Mark Dye is a freelance journalist based in London.
Port remains one of the world's most popular wines and one of Portugal's most successful exports. Through innovation and a good sense of direction, its most famous dynasty has remained in family hands. Mark Dye tells the story of Taylor's
Today, The Fladgate Partnership in Portugal sits at the heart of what is widely accepted as the grand old lady of port, and is one of the greatest of all its shippers. Still fiercely independent and family run, its roots can be traced back to 1692 marking more than 300 years of success for its famous wines.
Since then, the company has been producing its wines from grapes high up on the steep, rocky slopes of the Douro Valley with its vineyard, Taylor Quinta de Vargellas, often acknowledged as one of the world's best. The vines which have been present since pre-Roman times only add to the rich history of the brand.
Most famous for its sublime and long-lived Vintage ports and old distinguished tawny ports, the company has latterly built a reputation for innovation, pioneering a successful Late Bottled Vintage style which has been copied by almost every other shipper. Last year a worldwide love for its Port saw group revenue exceed h70 million, driven by some 278 permanent members of staff and around 170 seasonal workers. The group is run by managing director Adrian Bridge, a third generation member of the Robertson family by virtue of his marriage to chairman Alistair Robertson's daughter Natasha. He has been the driving force behind the acquisition of new vineyards and the takeovers of internationally known ports, marrying famous names such as Taylor's, Fonseca, Croft and Delaforce under one roof.
The formation of The Fladgate Partnership as it stands today occurred in 2001 when Bridge bought the Croft and Delaforce brands of port. These were two companies that Bridge identifies as good examples of what can happen to a brand when it is owned by a large multinational corporation who, through different priorities perhaps, underinvests in it.
"We've been able to take these brands into private ownership, make a significant investment and repackage them. We've invested in the wineries and vineyards and reconstituted relationships across the world with new agents, invigorating the brand names. It's good news for a brand such as Croft which has been in production for over 300 years," he says.
At that point the company already owned Taylor's and Fonseca, but Bridge says he wanted to create a new holding company that didn't differentiate between the original team and the people who came with Croft and Delaforce – 81 people moved into the company during the merger.
According to Bridge, the name itself comes from John Fladgate who was made a baron in Portugal and remains an important part of Taylor's history. The full name is Taylor Fladgate and Yeatman, with Fladgate being John who had five children – one son who carried on in Taylor's, and four daughters. "One of these married into the Guimaraens family of Fonseca Guimaraens and one married into the Wright family who had been running Croft in Portgual for over 100 years," he says. "Another married into the Morgan Brothers which was also part of the company we bought, though we didn't actually buy the brand name as that stayed with Diageo because of their Morgan rum. The fourth daughter also married into a port company, but not one we own."
Bridge says it seemed appropriate to go back to the company's roots. In 1850 these companies had all been joined together, through marriage, and now they have come back together, somewhat fittingly, under the Taylor Fladgate name. "I think this is an important aspect because as a company we've had people working here for their entire lives as their fathers did before them."
For Bridge, who first helped tread the wine at Vargellas in 1982, fine wine is about family and a rich vein of history, something he works hard to capitalise on.
"Our brands convey the quality and heritage that we stand for," he says. "We have family members working in key parts of the business and we work hard to ensure that customers see the family behind the company and understand what we stand for."
He believes that this message is one which is conveyed equally to the internal and external audience – for his staff to be proud to work in a family company. Like many family run businesses, Bridge says the group takes a long-term view in management and operational strategy. They will invest in vineyards for a 40-year stretch and have significant investments in old tawny ports – many of which will not be sold for 20, 30 or possibly 40 years. "This means we are putting wines aside today that my 11-year old son will sell when he is more than half way through his career," he quips.
Bridge is instrumental in developing new technologies, new methods and new buildings, all of which reflect the company's core values. He believes in the importance of good governance whether a company is publicly or privately held. "Though some people would argue that companies in public ownership are open to greater scrutiny," he says.
Bridge maintains the advantages of being private really come down to how a company looks after its future, how it makes long-term decisions and the speed at which these decisions are made. These include decisions that feel right for the business which don't neccessarily conform to the norm and can sometimes be slightly harder to justify. "In the public domain you probably have to do that a bit more," he adds.
Future and long-term are words Bridge uses a lot. But when the family ownership side of the business is important for your longer-term business relations, it's easy to understand why.
"Fine [wine] producers around the world typically work with a number of importers in different countries who put a lot of effort into your brand: in establishing your name with the customers in their country."
These importers, he says, place a great deal of importance on the company being private because they feel reassured in terms of continuity and therefore worth their effort – more so than in a public company whose ownership could change tomorrow.
Bridge says this not only builds good relationships, but means that the business tends to naturally gravitate to other family-owned businesses. "If I think of the great fine wines of the world, they are mostly owned by individual families and have been in those families for many generations. The care and attention lavished upon these products by the family can be seen in the final product, and ultimately the consumer benefits."
With Taylor's being sold via agencies in 53 different countries, alongside similar types of companies, there is a feeling that this 'family' approach lends itself to a strong business model that pays dividends.
"If I look at some of the champagne houses we partner with in the UK, we will also partner with them in France or Germany or elsewhere in the world because we have a similar business vision," says Bridge.
Clear visions of the future come from strong leadership, and nowhere is this more prevalent than at the Fladgate partnership's board level. Bridge argues that the board should have a strong sense of running the family business as a business. "Family companies can often be distracted by family politics at board level – else a patriarchal leadership can set a different agenda," he adds.
Survival, he says, is key and the pride of ownership and sense of responsibility that goes with it is crucial. All too often later generations can feel too remote from the business or its initial objectives and this is one reason, Bridge explains, that there needs to be clear objectives. "The incoming generation often feels it is being asked to shoulder much of the responsibility without a clear sense of being handed control, while the older generation is often reluctant to release control for fear of what it says about aging. Clarity and bravery are needed by both sides coupled with open, clear communication."
With that in mind Bridge set out to create a family council, rule book, succession plan, family conflict system and an annual valuation of the business back in 2000 with his father-in-law. Today, the family council meets twice a year to discuss all these issues.
Bridge adds that often, people have very different ideas on how the business should move forward. It is essential that a methodology is in place to resolve issues which arise in a capital intensive business, where ownership becomes more fragmented over several generations. "Inevitably you will face that struggle that happens in all family businesses, between those who work in the company and those who do not, but rely on the company for an income, and who are more interested in dividend increases."
According to Bridge, Taylor's has benefited from the fact that he is an outsider coming into the business. He points out, however, that he understood the business well prior to joining in 1994, having known his wife for 12 years previously.
"It is sometimes very helpful to be the catalyst in creating a degree of change. I think that it's been extremely positive and that the members of the family have very much appreciated an unblinkered view. Sometimes it's useful to have someone who understands the business and all the personalities involved."
Bridge's father-in-law is a majority owner in Taylor's, but two other families have minority ownership. The heads of these businesses hadn't made any plans as to who would be part of the business and how they would be involved.
"We were very successful in resolving those issues and creating a roadmap to move forward. At the moment we don't have any shareholders who want to divest their holding, but nonetheless we go through an annual valuation so people can see, not just in emotional terms, but in financial terms how their investment is performing. They need to be able to have a clear picture of what their investment's worth."
So, although issues of succession have been tackled head on at Taylor's, does Bridge believe it is a mere pipe dream for most family businesses to survive beyond three generations?
"No, it need not be," he says. "We have been a family business since 1692 albeit with regeneration from new family members joining via marriage. Again, a good sense of direction becomes very important."
It appears that any business, whether public or family-owned, has to keep up with change and nowadays that pace of change can be extraordinarily fast.
"It depends on the business they are in and their ability to regenerate," says Bridge. "In some industries it is very difficult because of the scale or geographic global powershift. It's not a pipe dream as long as people remain flexible to the current business environment and continue to innovate and take the business forward."