To Britons, the euro is a coin. To the Portuguese, it's the 2004 football championships, no matter that the host nation failed to lift the trophy.

To Britons, the euro is a coin. To the Portuguese, it's the 2004 football championships, no matter that the host nation failed to lift the trophy. More than a month on from the final, the green and red flag still flutters from cars and buildings. The raising of the Portuguese profile has had a knock-on effect on their wine. And it could do with it. Some 50,000 English fans descended on Portugal in June, and many would have explored no furthur than the sun, sea and golf of the Algarve, and the easy-drinking comfort of Mateus Rosé.

So, you could be forgiven if you imagined that Antão Vaz, Fernão Pires and Arinto were members of the Portuguese national team. If only a couple of the country's tongue-twisting native grape varieties were re-christened Figo and Ronaldo, Portugal's wines might do a lot better in a market which relies so heavily on the name of the grape. Unfamiliar grape names apart, there are more deep-seated reasons for its wines' relative anonymity. Portugal has been mired in Lisbon- and colonies-bound plonk for so long that it denied itself the chance to develop a quality image outside those markets. Growers and their co-operative customers are now reaping the whirlwind as so many growers, particularly those over 60, give up the struggle of competing with easy-drinking New World brands.

But changes are afoot. Family estates that have traditionally operated as mixed farming enterprises are taking the quality message on board. With a little help from the EU, one solution has been to invest with a view to bringing in riper, healthier grapes, halving yields to gain the required extra concentration and making positive use of irrigation and mechanical harvesting. The result is that the tide of white plonk is receding in favour of much-improved reds.

A dilemma remains. How do you revive the industry without abandoning the traditional grape varieties that give Portuguese wines their distinctive taste and character? Some producers, like Quinta do Monte d'Oiro and Cortes de Cima, look to the syrah grape as a potential saviour. But a thriving modern wine industry cannot survive on international grapes alone - it must look to home-grown talent. The winemaker at José Maria da Fonseca, Portugal's oldest table-wine producer, is concentrating not just on syrah but on native grapes, in particular the castelão, which does well in his neck of the Terras do Sado.

Others too are upping their wine quality by replacing workhorse varieties with Portuguese grapes like arinto and encruzado for whites and trincadeira, touriga franca and touriga nacional, the backbone of port, for reds. At Esporão, where Sir Cliff Richard's Algarve-based Vida Nova is made, the experienced Australian winemaker David Baverstock is convinced of the potential of touriga nacional. "Touriga's going to make a name for itself," says Baverstock. "It's a sexy grape with everything going for it, and it's getting better and better."

Along with the Douro, the sprawling southern Alentejo region is generating more excitement than any other for its generously fleshy and plummy reds made from aragones (tempranillo), touriga nacional and syrah. "You may not get quite the complexity and subtlety of Douro reds," says Baverstock, "but using New World techniques here, you get a lovely sweet mid-palate richness." All well and good, but still only one in a hundred take-home bottles are from Portugal compared to Australia's 16. It'll take more than a chorus of fans to remind us of Portugal's progress off the pitch.