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Douro Wine Company
The Douro Wine Company (also known as the General Company of Agriculture of the Wines of the Upper Douro and in Portuguese Companhia Geral da Agricultura e Vinhos do Alto Douro) was a government oversight organization established by the Portuguese Prime Minister Sebastião José de Carvalho e Melo, Marquis of Pombal to regulate the trade and production of Port wine. Established in 1756, one of the first official duties of the company was the delineation of the boundaries of the Douro wine region.〔H. Johnson ''Vintage: The Story of Wine'' pg 226-229, 325-328 Simon and Schuster 1989 ISBN 0-671-68702-6〕 This act essentially made the Douro the world's first regional appellation.〔J. Simpson ''"(Old World versus New World: the origins of organizational diversity in the international wine industry, 1850-1914 )''" Charles III University of Madrid, Working Papers Economic History, pg 16-18, February 2009〕 While the boundaries of the Chianti and Tokaji wine regions were outlined in 1716 and 1737, respectively, neither of these regions were "technically" appellations in the sense of being subjected to continued government control and regulations.〔S. Gatti, E. Giraud-Héraud, S. Mili (editors) ''"(Wine in the old world: new risks and opportunities ) pg 8 Volume 264 of ''Economia - Ricerche'' FrancoAngeli, 2003 Accessed: December 13th, 2009〕 Under their charter, Pombal invested an immense amount of control in the Douro Wine Company to regulate all exports of Port, set production quantities limits, fix maximum and minimum prices for grapes and to serve as sole arbitrator in any disputes between vine growers and Port shippers. In 1761, the company was further granted a monopoly on the sale of brandy which was used in the fortification process of Port winemaking.〔 The Douro Wine Company continued to operate to 1833 (and was briefly revived from 1843 and 1853).〔 Today, many of it functions have been deregulated with the Instituto dos Vinhos do Douro e do Porto or (Port and Douro Wines Institute) being the official regulating body of Port wine and Douro table wine production.〔T. Stevenson ''"The Sotheby's Wine Encyclopedia"'' pg 334-336 Dorling Kindersley 2005 ISBN 0-7566-1324-8〕
==Background==
Since the 17th century, British wine merchants had been consolidating their power over the Portuguese wine trade—particularly in the Douro region, which produced the style of wine that included some addition of brandy, which was becoming popular in the London market. The 1703 Methuen Treaty between England and Portugal had both direct and indirect effects on the Portuguese wine industry. The treaty not only stipulated that the amount of duties on Portuguese wines was to never be more than two-thirds that of which was levied on French wines, it also allowed English woolen cloth to be admitted into Portugal free of duty. This second stipulation ended up having a devastating effect on the Portuguese textile industry, leading to huge numbers of shepherds and weavers becoming unemployed. In and around the Douro region, this segment of labor turned to the wine industry and encouraged a boom in vineyard planting. Over the next few decades the resulting grape surplus, coupled with some unscrupulous examples of wine fraud and adulteration, led to a general decline in Port quality and a depression in prices.〔
The British wine merchants used this opportunity to leverage their strength in order to maximize profits. In 1727, they grouped together to form a trade association and built the Factory House, a private gentlemen's club, where they could meet and collude on details pertaining to the wine trade.〔Enter Portugal ''"(The Origins of the Port Wine Trade )"'' Accessed: December 13th, 2009〕 They bought all the wine from growers on credit, holding off payment till the wine was sold. They built large warehouses in Vila Nova de Gaia where they could keep the wine for years aging. Less than scrupulous shippers also committed widespread wine fraud by importing grapes from regions outside the Douro to blend, as well as adding non-grape based wine ingredients like elderberry juice for coloring and dried pimentos to add spicy flavors. These tactics increased the leverage of the British shippers and meant they could set whatever prices they wanted to pay the Portuguese grape growers. To ensure more fair pricing, the growers often had to resort to more unorthodox business dealings such as the prostitution of their daughters to the British shippers.〔
Complaints and dissatisfaction with the business practices of the British made their way to the Portuguese government. Following the 1755 Lisbon earthquake, the Prime Minister of Portugal, the Marquis of Pombal, saw an opportunity to reestablish Portuguese control over the Port wine industry. The lucrative revenues from the Port wine trade were needed to rebuild the country in the aftermath of the earthquake and the Marquis sought out ways to interject more Portuguese influence over the process. His efforts lead to the founding of the Douro Wine Company and investing it with massive amounts of control, taking away the pricing leverage of the British shippers and reducing their role essentially to being "middlemen".〔
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