FEATURE: GERMANY Life is Sweet

Labelled as Pinot Grigio, rather than Grauburgunder, the quintessentially Italian grape is doing rather well for the Germans, says Tom Bruce Gardyne

“If somehow Germany could become a package tour destination,” Nicky Forrest sighed wistfully, “it could bury negative preconceptions at a stroke!”  As a partner at Phipps PR which has represented Wines of Germany for the last eight years, Nicky knows all about the country’s occasional image problem. Possibly inspired by her comments, the country’s tourist board recently conducted some research in the UK. It concluded that the Germans are regarded “as smart, friendly and modern” yet “may seem humourless, rude and dull”, and that these perceptions come largely from stereotypes rather than first-hand experience.

This summer thousands of football fans saw Germany in the flesh. They drank vast quantities of beer and a fair amount of wine. Being the official World Cup wine supplier, the country sold two million bottles under the FIFA label in Europe, mostly at home, according to Steffen Schindler, of the German Wine Institute (DWI). A further 100,000 bottles from a wide range selected to show-off the best of German wine were drunk in the VIP suites in the World Cup stadiums. The extra sales were welcome, though more important was the chance to disrupt some of those preconceptions. Whether UK tourists will return en masse next summer remains to be seen, but even a one-off glimpse of Germany from the inside must have been positive. Who knows, it might even lay to rest Basil Fawlty’s “don’t mention the war” cliché.

In the UK, annual off-trade sales slipped below 3m cases for the first time this year. However, if you ignore the sub-£3 bargain basement which accounts for 60% of sales, there has been some growth above this, edging the average bottle price up 3p to £2.55. This may seem modest, but at least it is a move in the right direction. According to ACNielsen, the only other countries among the top 10 to increase their average price in the UK off-trade in the year to April ‘06, were Chile, Spain and France.

Headbangers
At times, those Germans bashing their heads against a price ceiling set painfully low by the UK supermarkets must be tempted to give up and look elsewhere. There has got to be an easier life than the EDLP nightmare of Asda. “It is certainly a very competitive market and one that’s getting more and more so,” says Nik Schritz, joint MD of Reh Kendermann. Yet supplying the discount chains back home who control nearly half the German market has given producers plenty of experience in dealing with ruthless buyers. “Perhaps we are not as shocked as the Americans or Australians,” says Schritz.  His company has its own Kendermann brand and Black Tower which was bought from Allied Domecq in 1992. Back then, the old German in the famous crock bottle was on the slide with sales slipping towards 100,000 cases. Today, by improving the quality, extending the range, revamping the packaging and simply refusing to give in, Black Tower’s UK sales are now over 400,000 cases. The original Rivaner still accounts for the majority, though Pinot Grigio, launched through Thresher last Christmas and now widely available, is catching up fast.

The company’s sales in the UK off-trade have been impressive, up 21.5% in the year to July with 41% growth in the Kendermann brand and 13.5% in Black Tower. Meanwhile, its arch rival Blue Nun did less well, with volumes down on the previous year. Keith Lay, Ehrmanns’s marketing director, admitted the Nun’s traditional fan-base was ageing and very much driven by deals. If you eased back on the special offers, consumers soon fled. But Ehrmanns has been working hard to recruit a younger female audience, and this December, Blue Nun will be the official wine at the NEC Clothes Show which is expecting around 200,000 women. And, encouraged by the success of Blue Nun Pinot Grigio, a new blend of Pinot Grigio/Riesling is being tested out in Tesco. This summer, Sainsbury’s bought a parcel of the German red varietal, Dornfelder, under the Erben label from Langguth, Blue Nun’s parent company. Ehrmanns is optimistic about a full listing and perhaps one for the up-market, barriqued version as well.     

Lay feels that by offering consumers something familiar, Pinot Grigio can really help bring people into the German category. The Italians might call it naked opportunism, but then everyone, from the Aussies to the Californians, is trying it on with the quintessential Italian grape. And you can forgive the Germans for not calling it Grauburgunder as they do at home. That would be a hard sell in the UK. “I am grateful to Italy for making consumers aware of the wine and the name,” says Schritz, who insists there has been no attempt to dupe the consumer with “dolce vita-style” labels. “German wines sold in the UK are clearly within the German shelves. Consumers are quite aware of what they are buying,” says Schritz.

Kendermann Pinot Grigio pioneered the varietal on the German shelves through Sainsbury’s five years ago. Despite an early de-listing, it has now bounced back and gained wide distribution. “We must be doing something right,” says Schritz “We have succeeded unlike some of our German competitors, so there must be something within our brand.”

The idea that Pinot Grigio acts as a bridge onto the German shelves is backed up by the Tesco buyer, James Davis. He says the country’s sales have been showing “good, positive growth driven by Pinot Grigio and more premium wines above £5”.

Rieslings to be cheerful

Others argue that Germany should concentrate totally on Riesling and not be distracted by other varieties. The wine has plenty of fans in the trade and the press with Jancis as cheer-leader in chief. We all know which varietal reigns supreme in the Robinson household. As she wrote recently in the FT, when her son was at a restaurant with friends deciding what to drink, the cry was unanimous, “Riesling!”

Yet on the supermarket shelf, Germany’s heroic grape is still not quite there in terms of mass-market appeal. So has the decision to focus the country’s generic campaign almost entirely on Riesling been a mistake? “Not at all,” says Forrest. “Any marketing guru would tell you you need one key message, and when it’s as strong as Riesling you would be mad not to shout about it.” Schindler agrees, and is convinced it makes far more sense than the old approach of the DWI. “Through the nineties we tried to explain to people that Germany was a country with 13 wine regions and 15 grape varieties.” Clearly it was way too much information. People tuned out long before they got onto residual sugar levels and what makes beerenauslese different to trockenbeerenauslese.

The renowned Riesling producer, Ernie Loosen, who makes the Naked Grape among others, told me the starting price for a well-made Riesling should be £5.99 which is quite some jump from that average bottle price of £2.55. Peter Bisley of importers PLB, would put Riesling’s entry point at £4.99 with scope for some price promotion off that. In January, PLB became agents for Moselland, the biggest Riesling producer in Germany with plantings of 2,360 hectares. The co-operative has had success in America with Blue Slate and Bloom, two brands created in partnership with the US importer. Bisley, who is keen to try the same approach here, feels Riesling’s day will come, if not tomorrow. As Forrest says, “Maybe it takes 10 years for a wine trade trend to turn into a consumer trend.” 

For the moment, German wine in the UK remains extremely bottom-heavy. Schritz believes there is a loss-leader supplier in all the basic food and drink categories in the supermarket be it bread or tomato soup. Somehow Germany became that supplier for wine; whether it asked for the role or was given it, no-one quite knows.

Schritz reckons the problem is a generational one. “I think Liebfraumilch has fixed a certain image of German wines especially among the slightly older generation. The younger generation have not grown up with it.” Perceptions are notoriously hard to shift, and not always tied to reality. “Bordeaux” may signify quality, even though a fifth is sold under e2 a bottle. In the UK, the presence of so much cheap, and not particularly cheerful German wine, does no favours for the category. The worst examples with their Hammer House of Horror gothic labels have been banished to the corner offie. One day, even that sickly tide from the past will slip away.

2020 VISION
Steffen Schindler, export director at the German Wine Institute (DWI), accepts there’s a link between perceptions of a country and its products. “Our image abroad is still rather humourless, sober, precise and technological,” he says, adding ruefully, “la dolce vita is not a German expression.” This is true and it’s probably fair to say his country does not radiate the same sense of hedonism as Italy. Yet where Germany does score over Italy is when it comes to long-term vision. While Italians can have problems thinking about tomorrow, the Germans are planning for the future. “Our young generation of winemakers is very ambitious,” says Schindler. “The aim is to lead white wine in all price points by 2020.” This is already happening with German Riesling in the United States where sales have doubled in the last three years. The UK is still the biggest export market and is twice the size of the US. But the average bottle price is far higher in America and, according to Schindler, second only to French wine in Japan.

The DWI continues to back Britain, however. “We always spend the biggest percentage of our marketing budget in the UK. It’s a very dynamic market, but it is extremely tough.” In terms of total volume, Schindler says, “We will never be where we were, we don’t have the wines. Our production is 10 million hectolitres in a country that consumes 20 million.” That may mean less sub-£3 wine in the UK, but it also means balanced production. While rivals grapple with too many grapes, “Germany is hoping for a big harvest this year.”

© db November 2006