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AMONG wine buffs outside Portu-gal, Dao was until very recently a dirty word. The Portuguese saw it differently. Dao was their Bordeaux, one of their most prestigious red wine denominations. It was one of the first areas officially demarcated for fine wines early this century. But then the Portuguese traditionally liked their reds tough, matured for ages in old oak barrels. The sort of fruity red wine enjoyed in Britain or the US used to be rejected by the wine authorities before it ever left this pine-clad, hilly backwater of northern Portugal.

In any case, few people ever tried to make fruity wine. Only one private estate, Conde de Santar, made its own wine, and that was trundled away by tanker and bottled by a Portuguese merchant, deteriorating all the way and no fun by the time it reached British shelves. The other growers - 100,000 of them, mostly with vineyards the size of a large back garden in clearings between the pine and eucalyptus trees and granite outcrops - sent their grapes to dowdy co-operatives.

Then membership of the Euro-pean Union swept away archaic rules governing the production and selling of Dao grapes and wines. Gradually, and particularly over the last five years, European money has begun to change things. More than 20 farms or wine estates have started to make and bottle their own wine, uprooting scraggy bush vines, planting good local varieties in modern rows, and building modern wineries with the aid of EU grants. Not all the results are good. Some producers cling to the tradition of over-long wood ageing. Dao still lags way behind some high-quality Portu-guese wine appellations, especially the Ribatejo and Alentejo. But at last there is some good Dao for those who enjoy rich, fruity reds rather than the taste of old boots.

One real superstar has emerged from the mire. Quinta dos Roques used to send all its grapes to the local co-op until a new son-in-law appeared at the end of the Eighties. A steel importer from the Ribatejo, further south towards Lisbon, he was not a wine lover, but was shocked at the deficit between his father-in-law's vineyard costs and the price the co- op raised for its indifferent wine. By 1990 the family had built a new, modern winery. They now have 40 hectares of modern vineyard, stocked with the many Dao vine varieties that produce the best flavours. And Manuel Lopes de Oliveira has become a wine lover. No wonder: the 1991 and 1992 vintages on sale in Britain rank with excellent Burgundy or Bordeaux that costs far more. 1991 Dao Quinta dos Roques (pounds 5.65 Wines of Old-ham, pounds 6.35 Lea & Sandeman of London SW10 and W8, Sherston Wine Co of St Albans), dark, rich and concentratedly fruity, is delicious now but will develop and soften over three years. 1992 Quinta dos Roques Reserva (pounds 8.45 Wines of Oldham, pounds 9.50 Lea & Sandeman) is a really superb red - rich, ripe and intensely raspberry fruity with plenty of tannin and new oak. This should be wonderful early in the next century (but buy now - it will long be sold out by then).

Fifteen miles away as the crow flies across the valley, but a good 30 miles down and up the winding roads, Quinta das Maias has no winery, just a couple of derelict farms and a shed. Its owner, the energetic Professor Virgilio Loureiro, was goaded into developing the estate at the end of the Eighties. He had been invited to give a talk to local farmers about the need to promote re-investment in the Dao area. As he stepped down, he overheard a sceptical grape grower muttering, "If he thinks it's such a good idea, why doesn't he make wine from his own land?" So now he does, but the grapes are trucked across the valley to the Quinta dos Roques winery. The 1992 Dao Quinta das Maias (pounds 5.70 Wine Society) is lighter than the Roques red, with lots of new oak and raspberry fruit.

There have been changes, too, at the Casa de Santar (formerly Conde de Santar), the one and only Dao estate to make wine between the Second World War and Portugal's entry into the EC. The catalyst here was a son, Pedro de Vasconcellos, returning after a wine degree in Montpellier and work experience in Bordeaux to the family's 18th-century manor house, with its formal gardens and fountains, olive groves, orchards and extensive vines up in the hills near Dao's capital, Viseu. 1992 Casa de Santar, Dao Reserva (pounds 4.99 Wine Cellar and Berkeley Wines) shows the fruits of modernised vineyards and winery, with its dark, firm, strawberry and dried fruit flavours and hints of tobacco.

There had to be at least one flying winemaker in Dao, too. Unusually, it's a Yorkshireman. Jim Reader was once a brewer whose brewery became linked to Allied Lyons, owners among other things of Cock-burns Port. He became quality controller for Cockburns in Oporto, later winemaker. Cockburns dabbled with the idea of linking up with a Dao estate. When they got corporate cold feet, Reader stepped hot-footedly in, flanked by Cockburns' chief viticulturist, Miguel Corto Real, and Portugal's viticultural guru, Nuno Magalhaes. Their miniature winery has turned out a rich, figgy, strawberry-fruity 1991 Dao Fonte do Ouro, Boas Quintas (pounds 6.90 Adnams of Southwold).

For a long time before the estate outburst of recent years, the best Dao was made by Portugal's high-quality wine giant, Sogrape, producers of Mateus Rose but also a big range of serious, modern wines from across Portugal. At a time when the local government's "protectionist" rules banned outsiders from buying grapes, Sogrape did a deal with one of the co-ops, installed equipment and made the most of a mixed bag of grapes and archaic local winemaking rules. As soon as the rules changed, in 1990, they built an ultra-modern winery. For nouveau lovers, their ripely fruity 1995 Dao Novo, Sogrape (pounds 2.99 Sainsbury's, pounds 3.49 Grape Ideas of Oxford) shows just how far away from the old, tough, fruitless style Dao can get. Their 1992 Dao Grao Vasco (pounds 3.99 Victoria Wine, Oddbins, Davisons and Grape Ideas of Oxford) is in a lighter style than the estate wines, while their upmarket 1991 Dao Duque de Viseu (pounds 4.99 Safeway and Spar) has good strawberry and figgy fruit with a hint of vanilla oak.

SHERRY lovers should head for Sainsbury's, where a range of fine sherries has been reduced from pounds 3.35 to pounds 2.99 per half bottle. They just weren't selling when people compared their prices with the cheaper Sainsbury's ranges, or even with prices of the major brands. That's a pity, because a small price premium makes a lot of difference to the taste of sherry. My favourite among these smart half-bottles is the dry Sainsbury's 0ld Oloroso, a really intensely flavoured sherry, full of woody and nutty flavours, especially walnut. Oloroso as drunk in Spain is almost always bone dry. So is palo cortado. The Sainsbury's Palo Cor-tado has been made to British taste, however; it's quite sweet, but also intensely walnutty, with hints of toffee. Amontillado is also bottled dry for the Spaniards, but again the Sainsbury's Aged Amontillado has been slightly sweetened, though not as much as the palo cortado. This one is not quite as good as the other two, but it beats basic amontillado by a long way. The range is available in about half of Sainsbury's stores.