Brazil’s wine industry ready to party

Half length of samba dancer pointing to camera

Carneval in Rio de Janeiro is the world’s biggest party. Thousands of people samba down the street, shedding wings, feathers and glitter as they go. Celebrities and the poorest slum dwellers join forces, brought together by their desire to dance.

It’s a metaphor for Brazil itself. Big, spectacular and happy, where acute poverty sits in close proximity to staggering wealth. Despite being the largest economy in Latin America, Brazil has been, until recently, one of the world’s most economically unequal countries. But as commodities money has flooded into the country during the past decade, Brazil has developed a vibrant middle class of around 94m people. With rising affluence comes travel and a middle class appreciation for restaurants – and wine.

The 2014 FIFA World Cup is approaching and international supermarkets are doing Brazilian wine promotions. If Brazil plays this moment right, it could gain a firm footing on the world’s wine shelves.

The beautiful South

The Vale dos Vinhedos, (or Wine Valley), of the Serra Gaúcha region is so lush and green, it looks too exuberant and humid for grapes. Yet it produces some of Brazil’s most notable wines, whose complexity and quality would no doubt have surprised earlier generations of winemakers.

Early attempts at grape growing by the Portuguese and Jesuits were stymied by the humidity, which brought rot and fungus. It wasn’t until a cultivar of Vitis labrusca was introduced in 1840 that winemaking became possible. It was taken up with enthusiasm by the waves of Italian migrants from Veneto, Trentino and Lombardy, who emigrated to Brazil’s south around 1875. The majority of Brazil’s wineries are owned by descendants of these migrants. In the 1970s, companies like Moët & Chandon and Seagram’s arrived, bringing with them the technical knowledge to make Vitis vinifera wines, which now represent around 20% of national wine production.

Today, most of Brazil’s wine production takes place in the southern state of Rio Grande do Sul. While the more southern area of Campanha is attracting investment and interest because of its cooler and drier climate, Serra Gaúcha remains the country’s most important region, responsible for 85% of Brazil’s wine production.

The Valley is visually dominated by the Miolo Winery, owned by a family that has been growing grapes since 1897. Miolo has played an outsized role in the development of Brazil, from encouraging Vitis vinifera cultivation, to helping to found Wines of Brazil in 2002, to forging strategic alliances that resulted in the formation of the multi-business Miolo Wine Group. In 2003, the winery attracted flying winemaker Michel Rolland, who helped develop the winery and the wine styles.

The winery itself is state-of-the-art – thanks to a $50m investment – and includes an impressive lecture theatre. Brazilians are thirsty for wine knowledge, and with 230,000 annual visitors, Miolo sees an opportunity to give it to them.

It is, of course, the wines where Miolo has built its reputation. They have something to offer all levels, from its flagship Lote 43 Bordeaux blend, to demi-sec sparkling, to a very tasty Touriga Nacional and Tinto Roriz blend. Overseas, Miolo wines can be found in the off-trade at Marks & Spencers, Sainsbury’s and Waitrose in the UK, and in Albert Heijn in Holland. “We focus on the on-trade in Brazil, to build the brand,” says export manager Fabiano Maciel. “We have more than 100 labels in total, but choose the most important for export.”

If the Miolo complex is unmissable, it’s fair to say that Lidio Carraro is easy to overlook. Just across the road, it looks more like a suburban home than a winery, an impression reinforced by the smell of baking wafting from upstairs. It was, in fact, the Carraro family home before they converted it. Downstairs, in what was probably once the lounge room, winemaker Patricia Carraro says that her Italian-origin family has grown grapes for five generations. In 1998, they decided it was time to make their own wines. This meant taking a huge financial gamble; as in most of Brazil, the grapes were grown on pergola systems and needed replanting. “We had to cut the vineyards,” she said. “It was impossible to produce fine quality.”

In a short time, the winery has scored some spectacular successes, including a presence in duty free. Lidio Carraro also won the tender to supply the official wine of the FIFA World Cup 2014. The wine, called FACES, is a blend of multiple varieties – the white, for example, includes Chardonnay, Moscato and Italian Riesling – to symbolise Brazil’s ethnic and viticultural diversity, plus the idea of different elements combining in a team. Carraro says the country will never build its identity through one grape, as Argentina has with Malbec, because too many varieties flourish in Brazil. “It’s easier to talk about Brazil and connect people with the image they have uncomplicated and vibrant.”

Sparkling future

But while there are some very interesting still wines to be found, it’s sparkling that’s proving to be Brazil’s most effective ambassador, for a number of reasons, the first of which is that the relevant grapes do well in Brazil’s south.

Salton, the oldest winery in Brazil and the country’s largest sparkling producer, is running like clockwork as the harvested grapes arrive. Founded in 1910, it’s a multi-generation family winery that’s booming, with six or seven years of export experience behind it. “We are the first winery with fair trade certification,” says export manager Vagner Montemaggiore. “We have more than 40 labels – something for each channel,” including bestselling bottles of grape juice, produced just once a year. He says that one of the best things that happened to Brazilian wine was the flood of imports in the past few years, which have prompted Brazilian upgrades.

Salton produces 8m bottles of sparkling a year, which represents 40% of its overall production; they can be found in 14 countries. They also produce still wines. The British buyer at the table is nodding appreciatively as he tastes some of them: a Marselan, a Tannat, a Teroldego and a Cabernet Franc.

The dramatic worldwide growth in sparkling wine consumption means that Salton isn’t the only winery doing well with these wines. Smaller wineries like Don Giovanni and Cave Geisse, founded in 1979 by Mario Geisse, who had arrived in 1976 to direct Moët & Chandon Brazil, are winning plaudits. Down in the stone cellars of Casa Valduga, a major producer, are pallets of wine waiting to be shipped to international supermarkets. Another family winery, it was one of the first to master the art of traditional method sparkling making, and while it also makes still wines, it boasts the largest sparkling wine cellar in Latin America. Exporter Elisa Walker says Casa Valduga now ships to more than 20 countries.

“We started exporting because of demand after we won international awards,” she says, adding that in 2005, people were cynical about Brazilian wine. “Then we made projects about image with Wines of Brazil and taught people about our location and our weather. We always asked for feedback on our wine.” They got feedback about using too much oak, for example, so cut back their use. “The big difference now is that people are looking for Brazilian wine.”

Economics also plays a role in sparkling’s ascension, says Flavio Pizzato of Pizzato Winery and Vineyards. In 2005, Brazil’s currency strengthened, lowering the price of imports. Soon, the Brazilian share of the wine market dropped precipitously, to around 20%. The Brazilian tax regime only adds to the woes: Inputs throughout the production chain are taxed. “Fifty seven percent of the bottle price is taxes,” said Roberta Baggio Pedreira, export manager of Wines of Brasil.

Brazilian wines then have to compete on the shelf with wines from Argentina, Chile and Uruguay which have faced zero import taxes due to special trade agreements, which means Brazilian wines are automatically more expensive than wines of similar quality from their neighbours. The wine sector has asked the government for an adjusted tax regime, but have had no success so far. It doesn’t help that Brazilians, raised in a closed market where they were led to believe that anything that came from overseas was better quality, already have a bias towards foreign products. In many cases, they were: after all, wines made from labrusca grapes used to dominate production. Even today, a wine that is labelled as a vinifera variety may still have a labrusca component.

This prejudice does not exist toward Brazilian sparkling wines, partly because their South American competitors aren’t known for sparkling production. “During this period [of currency strengthening], the consumers thought that Brazilian wine is good, but expensive, but sparkling is good but not expensive,” says Pizzato, whose 200,000-bottle-a-year operation is regarded as one of Brazil’s best boutique wineries. “Brazil has 75% of the sparkling market, so we are not afraid of Argentina.”

Christian Burgos, editor of wine magazine ADEGA, agrees. “We have above average quality sparkling. The same weather conditions that make it more expensive to produce good reds than Chile and Argentina help us to produce good and competitive sparkling. Terroir rules, once again.”

Grape juice

The Great Depression caused such a collapse in grape prices that many grape growers banded together in co-operatives like Garibaldi and Vinícola Aurora. Today, Aurora doesn’t look like much more than a long, nondescript building in the town of Bento Gonçalves.

Inside, however, is an oenotourism experience, from a floor light show that lets visitors rustle leaves of light, to a sophisticated tasting room for seminars. Aurora is Brazil’s biggest winery, involving 1,100 families, three wineries with a fourth one planned, 11 agronomists, four winemakers and 150,000 tourists per year. Aurora was also the first Brazilian winery to export, and their wines are found in 11 countries.

“We conquered Belgium last year,” said winemaker André Peres. “We have export in our DNA.” He adds that when one Brazilian winery exports, “you open the door for other wineries. But if you do something wrong, you close the doors for everyone.”

Of the 55m kilos of grapes Aurora processes every year, 24m L of the resulting grape juice will be made from the labrusca grapes that have done so much damage to the image of Brazil’s wine. In a curious twist, the grape problem isn’t just solving itself, but providing another income stream. It’s because natural grape juice has recently become trendy as a health drink in Brazil, which is diverting the juice from hybrid grapes into the bottled juice market. “Last year we weren’t able to export grape juice,” say Peres. “Sales in Brazil grew 42% last year.”

Aurora won’t make any wine that isn’t vinifera this year, as every litre of hybrid juice will be sold as grape juice. “We’ve turned it from cheap wine into expensive grape juice – people are surprised by how expensive it is.” This means more money invested in fine wine, a scenario that’s playing out across Brazil.

The future

In all Brazil has 83,700 ha of wine land, dotted with around 1,100 wineries, some of which are tiny holdings of 2 ha. With wine consumption at only two litres per head, there’s plenty of room to grow domestically, as well as internationally.

There are problems: the harsh taxation regime, lack of local demand, and an over-abundance of labrusca wine, despite the reallocation to grape juice. If they can solve some of these issues, there’s no reason why Brazil can’t emerge as a major producing country. The quality is emerging, as is the enthusiasm. Wines of Brazil have made an outsized noise at the major trade fairs through witty promotions and warm hospitality, gaining Brazil outsized attention. And with the 2014 FIFA World Cup and then the 2016 Olympic Games approaching, the Brazilians have a unique opportunity. Because above all, the Brazilians know how to put on a party that everybody wants to go to. It’s a great chance to show off their wines.

Felicity Carter

This article first appeared in Meininger’s Wine Business International in 2104.

Leave a Reply

Your email address will not be published. Required fields are marked *