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Friday, 11 September 2015

D'Oliveiras - The Interview

An interview with Luis D'Oliveiras of Pereira D'Oliveira (Vinhos) in Funchal, Madeira

I meet Luis D'Oliveiras in a sultry, listless warehouse in central Funchal that serves as a mixture of offices, tasting hall and functioning Madeira house.

The seating area at the front, a mix of bustle and torpor, has the feel of a southern European railway station.

The contrast with Blandy's round the corner could not be starker - there are no corporate logos or staff uniforms here, no displays of winemaking paraphernalia or memorabilia; this is Old School and the focus is on the wonderful liquid in the glass.

Where Blandy's have branched out into shipping, banking and tourism, D'Oliveiras remains focused on Madeira wine itself; not exclusively the making of it, but also the acquisition of stocks.

Luis D'Oliveiras is a deal-maker in a family tradition; the company is a combination of six firms, two of which were the original family businesses merged through a dynastic alliance and four of which were acquired.

In 2003 he and his brothers acquired Adegas do Ferreao (founded in 1949) and his most recent acquisition is Artur Barros e Souse from 1921.

Part wine-maker, part property magnate, part corporate raider, he looks for businesses with good stocks of Madeira and good warehousing (ideally with the multi-level flooring for better aging of the wine) that have been poorly-managed and can be picked up cheaply.

He then sells limited amounts of the stock to meet cash flow needs, waiting for the rest to go up in value.

I find it odd that the main warehouse is located on prime real estate in central Funchal, but Luis explains that he needs to be there for the tourists who come in every day on cruise ships.

And business is good - interest has been increasing every year since 2010, with 70% of his sales via export and 30% local (including Portugal and the Azores).

He runs the company with a staff of 22 and no directors there are just three shareholders, one of whom is a sleeping partner.

He is also not interested in volatile growth; more important is long-term sustainability and retaining control.

For this reason, the company owns all its warehouses and pays no rent. 

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