Wine Analysis
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DenmarkMarket AnalysisDenmark is located on the northern tip of the European mainland. It has a population of 5.6 million people. The legal age limit to buy wine is 16 years of age. 83% of the population is over 16 years of age.Denmark is a growing wine market. It has only developed over the last 60 years. Its per capita intake of wine is significant for a country with little or no domestically produced wine. Only five countries in the world consume more wine per head of population.Since 2011, wines from new world areas like California have seen the biggest increases in penetration across the Danish market. Wine in Denmark recorded a total volume growth of 4% in 2014. The fact Denmark does not use the Euro means it did not suffer a major economic downturn. This currency stability has led to no significant downturn in wine consumption throughout the last 5 years.As regards the segmentation of wine in the Danish market, premium wines are gaining market share in Denmark. Population demographics show that the population of Denmark is getting older. As people are getting older they are tending to buy a more premium expensive product. Their consumption rates are lower than that of the younger people. An area of opportunity for a new world wine would be to market their wine as a premium product which accompanies good food. Using the label on the bottle to recommend which wine compliments which dish would be a good selling point.Danish consumers are interested in ethical and Fairtrade products. If wine is produced in a sustainable manner this would create a unique selling point for a new world wine. Outside of the premium range of wines consumer behaviour changes. Younger people in Denmark prefer a cheaper product. They also prefer a lighter, sweeter wine. The Bag-in-Box wine is also growing in popularity among consumers in Denmark. It accounts for up to 30% of all wine sales.In Denmark it is recommended to use a recognised importer of wines. Importers can generally mitigate the risks of dealing with large supermarkets and other customers. Building and developing relationships directly with supermarkets can be time consuming and difficult.There are some barriers to entry for new world wines in Denmark. This is especially true when trying to supply to supermarkets. Shelf space in supermarkets is often limited. Supermarkets tend to reserve shelf space for wines from more traditional countries. This trend is changing due to consumer’s movement to new world wines so in the future shelf space should increase. Supermarkets often also demand the exclusive selling rights to a particular wine brand. This limits the number of retailers who can sell the wine and therefore limits the number of potential customers.There is a diverse and large amount of wines available on the Danish market. It can be difficult to build brand awareness and distinguish one product from another. Wine suppliers who develop a unique selling point which separates their wine from others tend to penetrate the market better.GermanyMarket AnalysisGermany is a country located on mainland Europe. It has a population of 80.62 million people. The legal age limit to consume wine is 16 years of age. 87% of the population is over 16 years of age.
Germany is mature wine market. It is known as one of the more traditional wine countries.  Wine is the second most popular alcoholic beverage in the country. Germans are very modest in level of drinking. It is the world’s fourth biggest consumer of wine in terms of volume but it is only eighth in terms of per capita consumption. German consumers tend to focus on quality not quantity when it comes to wine. The main countries of origin for its wine tend to be old world countries like France and Italy. Germany also has quite a large domestic wine market. So far new world wines have struggled to gain market share. German consumers tend to be loyal and traditional in their behaviours. This makes it difficult for any new producer entering the market.The trend is the German market is a move away from red wine to lighter white wines. A change in eating habits over the past number of years has driven this change. People are matching lighter white wines with lighter fish dishes. Aromatic, low alcohol, wines are also very fashionable in the current German market. Young females tend to drink these wines in cans. This means they can be produced in bulk and carbonated and canned in Germany thus reducing costs.German retailers are following the example of their British counterparts. They are starting to sort wines on their shelf according to taste profile. This is good news for new world wines. Consumers will start to give less priority to the country of origin of the wine but more to the taste of the wine. This way they can match the taste with the occasion. Using labels which show which wine matches which dish is a key benefit to help increase sales.Another area which can help boost the profile of a new world wine is the online market. Online wine sales are increasing all the time in Germany. Smaller companies can use the online space to give more information about their product. Without this added information consumers are more likely to buy more traditional wines.There are a number of market entry barriers. Germany is a large open market. The southern part of the country has a large wine producing tradition. This part of the country is particularly difficult for new entrants to break into. However in the northern part of the country there is opportunities for new world producers. Excise duty is not charged on still wines in Germany. However sparkling wine based drinks are subject to high excise duties. This is to discourage high levels of consumption among young people.Supermarkets in Germany tend to charge high fees to gain shelf space. One way to gain shelf space is to partner up with a buyer who already supplies the supermarkets and sell your wine under their banner. Discounters like Lidl and Aldi have huge market share and a massive demand for wine. Due to reduced availability of wine for the low-end and middle segments they have turned to suppliers from new world countries. There is potential to develop long term relationships with these discounters but competition is fierce which often lowers price and profits. However, if a producer can supply a high volume of consistent quality wine there is an opportunity to make profits in this sector.