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| December 15th 2006 |
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| Greece: Things must change |
by Alex Sakkas
With the domestic Greek alcoholic drinks market continuing its sluggish performance, wine will need to re-invent itself to achieve its true potential, both in terms of visibility in Greece and competitive presence abroad. New methods of communication are needed
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Everybody is talking about wine in Greece today: there are more and more new producers, continually better offers, restaurants display increasingly impressive wine lists, new professionals make their appearance and a second spring for the Greek wine world appears to be in blossom. It wasn’t so two decades ago. At the time of the first renaissance of Greek wine from its chilled ashes there were hardly more than a handful of producers who had made the real shift towards quality and innovation.
However, is the situation today truly what it seems to be? Do the numerous awards and accolades that contemporary Greek wines receive in serious international competitions make any sense in a beer, cider, spirits and bulk wine – not to mention retsina - consuming country? In spite of the controversial place of wine in a society and market full of contradictions, the answer is a resounding yes.
An Overview
Wine production has traditionally always been an important economic activity in Greece. However, the first step towards modernization was only taken during the 1960s when several large companies made considerable investments and started producing bottled wine. At that time most consumers still believed that bulk wine bought directly from tap at the taverna was the best on offer because it was made „the traditional way“, was „the purest“ and contained „no chemicals at all“.
The contemporary face of the Greek wine world consists of a very small number of large companies, the so called „big four“ or perhaps five with Hadjimichali, who is a case apart, a considerable number of cooperatives and a multitude of smaller producers. Whereas the major companies hold the lion’s share of bottled wine sales in the domestic market, the smaller ones can be divided into two camps: the ones who produce both bulk and bottled wine and those others who make only what can loosely be translated as „wine of limited production“.
In fact, it has been these wines of limited production from a small number of producers that has revolutionized the market over the past twenty years. Their wines have been and are continuously being produced with a mindset focused on quality and innovation made possible by continuous investments, financed partially by programmes coming from the European Union. Although the larger companies have been obliged to follow the movement towards quality and now offer wines of an excellent level, the trend is still a limited phenomenon, both in terms of the total quantity produced and its limited domestic consumption. Beer volumes are now some 485 million litres, spirits almost 55 and wines a mere 285: a third of the local alcohol consumption.
Vineyard Area and Producers
According to data released by the Greek Ministry of Agriculture, the total vineyard area in Greece covered 66,282 hectares in 2005, 78% of which was devoted to producing table wines, including |
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Regional Analysis |
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the local version of vins de pays, and only some 22% to wines with an appellation of origin. The Peloponnese is the largest region with a total vineyard area of 12,584 hectares, or 19% of the total, followed by Western Greece with 16%. Most of the vineyards devoted to an appellation of origin are concentrated either in the Peloponnese – with Nemea, the 2nd of Hercules’ labours, being the most famous – or on the Aegean Islands of Santorini, Rhodes, Samos, Paros and the like.
It is of importance to note that much of the revival of Greek wines can be classified under the heading of „table wine“. Here, a new generation of producers has felt freer to experiment than in the appellations of origin, where rules and restrictions are very strict. Unfortunately, in the view of many observers, this trend was strongly influenced by an interest in international grape varieties. This has led to a social phenomenon, namely to the trendy consumer who adores Sauvignon, Chardonnay, Cabernet Sauvignon, Syrah and other such modern „brands“, but considers most of the traditional wines unfashionable. For that reason, many indigenous grape varieties have, in spite of their viticultural heritage, been neglected. It is only recently that a limited number of visionaries have begun vineyard development to exploit the potential of such grape varieties as the white Assyrtiko, best known in the Appellation of Origin Santorini, or the red Agiorgitiko, once called Saint George, that is at home in Appellation of Origin Nemea. Supporters of the use of international varieties respond that in overseas markets such as the UK or the US, sales of wines made from Greek indigenous grapes have been slow, even when they have benefited from critical acclaim.
Although the „Big Four“ - Boutari, Tsantali, Kourtaki and Achaia Clauss – along with Hadjimichali still dominate both the domestic market and exports of Greek wine, they have also diversified their production and invested in both quality and innovation. Nonetheless, it has been smaller producers like Tselepos and Gaia in the Peloponnese or Sigalas on the island of Santorini whose work with indigenous grape varieties has caught the press’s eye. To that list can, of course, be added Gerovassiliou and Biblia Chora in Northern Greece, who have done more with international varieties. However, much still needs to be done in the Naoussa appellation of origin to improve the potential of Xinomavro, the main indigenous varietal of the north; but as these varieties emerges, there will be increased hope for the future of Greek wine.
Consumption and distribution
Although they might seem at odds with each other, consumption and distribution in Greece are strongly influenced by one another. While the strength of Greek wine lies in the quality innovation of its smaller producers, it remains to be seen if they - along with the market leaders – can reverse the constant decline in domestic consumption. |
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Indeed, from 33.8 litres in 1988, the per capita consumption of wine in Greece dropped to 27 litres last year. 60% of this still consists of bulk wine that is purchased on tap from producers or local merchants; a mere 40% is bottled wine. The consumption of Retsina, which is still identified as the quint-essential Greek wine in many markets, remains quite strong in terms of both bulk and bottled wine. Malamatina is a phenomenon of its own, an exceptionally strong Retsina brand that has resisted every competitor’s advance to chisel away at its market share.
This decline in consumption is not only a reflection of the „drink less but drink better“ phenomenon noted elsewhere. Beyond an overall recession and a decrease in the average Greek consumer’s income, the population is ageing. Even the top restaurants for the happy few, where the best and most expensive wines are consumed, attract fewer clients these days.
In any case, although on-trade sales remain high, as Greeks still drink in bars and restaurants, off-trade consumption has gradually expanded during the recession as the decline in income has encouraged the trend towards drinking at home – and it is a fact that Greeks drink not only less but also cheaper wine at home. This situation has also led to a shift in distribution towards hypermarkets and supermarkets, where most of the inexpensive wine is sold, and subsequently to the fall of the specialists’ share to 22%. Few Greek supermarket chains can, however, compete with their French, English or, to a lesser extent, German counterparts, where excellent arrays of wine are on offer at reasonable prices. The slight increase in total wine sales that has been reported recently is due, at least partly, to low-priced imported wines that are beginning to threaten local brands.
Exports of Greek wines
Greek producers have relied too much on ethnic markets in other countries with their potpourri of Greek restaurants, and have long neglected the need for Greek wines to be known and understood by the indigenous population in each export market. This might well explain the drop in exports of Greek wines over the past five years. Since 2000 they have fallen 32.2% in volume and 6.1% in value!
Most exports are to Europe, which absorbs 83.9% of that volume. The US accounts for 6.4% and Canada 3.7%, leaving little for other markets. In fact, Germany remains the major client, buying almost 160,000 hectolitres of Greek wine each year, 52.4% of the total export volume. France is second with 14.4%. The „Big Four“ share in differing percentages these export markets, but all have been heavily hit by the fall, unable to elaborate more effective marketing and promotional campaigns that are urgently needed to maintain their historic market shares, which are being squeezed by wines from the New World.
On the other hand, although hardly noticeable in the statistics, some of the smaller producers have been able to create niche markets, either because they are more inventive and flexible or perhaps because they act individually and do not rely so heavily on national institutions for their promotion. This is a problem that must be resolved if Greek wine is ever to perform better in exports. A global identity - a quality image that reflects in modern life the valour of antiquity - must be created to develop the brand Greece. Culture is not about guarding the ashes, but preserving the flame. Individual promotions, whatever the degree of their effectiveness, will never provide more than limited results.
A forecast
As Greek wine has yet to adopt a faster, more effective pace, uncertainty prevails. Unless Greek wine is able to re-invent itself globally and begin resurrecting its image through advertising, promotion and quality tourism, there will be true admiration only for the happy few small producers who succeed. That is too little for the industry, which needs to create for itself a new qualitative image throughout the world. Given the first signs of financial recovery, it is necessary that the major players be more effective in their communication. At the same time, they must create more premium products to attract wealthier consumers who are willing to pay a reasonable price for a branded product - and in doing so slowly attract the average consumer to the intricacies of Greek wine.
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