Despite the long-held reputation for bargain hunting, Germany’s wine drinkers are aligning with global trends and swapping quantity for quality, according to our latest Landscapes market report
At first glance, the German wine market appears to be a model of consistency. Consumption volumes have remained stable, consumers have preferred wine from the same three countries for ages – wines from France, Italy and Spain are perennial leaders – and German wine drinkers have never been very keen on spending much on a bottle of wine. However, a closer look shows that consumer preferences and behaviours are beginning to change.
For instance, German consumers are trading up in line with the ‘quality over quantity’ trend that we are seeing in many markets (notably the UK, US and Australia – and also Japan). German regular wine drinkers are consuming wine less frequently both for casual and more formal on-trade and off-trade occasions than they did in 2016. Hand in hand with this comes an increased willingness to trade up when purchasing wine, due to both the increasing value per bottle as well as willingness to spend more on a bottle of wine, especially in the on-trade.
This change in consumption behaviour is having consequences for retailing. Discounters are moving away from offering only entry-level, low-priced wines to stocking a selection of premium, high-quality wines that are higher in price, but consumers are increasingly willing to buy them. Supermarkets are also offering a wider range of premium wines and also increasing their selection of local wines (which also tend to start at higher prices than they used to).
These local wines are beginning to sell more than in 2016 as German wine drinkers join another global trend – valuing and seeking out good quality local product. Traditionally stereotyped as cheap and sweet, German wine is now globally recognised as traditional, yet versatile, and German wine producers have created modern, fresh and high-quality products. Correlated with this is the growth of regional awareness and recognition (particularly among more involved consumers) of the specific strengths of each region – unsurprisingly, German regions account for six of the top ten places for region of origin purchase amongst German wine consumers. This trend is also confirmed by market experts, who believe taking advantage of regionality trends can benefit both producers and retailers.
In addition to regionality, an interesting story and a personal connection to the wine producer is what German wine consumers are looking for when purchasing. While other markets tend to use brands as points of orientation, German regular wine drinkers show lower overall levels of brand awareness. This was seen in the recent Wine Intelligence Global Wine Brand Power Index 2019, where only six of the top 15 most powerful brands in the German market were domestic.
Yet, this can be considered an opportunity as many market experts have suggested lower levels of brand awareness presents the opportunity to educate consumers about wine and bring them closer to the category. This may provide industry professionals the chance to immerse consumers in the category and develop products that are both authentic and approachable, therefore attracting more consumers.
This not only goes for German wine professionals, but also other countries of origin looking to gain presence in the German wine market. As a market primarily dominated by the Old World, including not only Germany, but also France, Italy and Spain, the New World struggles for attention. As one of the world’s biggest imported wine markets, wine education could lead to exciting prospects for both those who already dominate the category, as well as those who are seeking to establish or boost market presence.
For more information on the German market, please see Wine Intelligence German Landscapes 2019.
Author: Tina Fruth