Francesco Domini
estate director
Feudi di San Gregorio, Campania, Italy
Feudi di San Gregorio was established in 1986 and started exporting the first quantities to Germany in 1995. Today [Germany] is one of the key world markets for Italian wines, although realistically Campania remains a niche segment for German consumers. Nevertheless, the market has grown over the past few years, with a burgeoning interest in our local varietals such as Greco di Tufo, Aglianico, Fiano di Avellino and Falanghina coming not only from the Italian community, but especially from German consumers and traders. This is certainly a dynamic and sophisticated market for imported wine brands.
Today, the most buoyant market in Germany for our wines is the northwest, which in addition to Bavaria, has always been a “fortress” for the consumption of Italian wines. Hamburg, Bremen, and Hanover are the key destinations for premium Italian brands, although I’ve also noticed interest growing in the southwest in recent times. However, much work needs to be done in terms of educating consumers about the varieties we export; awareness is better than five years ago, but Greco di Tufo is still a minor curiosity for most people in the market for Italian wines. Therefore, we’ve dedicated considerable resources to addressing this issue over the past few years through seminars and tastings.
In addition, the lack of “branding” for Italian categories in Germany gives total power to the retailers. For example, the big retailers such as Edeka and Aldi can choose and change their suppliers overnight, since the wines sold simply emphasise the category like “Prosecco” or “Chianti”. It’s vital for high-end producers to invest heavily in the market, to forge a strong differentiation.
Overall though, I’m optimistic about our future in Germany, not least because the level of consumer knowledge in the premium segment is high, and this group tend to strongly favour European wines over the New World. So my advice to small producers (either Italians, Spanish or Germans) is to identify the type of public – traders and consumers -- that could be interested in their wines and work straight towards that audit through a direct communication. Personally communicating with the public and creating a one-to-one relationship, first with traders and then with consumers, is vital.
Tim Banks
sales and marketing director
Ornellaia, Bolgheri, Italy
Ornellaia has been present in the German market ever since our first vintage in 1985. My impression today is that the German market is still a growth market for high-end Italian wine, provided that you can make the direct link with the end customer. This becomes ever more vital in Germany – as with all markets around the world, the trend is toward a shorter supply chain and a reduction in the distance between the producer and the customer. People now expect, at least in the premium segment, a closer relationship with the brand in question: growth has to be managed in the right way, and in a way that is relevant to today’s customer.
But in terms of distribution channels, I’ve seen more growth in retail sales, although as I said I believe this is linked to the customers’ direct relationship with the brand. The Internet has brought everyone closer together, and in this the brand is paramount. Whether it is in the German retail or restaurant sector, what matters more and more is the reputation of the brand. Once German consumers have found a brand they like and trust, they have it delivered directly to their homes via the Internet – loyalty is extremely high in the premium segment and Internet sales are becoming very important.
Indeed, many of our customers are fortunate enough to be able to get away from the big cities, and have their wines delivered directly to their front door wherever they are, thanks to the excellent German infrastructure. Yet conversely, German’s geographical size is the most challenging thing about the market. In Germany, wealth is not concentrated in one area and too many brands focus on large urban areas across the country without the necessary critical mass. You must focus on your true customer, and make sure your wines are getting to them, wherever they are.
In addition, don’t underestimate the dominance of the wholesale network, which has disappeared in nearly every other European market. However, I would strongly suggest that wineries looking to build a business for the future need to have the shortest connection with its consumers as possible. This is not to say that certain wholesalers do not do an excellent job, but for wines at the top end direct control is the way forward. To that end, my final advice on conquering Germany is simple: focus on your end customer, create a relationship with them and make the delivery route as direct as possible.
Beth Wilcox
regional manager, Western Europe
KWV, Paarl, South Africa
KWV first entered Germany in the 1950s; what makes this market so interesting today is that the share of imported wine in such a big market – and a domestic producing country – is unprecedented compared to most nations, especially for New World wine. However, while the market is stable, KWV has noticed a slight decline overall in volume, but there are interesting trends in value that are encouraging for our category. Retail channels continue to dominate; however Germany’s on-line channel is also extremely dynamic at this time and an increasingly important sales avenue.
Geographically, Frankfurt is the largest market for KWV, although sales are quite stagnant at the moment, while Hamburg and Berlin are the most dynamic in terms of growth. Yet don’t make the mistake of believing only large urban areas count – rural Germany is also important, vis-a-vis the on-line sphere.
Nevertheless, Germany is most definitely a dynamic and fast-paced urban arena for imported wine, albeit the barriers to entry are high. Indeed, this is a market where brands risk investing considerable resources without a guarantee of sustained or incremental business. Moreover, the pressure to keep prices competitive is immense, as is the competition from existing and dominant brands which invest a lot to maintain their position in this all-important European market. Moreover, the pure size and need for national coverage via agents and importers to gain access to this market is not to be underestimated: a lot of legwork is required. German language skills are also essential if you hope to establish a sound relationship with your importer.
Fabrice Rosset
president
Champagne Deutz, France
Deutz has a longstanding relationship with Germany. Our founder William Deutz travelled all over Germany in the late 1830s, starting with his birthplace, Aix la Chapelle. Today the market is less buoyant, but slowly recovering in volume and price after several weak years (post-2014). As you would expect, Deutz has experienced its greatest success in the premium retail and hospitality segment, with Munich, Berlin, and Hamburg showing the greatest potential for growth, although the environment is highly competitive.
Yet at the same time this is a very decentralised market, with many sales/distribution channels that are becoming quite saturated with imported brands. The key is to appoint regional partners (ideally, one in each province and key urban area) who have a direct access to the target audience. Deutz has been investing a lot of time and effort to initiate and consolidate solid strategic partnerships with key players in regions over the past years, so far with pretty good success.
Of course, there are risks involved, not least the monumental effort and resources required to build a sustainable position in this very competitive market. Stories of brands losing their entire investment are by no means uncommon, while increasing competition from domestic brands has, in particular, hit French wines hard. This is a market that demands time, patience, dedication, professionalism, knowledge, the ability to build a solid local network (ideally a strategic alliance with an agency in Germany), and last but not least, financial back-up in order to be able to finance brand-building in the long term. Building a brand in Germany is a long incremental process and organisations have to implement a coherent financing plan and thus not expect a major ROI in the very short term.
