Holland trades up

Wine consumption in the Netherlands is falling, yet people are drinking better. Cees van Casteren MW analyses the situation.

Amsterdam, The Netherlands
Amsterdam, The Netherlands

The Netherlands – only 200 km wide and 3,000 km long – is a small country, but it always tries to play a significant role, whether it be economically, politically, or in sports. In wine, Holland is the fifth import market in the world, which is also surprising considering the size of the country.

Geographically, the Netherlands can be divided into ‘de Randstad’, which is one big urban area comprising the main cities Amsterdam, The Hague, Rotterdam, and Utrecht, and the rest of the country, which is patronisingly referred to as ‘the provinces’. De Randstad is responsible for the vast majority of wine sales and for all new trends and developments, both off- and on-trade.
 

A snapshot

The total market is approximately 400m bottles annually. In terms of sales channels, the supermarket still dominates: 75% of wine for all consumption moments is purchased in the supermarket. The average price in the supermarket is very low at under €3.00 ($3.21) per bottle; however, this average price includes the most basic and cheap aromatic and fruit wines. Without them, the average price would be significantly higher. Wines attract a 21% VAT and, for still wines, a duty of €0.72.

As for the on-trade, Holland is currently one of Europe’s hottest culinary destinations, and blessed with a vibrant offering of one-, two-, and three-starred Michelin restaurants. De Librije in Zwolle and De Leest in Vaassen are leading with three Michelin stars, closely followed by no less than 19 two-starred restaurants. The best-known sommeliers are Ruben Kwakman (Zarzo, Eindhoven), Jasper van den Hoogen (Bord’Eau, Amsterdam), Petro Kools (Da Vinci, Maasbracht), Noël Vanwittenbergh (Ciel Bleu, Amsterdam), Ronald Opten (La Rive, InterContinental Amstel, Amsterdam), Roy Pelgrim (Cordial, Oss) and Peter Bruins (De Bokkedoorns, Overveen). Despite this luxury situation in the premium on-trade category, the total on-trade is relatively small compared to Belgium or Germany, representing just 15% of the total Dutch wine market.

Although in northern European countries red wine usually is dominant, recent research from SAMR Marktvinders, led by researcher Goos Eilander, showed that the Dutch drink significantly more white wine than a decade ago. This trend has been bolstered by significant volumes of Prosecco consumed in the Netherlands. Eilander’s research also showed women drink white wine and rosé more often than men, although the number of glasses consumed per occasion remains low (1.7 glasses per consumption moment). White and red now have an equal market share in the Netherlands. Sparkling wines are expected to benefit from the recent abolition of the so-called ‘bubble tax’, which was a special tax on sparkling wines depending on the pressure in the bottle. Instead of the bubble tax, sparkling wines are now, as of January 1, 2017, taxed at the same rate as still wines.

The Dutch still drink more wines from France than from any other country, and although France is losing ground each year, their loss of market share has slowed in recent years. “South African wine now is the solid number two in the Dutch market,” says Eilander. “Relatively speaking, Australia and South American wines have improved their market share in Holland compared to the past.”

Consumption falling

Average consumption has increased from 0.6 L per capita in 1949 to 22.1 L per capita in 2011, after which consumption plateaued. Then in 2015 and 2016, consumption decreased. The main reason for this decline seems to be decreasing sales of wine in Dutch supermarkets.

The big question is why. To answer the question, Marten Suurmeijer of Nielsen in Amsterdam looked at the volume development of all alcoholic drinks in Dutch retail, as well as consumption patterns and sales channels. Suurmeijer combined the scans of grocery purchases (up to week 32, 2016) and consumer research of more than 1,500 wine buyers aged between 18 and 65 (58% of whom were women) with research about online wine purchases.

His conclusion is that the overall category of alcoholic beverages – excluding spirits, but including beer, wine, pre-mixes, cider, and fortified wines – has remained stable in Holland in 2016 compared to 2015 and 2014, with volumes totalling approximately 1bn L. Over the same period, however, sales of still wines sold in supermarkets have decreased by 6.2%, which is equivalent to 6.25m L. This is significant, because from 2010 and 2011, Dutch supermarkets attempted to reverse the plateauing of wine sales by selling more on promotion. The ‘promo’ share increased from 18.4% in 2008 to 28.8% in 2016. They tried the same thing with lager beer and yet volumes of lager decreased, even though supermarkets put a staggering 85% more beer on promotion than they had a decade earlier; lager on promotion was 27.1% in 2007 compared to 50.2% in 2016.

If wine and beer didn’t do well, which alcoholic products did? According to Nielsen’s research, special beers and Radler – a lower-alcohol beer-juice mix – did very well, both increasing by approximately 30%. The most spectacular growth, however, has been in the so-called fruit fusion wines, which saw growth of almost 200%, along with the combined alcohol-free drinks category that saw 85% growth. 

Two-thirds of all consumers who buy wine in a supermarket drink wine at least once a week. Some 34% of them drink wine multiple times per week, mostly at home (86%), and only 16% on-premise.

Whether this is because “Dutch men don’t take their wives out for dinner”, as a senior member of the international trade used to joke, is uncertain, but the fact is that Holland is a model ‘take home market’.

Two-thirds of all wine drinkers also drink beer, and this may be one of the reasons why both beer and wine are under pressure. In the past three to four years, approximately one-third of all wine drinkers have turned from wine and beer to alcohol-free beer (mainly the Bavarian brand Radler, which has 2% alcohol), and this trend might put continued pressure on wine sales in the near future.

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The IkPas movement

From the Nielsen research, it also seems clear that more women are reducing their wine consumption than men, particularly in the 18- to 24-year-old and 40- to 64-year-old age groups. Men aged 25 to 39, on the other hand, are significantly increasing their wine consumption. Of all consumers who are currently reducing their intake of wine, 41% say the main reason is health.

Peter van Houtert, chairman of the Royal Association of Dutch Wine Traders (KVNW), says, “The SAMR research also confirms the fact that the Dutch wine market is not growing anymore, and that the consumer in Holland is drinking more responsibly. Instead of drinking more, the Dutch are drinking better. As since January 1 of this year we got rid of the ‘bubble-tax’, I do not preclude this will have further positive consequences in this respect. In any case, these figures fit the efforts of the KVNW for more enjoyment of wine, albeit in a responsible way.”

Significant in this respect is the initiative of the ‘IkPas’ (I pass) movement for an alcohol-free month, be it January or February. According to van Houtert, this initiative has clearly impacted the trade during the first two months of the year. Martijn Planken of IkPas says the trend for an alcohol-free month has blown over from the UK, which already had a Dry January, and Australia, with its OcSober month. “In Holland we saw each year more of these initiatives, albeit local and small. IkPas tries to combine all these initiatives to turn it into a national challenge and to get more media attention. And that works.”

The reason Nielsen’s Suurmeijer included online purchases in his research is that Holland is one of the most sophisticated online markets in the world. Based on 2017 Internet World Stats data, Holland has almost 16m internet users, which represents 95.5% of the total population. By 2015, more than 11m Netherlanders had bought something online at least once. In total, 46m online orders were placed, a growth of 10% compared to the same period a year ago. The Dutch also like to pay with iDEAL, an online payment method developed by the Dutch banking community.

In terms of wine, according to SAMR, the total percentage of online sales is 7% of all consumption moments, corresponding to 10% of the total volume. Nielsen only researched supermarket buyers – of whom only 4% buy online. But even in Nielsen’s research it is evident that online buyers do spend significantly more on wine than buyers in supermarkets or specialty stores. Offers and price are the main reasons for online shoppers to search for wine.

Nowadays, the Netherlands is doing better in politics than in sports. But it would be significant if the Dutch – of all markets – lead the way toward ‘less is more’. Towards more responsible drinking with better-quality wines. Albeit at the cost of per capita consumption. 

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