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Introduction
Wine production is an important component of the Portuguese economy, it accounted for 43 % of all agricultural exports in 1994. Yet there are signs that the Portuguese wine industry is not adapting itself to international trends in the wine trade. In the important UK market Portuguese table wines dropped from sixth position in 1987 to tenth in 1994. Production is in sharp decline, having fallen by 43% in the five years to 1994 (Table 1).
Table wines accounted for 53% of wine exports by volume, but only 14% by value. The value of table wine exports is weakened by the Vin de Mesa and Regional wines exported in bulk to markets such as Angola (Tables 2 and 3).
In 1990 Angola (a former Portuguese colony) was the biggest importer of Portuguese wine. In volume terms it still is, but the value of Angolan imports has fallen dramatically until by 1994 the UK had the biggest value share of Portuguese wine exports at 11% compared with Angola's 9% (Table 3).
It is notable that the biggest markets in volume are those with lower prices per litre, reflecting imports based more on price and volume than on quality (Table 4).
Competition in the UK Wine Market
Portuguese wine has been imported into England since the 12th century, and the commercial and political relationships built on this trade were confirmed in 1386 by the Treaty of Windsor, the basis for Portugal's standing as Britain's oldest ally. Nowadays the UK market is clearly of significance for the Portuguese wine industry in volume and value terms, and most Portuguese exporters believe that it is an important market to be in for the long term. It is certainly growing; the UK market for still light wine increased by 32% between 1987 and 1994 and, as very little wine is produced in the UK, imports are needed to satisfy the continuing growth in demand. The market is still dominated by the traditional European wine producing countries of France, Germany, Italy and Spain, but their position is threatened by the success of emergent competitors such as Australia, Bulgaria and USA. Against the 32% in market growth between 1987 to 1994, the market leader, France, was only able to increase volume...