3 lessons in management from the Port industry

Let me start by clarifying at the outset – all genuine port (wine) in the world originates from the Douro region, which stretches from about 60 miles west of Porto and up towards the border with Spain.

Like it or not, this has been a fact of international trade for years. And if you ask why, you will begin to comprehend how the Portuguese (with a bit of canny help from the Brits) started implementing management and strategy long before Harvard, Sloan et al business schools got in on the act.

Here’s what I mean.

1) Branding: As far back as 1756, the King of Portugal ensured that the Douro became the oldest defined and protected wine region in the world. Drink port from anywhere else and under international law, you are not drinking “the real thing”.

It does not stop there. Sandeman is one of the oldest brand names in the port business. The founder was a wee Scotsman, who made his way to London in 1790. Within 15 years, all of his casks were denoted by his own iron signature. His successors, in 1927, were amongst the first in the world to trademark their own symbol, the Don.

 2) Production:  We all know the rules of this decade:  Tech up your production to become lean and efficient above your competitors. But not if you are in the port biz.

How so? Well, most of the grapes are still harvested by hand, even in the searing heat of the Douro Valley. They are then transported back to the various estates and crushed. Yes, some places still use the well trodden method of human feet.

And finally, the spirit is moved to cellars in central Porto, where it is kept for years. These “caves” must maintain strict level of humidity and temperatures. In several places, this task is secured by spraying the floors with cool water, and very little more sophisticated an operation than that.

3) Pricing: Buy good port in Portugal, and much of it is very affordable, despite the intense labour costs. Check out the prices around the world and it is rarely under-priced. In theory, the only difference between the two places is a little bit of extra transportation costs and an extra mark up.

What I am saying is that the industry has long ago devised a pricing system where everyone benefits. This includes the final consumer, who often seems pleased to pay a premium for a great product.

Bottom line of all this. If you want a great holiday, where one of the great global tastes can become suddenly affordable, do what I have just done – spend a week in the beautiful country of Portugal.

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