Goal-Den Opportunity

06 November 2005 By db staff writer

“standfirst”>With Germany hosting the 2006 World Cup, and the generic body encouraging a strong team performance, there is no better time for German wines to show their true colours, says Penny Boothman

So waht’s your plan of attack for next year? A 4-4-2? A 4-3- 3, or even a 4-5-1? If you don’t know what I’m talking about, don’t worry, neither do I: it’s football. If you’ve been living in a cave for the last year you might not know (er, as I didn’t) that Germany is hosting the FIFA World Cup next year. So prepare yourself for Deutschland fever during the summer months of 2006. This is all very well for sausage specialists and lederhosen manufacturers, but what will it mean for wine producers?

A quick glance at the statistics doesn’t seem to hold good news for the category. Volume share of the light wine category in the off-trade has fallen from 8.1% to 7.3%, and Germany sits in sixth place behind South Africa’s 10.1% as Spain creeps up behind with 6.7% (all figures MAT to w/e 11.06.05).

But the news is certainly not all bad. While the German share of the light wine market by value has also fallen, it has fallen by less than the volume share: from 5.3% to 4.8%, which means that the average bottle price point has actually risen. A rise from £2.47 to £2.51 means that Germany is still at the bottom of the heap price-wise, with nearest competitor Italy ahead at £3.35, but it still represents a significant change for the German category.

As you will see from the table on the facing page, the total category remains fairly static, the £3-or-less bracket is in slow decline, while the £3 to £4 sector is actually showing strong growth. Even the sought-after £4 to £5 bracket is on the up, and the coveted £5 to £6 category has doubled over the same period, albeit from a small base.

Naughty nuns

Things are certainly looking up for Blue Nun; in the last five years sales have tripled in the UK and doubled worldwide. And the recent relaunch was greeted by headlines such as “Nun Gets Cheeky” and “New Blue Nun’s Just so Sexy” from The Daily Star and The Mirror respectively. “The relaunch of the brand, including new packaging and significant above-the-line investment (£500,000) will have an impact on the German category. This is a key part of our strategy to recruit new and much younger consumers to the brand,” says Keith Lay, marketing director at UK distributor Ehrmanns. “From a German category perspective this is an important development as Blue Nun is one of the few brands putting any heavyweight marketing investment into the category.”

Brands do indeed seem to be an important growth sector for German wine, and since Devil’s Rock relaunched last year, in new packaging – and under a screwcap closure – the brand has seen an upsurge in sales.

“Devil’s Rock Riesling has a very solid consumer following,” comments Lisa Johnston, brand manager for Devil’s Rock at Thierry’s. “Despite the fact that the German wine category has seen a steady decline over the last few years, sales of Devil’s Rock and other modern German wines have increased. This reflects the fact that UK consumers have moved away from the old-style Liebfraumilch and Piesporter blends of yesterday and prefer to drink wines that are drier in style, while still fruit-driven and fresh.” And this from a brand that normally retails at the £4.49 to £4.79 price point.

Devil’s Rock has been on the market for 10 years, but that still makes it a relative newcomer on the German scene. The staying power of brands such as Black Tower has to be admired. “Black Tower is seeing extremely good growth in the last six months, particularly in the cash and carry sector which has seen double-digit growth. The temporary decrease in Black Tower sales in 2004 was due to a switch in some areas to EDLP and has now been turned around. We are expecting continued good growth throughout 2006,” explains Hans Berktold, joint managing director, Reh Kendermann. “Black Tower Pinot Grigio was introduced to Thresher this year, and within eight weeks achieved 50% of the sales of Black Tower Rivaner, which has been established for well over 30 years,” he adds.

Pinot progress

This shift to including other varietals is something that all the major labels have in common. A lot of the German producers are branching out and Pinot Grigio seems to be the grape of the moment. “People talk about the resurgence of Pinot Grigio and I wonder if this is another way to get people into the German category, because sometimes Riesling can be a step too far for people who don’t know about wine,” says Nicky Forrest, director, Wines of Germany, UK. “There’s a Black Tower Pinot Grigio and a Devil’s Rock Pinot Grigio both of which obviously have other varietals in the range. And perhaps when consumers trust the Pinot Grigio they’ll move on to a Riesling.” It’s true that these days the varietal holds as much pull for the consumer as the country.

Germany has always been strongest in the multiple grocer sector, while the on-trade sector remains something of a challenge. “With the ontrade one of the problems we face is that there are about two German restaurants in the UK, and thousands and thousands of Italian, Spanish and whatever else,” explains Forrest. “So it’s very, very easy to drink Italian, but that’s a reason why Germany does struggle in the on-trade. There’s only an argument to put very, very good German wines into the top white tablecloth type restaurants. In most of the top restaurants now in the UK you’ll find a collection of German wines. So that’s great at the top end of the market, but in the midsector where you have all these endless Italian restaurants it’s more difficult.” The pub sector also presents difficulties as it is very fragmented, has a bad image of old fashioned Hock, and is perhaps more successful for German beers.

However, Wines of Germany is very keen to educate all levels of the industry and is planning a lot more trips to Germany next year. Which is all very well, but where does the football come in?

“We’ve always done stuff with the multiples, it’s a really important part of our route to consumer. Obviously we can’t do all of them over the football season, but with some of them we definitely want to do something over the summer,” says Forrest. “We’re going to step up our work with the retailers and double the amount of money that we have had in the past, which is quite an exciting departure for us. We’re going to be working very closely with the suppliers and they’re going to be helping out on the promotional side. They’re doing what they’re meant to – they’re getting these wines onto the shelves and our job is to get them off the shelves again!”

So when Germany hosts the World Cup next year it should be that much easier for its wines to score.