Real Companhia Velha

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. 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".

Later history

The Douro Wine Company continued to function until 1833 (though it was briefly revived from 1843 to 1853). By the mid-19th century, the tight restriction on the Port wine trade and (in particular) its monopoly on brandy was creating contempt among the Portuguese themselves. In 1852, the Douro region was seized by Miguelites loyal to the former King of Portugal, Dom Miguel. During the 18-month siege, the Miguelites blew up the brandy storage depot of the Douro Wine Company. With the warehouses of several Port shippers nearby, the fires quickly spread with an estimated 27,000 pipes (between 12,825,000 and 12,960,000 litres; over 3.4 million US gallons) of boiling hot Port wine flooding the streets and flowing into the Douro river.

The Company was broken up and many of its powers were subsumed by other organizations, some public and some private. Today the primary government regulating body of the Douro is the Instituto dos Vinhos do Douro e do Porto or IVDP.

Criticisms

The British were early and vocal critics of the Douro Wine Company. With its founding, they lost substantial control of their near monopoly of the Port wine trade. As wine historian Hugh Johnson notes "...they were now reduced to mere middlemen who were told what they could buy and at what price, and where they could sell it." Since the Douro Wine Company also bought wine and sold it to shippers on the international market, they were criticized for having a distinct conflict of interest in their role as regulators. Other criticism circulated around the Marquis of Pombal himself who was granted certificates of authenticity by the Douro Wine Company for "port" produced at his estate in Carcavelos outside Lisbon even though it was clearly outside the official boundaries of the Douro wine region.

One vocal critic of the Douro Wine Company was the British winemaker Joseph James Forrester. Despite being British, Forrester was well integrated into the Portuguese community and even received the title "Baron" for his work in defending the Portuguese wine growers and creating the first extensive maps of the Douro river and its wine region. In his 1844 pamphlet "A Word or Two about Port Wine" he criticized the Douro Wine Company for its control over the Port wine industry and its encouragement of producers to add substantial amounts of brandy to the wine. In Forrester's view, the best wines of the Douro were "natural"-meaning without fortification or, if used, in very small amounts. With its monopolistic control over the brandy used in fortification, it was in the Douro Wine Company's interest to encourage extensive fortification.