The Fladgate Partnership, which owns Port producers Taylor, Fonseca and Croft, has just purchased Real Companhia Vinícola do Norte de Portugal. The agreement is a real-estate deal, with Fladgate acquiring more than 1 million square feet of offices, cellars and bottling facilities in Vila Nova de Gaia, just across the Douro River from Oporto. Fladgate CEO Adrian Bridge confirms that the price was $28.7 million.
The Fladgate Partnership Vinhos S.A., which was formed in 2001 when Taylor Fonseca bought Croft and Delaforce, has been quite active in the past few years, having purchased all the assets (but not the brands) of rival houses Borges and Osborne. They recently sold Delaforce, and invested $43.7 million in a luxury hotel in Vila Nova de Gaia. The hotel is part of their campaign to enhance wine tourism in Oporto, a UNESCO Heritage city that's receiving an increasing number of tourists. Unlike many of their fellow Port producers, Fladgate has not ventured into Douro table wines.
No brands or staff were transferred in the deal. Real Companhia Velha will continue to own the Real Vinícola name. For Fladgate, the goal is to centralize all of their bottling in the new facilities. A spokesman said the company will invest nearly $3 million to upgrade the complex. Fladgate was already renting some space there, but the rest of its bottling was in Rua do Rei Ramiro, which is jammed with traffic, whereas the Real Vinícola facility enjoys easy access to the main highways.
According to Bridge, the major benefits are in efficiency and reduced costs. He estimates that the deal will pay for itself in 10 years. Fladgate bottles 16 million bottles a year and will now have a bottling capacity of 36 million. The firm also plans to sell bottling services to Real Companhia Velha, Osborne and other producers. Several stainless steel tanks of 1 million liters are also available for rent for companies looking for storage.
Real Companhia Velha was looking to sell because its plans for the development of its holdings suffered from the global recession. Pedro Silva Reis, CEO of Real Companhia Velha, stated that the company will bottle its production of 8 million bottles per year (DOC Douro and Port wine) at Fladgate's facilities for five years, with an option for three more years. In time, operations might be transferred to the company’s facilities in Alijó, in the heart of Douro Valley.
Port producers traditionally aged their wines downriver in Vila Nova de Gaia, because the climate was so hot in the Douro. But technology is changing that. According to David Guimaraens, Fladgate’s chief winemaker, air conditioning has allowed more wineries to move their cellars closer to their vineyards. Even as Fladgate consolidates its downriver operations into one big facility, it has expanded its investment in the Douro. The company has invested in winemaking facilities in Quinta da Nogueira, in São João da Pesqueira, and plans to develop tourism facilities at Quinta da Roeda in Pinhão.