreira, head of APCOR and CEO of cork stoppers
maker WFScork, said cork was not aiming to return to its total
domination of the late 20th century, when it held 95 percent of
the global market. Instead, it was focusing on premium wines in
what is now a much larger overall market.
"The trends are very clear. Wine consumption in the world is
moving from volume to value...," Ferreira said.
UNCONVINCED
Influential wine critics are still not convinced. For them,
taint remains a serious problem for cork.
APCOR estimates that up to 1.2 percent of wine bottles are
still ruined by TCA, but some producers and critics cite
anecdotal evidence that the actual proportion is much higher.
Lisa Perotti-Brown, a reviewer for the Robert Parker Wine
Advocate website, wrote in April that during a recent tasting of
more than 900 wines from California's Sonoma County she had to
discard up to 8 percent of the samples because they were corked.
She warned that even at levels below the detection threshold
hawked by Amorim, TCA can still damage the wine, muting or
otherwise dulling the aromas and flavours.
($1 = 0.9141 euros)
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GRAPHIC - World cork exports http://tmsnrt.rs/2qRYhP8
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(Additional reporting by Adam Jourdan in SHANGHAI and Benjamin
Weir in SYDNEY; Editing by Mark Bendeich and David Stamp)
((Mark.Bendeich@thomsonreuters.com;))
Keywords: PORTUGAL CORKS/