Once tainted, Portugal’s cork industry fights back

PORTUGAL - A decade ago, shares in the world’s largest cork producer, Corticeira Amorim (CORA.LS), didn’t look like a great bet.

Its biggest customer, the wine industry, was flirting with cheaper products that threatened cork’s dominance: screw tops and plastic stoppers. Many premium wine-makers had spurned cork, blaming it for occasionally tainting wines with a moldy taste. That was then. The cork industry has since staged a comeback: Lisbonlisted Amorim’s share price has soared almost six-fold and cork exports from Portugal, the world’s dominant producer, have just regained their peaks of 15 years ago. “When you go back 12, 15 years, the forecast for cork was anything but optimistic. Where we are today is a completely different territory from what most people thought possible then,” said Carlos de Jesus, Amorim marketing director. Sales of plastic stoppers shaped like a cork and aluminum screw caps, made by firms such as Australia’s Amcor (AMC. AX), surged to account for almost half of the U.S. market, the world’s largest consumer of wine, in 2009, according to the U.S.-based Cork Quality Council. Screw tops took over the Australian market, and are now used to seal most bottles produced in South Africa and Chile too. However, cork has rallied, partly by investing in research to eliminate cork taint - a dank, moldy smell sometimes caused by microscopic fungi found in cork-tree bark - and persuading some winemakers to ditch aluminum and plastic. Cork has raised its U.S. market share to around 60 percent, and its share of the global market, which Amorim estimates is worth about $1.3 billion a year, stands closer to 70 percent. But the battle for market share has only just begun. (Reuters.com)