Persepectives on the Irish market

Supermarkets have dominated retail wine sales in Ireland but new regulations mean changes are in store. James Lawrence asks experts what it takes to break into the market.

Tim Ford, Domaine Gayda
Tim Ford, Domaine Gayda

Tim Ford, managing director, Domaine Gayda, France

We first entered the Irish market in 2008. Growth has been stable for the past five years and I feel it will remain so for the time being. I feel that for the 11 years we have been there we have had a stable position with volumes and products. We have noticed a growing interest in themed-label wines that was absent when we started exporting, but overall I would describe Ireland as a very traditional and mature market. The retail sector is the most important in terms of sales, and accounts for 75% of our sales. Most people assume Dublin is the centre of the Irish universe, but this is not actually the case; Ireland is full of great country hotels and golf complexes, which are big buyers of ours. But like all markets, personal contacts create loyalty. The Irish need this more than most countries, so spend a lot of the time in the market.

James G. O’Connor, managing director, Green Acres, Ireland

My family have been running businesses in Ireland since the 1860s. In 1993, I decided to expand our restaurant business to include an agency for imported wine brands. Today we focus on a relatively small portfolio of fine wines, with a strong deference towards Bordeaux, Champagne and Burgundy. Bordeaux in particular continues to drive the demand for fine wine in Ireland, partly due to our historic links with the region. However, my business avoids the lower end of the market, as competition in this sector is incredibly fierce. 

Distribution of wines in the €5 ($5.65) to €10 segment of the market is largely controlled by the German supermarkets Aldi and Lidl. They account for the vast majority of sales of wine and spirits in Ireland, and so have considerable power. Moreover, in 2007 the Irish government overturned a law that stipulated minimal pricing for alcohol – and discouraged discounting and promotions – naturally leading to a resurgence in this form of promotion-led marketing. I remember in Christmas 2018 seeing Lidl offer two bottles of whiskey for the price of one. There were stampedes and scenes of chaos in Dublin, yet the government insist they want to tackle alcoholism in Ireland.

Ireland in general is a paradoxical market. There is a strong culture of enjoying alcohol and socialising, yet the total population of Ireland is less than half of London’s. Beer and spirits continue to dominate the sale of alcohol in Ireland, while premium wine sales account for about 5% of the total market. 

As a close-knit country with a small population, Ireland tends to bounce quickly, and fall steeply. The country suffered enormously after the financial crash, but the Irish economy also was one of the first to recover and I’m optimistic about our future. Nevertheless, competition in the retail sector is fierce; Oddbins and Debenhams tried to open several stores in Ireland, but were forced to close them. In the wine sector, Dunnes, a chain of department stores, probably sells the largest volume of high-end wine in Ireland. However, the on-trade, particularly, in Dublin is booming and our business sells a great deal of wine to leading Michelin restaurants across the country. 
We have seen a growing trend in Ireland of Millennials and Gen X consumers upgrading their spending habits, and buying better wine. Dublin of course leads the way in this regard, but Cork and the surrounding counties of Dublin and Galway are also important urban centres for wine consumption. 

Finding a distributor or agent in Ireland is not difficult; we’re a positive, open people, which fosters a good business environment and the state doesn’t place a stranglehold on the distribution of wine. 

Lastly, Champagne and sparkling wine brands should know that the Irish government imposes a double duty on sparkling wine, ensuring that it is an expensive, and very occasional, proposition for most Irish consumers. Seasonality is the main driver of sales. 

Pía Toro, brand manager, Viña Montes, Chile

Montes started exporting to Ireland in the early ’90s. Ireland was back then, and still is, among Chile’s top ten markets for exports. There is an historical connection between the Irish and Chilean people, as a good number of our heroes in the War for Independence from Spain were of Irish descent. However, we expected the Irish market to develop toward a more diversified distribution, ie a stronger independent trade as we have seen in the UK. This hasn’t happened yet. 

Up until now, growth has been mainly driven by the retail sector (supermarkets). The key challenge for premium brands is that the growth of the Chilean category has been driven by volume. The average value of Chilean wines exported to Ireland decreased by 18% in the past ten years, caused by a combination of currency exchange and mix. Smaller wineries that are more orientated to quality need to understand how much of Ireland’s wine is sold via the big retailers, and is orientated towards big brands, and large volumes. If you look at the growth of the Chilean exports worldwide, in the past ten years they grew 38% in value, while exports to Ireland grew 10% in that same period. However, Ireland has been systematically outperforming the UK, a market where Chile has lost 28% of exported value in the past ten years. In addition, we are seeing a buoyant on-trade moving towards the gastropub concept. That should also lead to a development in the independent specialised wine retail. 

Dublin and Cork are the key urban centres for wine consumption, although cities like Galway and Limerick offer good opportunities due to the hospitality and sports activities (golf) in the area. .

Diego Talavera, international sales director, González Byass, Spain

González Byass started working in the Irish market in the 1970s with Tio Pepe. Our other brands began to be released into Ireland during the 1980s. The wine market in Ireland experienced huge growth during the ’90s through to the middle of the 2000s. Yet since 2008, the market has stabilised at around 9m cases. More recently, the rise in popularity of celebrity brands has been most notable, with celebrity endorsement becoming a strong marketing hook. 

However, while the market is stable at the moment, it is expected to decline when the Public Health Alcohol Act is fully enacted, although we believe that value sales will increase. Nevertheless, the Alcohol Act will reduce choice in retail channels and complicate logistics as importers will have to develop Ireland-specific labels which will be required to include a cancer warning. 

Today, 80% of wine is currently sold in retail channels in Ireland, but due to government legislation this may change slightly in the coming years. It must also be said that Ireland has recovered well since the global financial crisis of 2008. Unemployment is low and the economy is in strong growth. One of the most positive aspects is that it has young, affluent consumers who will fuel the economy, driving it forward.

Overall, I’m optimistic about our future in Ireland, but prospective brands must find a good partner. The key element moving forward will be how you understand and navigate the legislative changes. Brand owners have to be ready for them but also have the capacity to spot the opportunities in a fast-moving market.

Interviews conducted by James Lawrence

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