just the Answer - Steffen Schindler, director of marketing, German Wine Institute
just-drinks talks to the head of marketing at the German Wine Institute ahead of next week's ProWein
ProWein, the first major wine exhibition of 2010, opens next week in Dusseldorf. To celebrate the beginning of the trade fair season for the wine industry, just-drinks talked to Steffen Schindler, director of marketing at the German Wine Institute, about 2009, the potential of developing markets and fighting consumer prejudices.
just-drinks: Which markets are of the greatest significance for Germany's wine producers today?
Steffen Schindler: Our major markets are the UK, the US, the Netherlands and Scandinavia as a whole. Those are our four major target markets. Last year, 21.4% of our exports in volume terms went to the UK, followed by the Netherlands with 16.6% and third was the US with 12.8%. In value, the order is the US, the UK, and the Netherlands.
j-d: How was 2009 for German wine exports?
SS: The economic crisis and the strength of the Euro meant that our exports went down last year for the first time in the decade, by -7.8% in value and by -5.9% in volume. It's not as big or as drastic as for other countries, nor was it as bad as we were fearing.
j-d: How big a concern is this trend in the long-term?
Firstly, the Euro is going down quite sharply at the moment, due to the problems the Euro-zone has in Greece – that means our exports get less expensive. We also feel that the economic crisis is coming to an end in some countries already. It did have a big impact in some countries and not such a big one in other countries.
When I say that our exports were down overall, when you look at the individual countries, the situation is very different. We have increased our exports to the Netherlands and to Ireland very sharply, for example. But, on the other hand, we have lost out in countries like the US, the UK and Russia.
So, we are gaining on the one hand and we are losing on the other. But, overall, it's not as bad as we feared.
Our market here in Germany is surprisingly very stable, and that's our major market, of course. We have lost only very little in Germany, so overall we are doing quite fine.
j-d: Which producing countries are you losing out to domestically?
SS: In Germany we are the market leader with 54% share in value. France and Italy are joint second with 13%, with Spain fourth with 6%. The losers in Germany are from all the countries that are higher priced, and that's the New World, and ourselves – we have lost some market share as well.
j-d: Has the global economic climate led German wine companies to become more domestic-focused?
I wouldn't say that. We have some regions which are very export-orientated. It's not so easy to switch from one market to another in the short-term. You can't replace the losses abroad by finding new distributors in Germany – that is something that takes time.
Those who are devoted to exports do not try to find new markets in Germany, they try to sell better in the export markets they work in.
We have seen prices go down a little for German wines, especially in the US. The only nations gaining market share in the US are Argentina and Chile, and they're winning because their wines are cheaper than ours. All Europeans have lost on the US market. The only way to stay in the market was to make certain price reductions. But, we were higher priced anyway.
j-d: What opportunities do you see in developing markets?
SS: The German Wine Institute concentrates its marketing in traditional markets. The producers themselves see opportunities in other markets. The Riesling renaissance that we have seen in recent years has really opened markets up for us. In Spain, for example, it's amazing how much German Riesling you find in good restaurants, and that's a market we would never have talked about in the past.
The market that everyone is talking about is China, which is now number 15 on our exporting list. Last year in China, we lost 9.5% in value, but we were up by 24% in volume. That means we sent more wine to China, in 2009, but at a lower price. The average price of our wines in China is still very high compared to other countries. This suggests that our fine German wines are in China.
Steffen Schindler, director of marketing at the German Wine Institute
We can also see more mass distribution of wine in China, meaning what is required there is more medium-priced or cheaper wines.
We're also looking at India, but it is still very difficult to work there because of the many restrictions we have and the structures are not there yet. When we talk to exporters we warn them to be careful in these markets.
There are still huge opportunities in other markets which are better organised and more reliable. Before looking at markets like China or India, exporters need to be sure they know how to export wine.
j-d: How do you deal with the consumer perception of German wines in markets like the UK, where the general opinion hasn't been as positive as it used to be?
SS: If you compare our four major markets, you can see we have four very different situations. In the UK, there is still the most conservative view of German wine. It is still considered to be rather old-fashioned, sweet and of a lower quality.
In other countries, that image has changed completely. In Norway, for example, Riesling is very trendy and, since last year, the most widely-sold white wine in Norway is a German wine.
In the US, we've seen a huge increase in exports since 2001 – they've tripled in that time, and that is mainly due to Riesling. We used to have a similar reputation in the US as we have in the UK. In the 1990s, our wines disappeared from US shelves, and today we now have young people around 35 to 45 who have discovered Riesling for themselves from many countries, mainly from Germany.
In the UK, the normal German wine drinker is above average age, while in the US it is the younger drinkers. Finally, in the Netherlands, we have never really been out of fashion. The Dutch travel to Germany a lot, they know our vineyards quite well. They know their German wine better.
j-d: What can you do to change consumers' perceptions?
SS: That is a big problem for us. Much of this has to do with marketing spend, of course. We would love to run a big marketing campaign presenting the new style German wines, but we cannot do that. So, we talk to the trade and media directly to try to win them over. Quite honestly, we don't have to try any more. I think, on that side, we have done a very good job in the last ten years or so.
In Germany, we have a young group in the industry called Generation Riesling – they're very ambitious, internationally-trained and they have a modern approach to marketing. We try to use them more, as well as using social media and social networks on the internet to reach out to younger consumers who might not have any pre-conceived ideas.
People always talk about Liebfraumilch, but there are very few people these days who actually drink it – some people do talk about something they don't really know. We hope we can win over the upcoming wine drinkers, because they don't have any such image in their heads
j-d: How is 2010 shaping up, both domestically and abroad?
SS: Again, luckily not as bad we had feared. There is light at the end of this small tunnel; demand is growing again in the US, for example. We will see at ProWein next week where we are at the moment. At ProWein last year, we were hesitant to see how big the crisis is, but the fair was a lot more positive than London, Verona or Bordeaux.
I think it's best to say that we are hesitantly optimistic.
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