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The decline in German wine sales is being stemmed by the New Wave of drier style wines which, incidentally, are keeping schtum about their origins, says Patrick SchmittThe decline in German wine sales is being stemmed by the New Wave of drier style wines which, incidentally, are keeping schtum about their origins, says Patrick Schmitt

IT DOES rather dawn on you, particularly when you consider the German wine category in the UK, how much emphasis the wine trade puts on origin, when perhaps brand owners would rather talk about style – or should one say sauce – over source.

Increasingly, there are brands which are trying to unshackle themselves from their producer country, and take a different route to appeal to consumers.  Take Blue Nun, for instance, a wine famous for being sweet and German, but now a brand with a French Merlot in its stable.

The aim of such an addition was actually to alter the brand’s reputation, or put an end to the jokes.  After all, as far as the average consumer’s concerned, "Germany doesn’t produce red wines" and "only light white wines can be sweet…" – so Blue Nun must have moved on.

While Blue Nun’s owners are trying to steer their brand firmly away from any German connotations, increasingly producers and agents are creating brands which from the outset have no real or specific geographical heritage to speak of.

Thresher’s Origin is a good example, as is Stowell’s Taste the World, as both are brands which dip their toes in vats sometimes thousands of miles apart simply to find the best varietal expression for the cost.

It is then hoped that the shopper will search out the brand, and a preferred style within that brand’s range – the country of origin is not relevant. 

Having said this, for many brand creators country of origin is still key, not just because source usually dictates shelf position and, of course, style, but because brands often play on the powerful imagery of their home nation to make some form of emotional connection with the consumer.

Think of the images of classical Italy on a Chianti bottle or those of a bright blue sea when it comes to South African Chenin.  But what if you don’t want to borrow from your country’s cultural or physical characteristics when it comes to selling wine, or you want to do a Blue Nun and extend the range outside your national boundaries?

Well, it seems the safest route is to go for something simple, neutral and without obvious reference to the source country.  A product that is neither traditional nor way out in style, packaging or name.

Anonymous origins When one begins to look at Germany’s best-selling brands in the UK, it appears that, well, they’re not very German.  To consider the leader, Black Tower, although the juice is certainly German, and much of it traditional in style (ie off-dry), the name and the look aren’t.

The brand is, however, shifting over 450,000 cases in Britain, and increasing in sales volume by 7% according to ACNielsen (MAT May/June 2004).  Over the same period, sales of German wines in the UK offtrade have dipped 3%.

The point is this is German wine, but does the consumer really realise it? There’s no gothic script or elongated bottle, let alone anything German on the label.  This is because, for most shoppers, anything Teutonic is a turn off when it comes to wine (although interestingly the opposite is true of all things functional/mechanical).

Look at other leading German wines if you’re still not convinced.  Coming up behind Black Tower is Blue Nun, and then the rapidly-increasing Reh Kendermann (dry Riesling and Pinot Grigio). Following these is Devil’s Rock and Fire Mountain.  Then there’s Bend in the River and Stowells.  Just consider the names alone.  

Let’s face it, these wines could be from anywhere, because wines at this level seem to want to hide their heritage – the country of origin in this case is not a positive association for a wine. Keith Lay, marketing director at Ehrmanns even makes an analogy between German wine and top-shelf mags – people obviously buy them, but do you ever see anyone pick them up?

In other words, there’s something embarrassing about actually being seen to like German wine, although many evidently do – Germany has a little over 8% of the UK light wine offtrade market, shifting more than 6.6 million cases over here.

But, while the heavily branded wines can entice the customer with their modern packaging and simple names, could more traditional German offerings be in decline purely because of consumer perception, or should one say prejudice? Perhaps not entirely, but it does account for the fact that few shoppers seem to actively seek out wines from the German section in supermarkets.

Of course, price promotions could draw them, but with an average bottle price for German wine of £2.51 (MAT May/Jun 2004), down from £2.53 at the same time last year, there’s not much room for deep discounting.

This means German wines can’t escape that neglected corner for those hallowed gondola ends, as only wines which will raise significant cash margins make it into the spotlight.  "We don’t get gondolas anymore," says Wolfgang Marsula, export director at Zimmermann- Graeff & Muller, producer of Fire Mountain, "but we used to a couple of years ago.

The argument from the buyers is that we don’t create enough cash margin compared to if there is a French wine there, or an Australian one."  This means that brand owners must resort to other techniques, for instance, loyalty cards with bonus points, or regular sampling to shift their wines.

Sweet or dry But could there be another reason for the decline? One that is related as much to style as image? Quite possibly, and in fact, the new German brands, in an attempt to escape the rather damaged reputation of the country’s wines, are not only presented in a modern manner, with English names, but in a modern style, a dry one, both to appeal to current tastes and distance the wines from those that made German wine popular in the 1970s and are mocked today.

As Binderer St Ursula’s (producer of Devil’s Rock) managing director, Peter Binderer, says, "The traditional wine style [off-dry] still has a lot of friends but that’s not the future, and we realised that if people like New World wines, then we need to find another style of vinification.

We were the pioneer of new style [dry] Riesling, and we introduced Devil’s Rock in 1995 and success came very rapidly – we gained almost full distribution in the major supermarket groups within the first three years and the style of the wine was very much welcomed by UK consumers."

Other successful "New Wave" German wines include Kendermann’s Dry Riesling and Fire Mountain, and it is certainly believed these wines have served, to some extent, to reinvigorate the German category, after all, German wines sales are showing an increase in the £3.50 to £5.50 category, which is exactly where these wines sit.

But there’s still a market for traditional German wines.  The modern wines mentioned above contribute only about 500,000 cases to Germany’s 6.6m in the UK.  However, much of the off-dry German wine is own-label Liebfraumilch and Hock, often simply sold at the lowest possible price.

Not only are these wines devaluing the category as a whole, but their most loyal consumers are actually dying off, hence Germany’s sales volume decline in Britain. 

As for the likes of Black Tower and Blue Nun, they are off-dry in style but are attempting to draw the consumer towards drier and more quality-focused wines, both by improving the juice in their mainstream styles, as well as reducing the residual sugar content, but also by adding new dry lines.

And, interestingly, Black Tower’s newly-launched dry Riesling is currently growing at 158%. Of course, the words off-dry and traditional aren’t confined to Germany’s cheapest offerings and, as is well documented, some of the finest Rieslings, if not the finest in the world, are grown on German soil and are off-dry in style.

In fact, it is fully deserved flattery for these wines in the press which is encouraging an increasing following for German wines over £6 sold through independent retailers.  But while this is more the arena of the wine connoisseur, wines like Dr L from the Loosen Brothers is a more widely distributed traditional Riesling below £6 that is achieving impressive sales.

Another is Tesco Finest Riesling, which is an off-dry example from the Mosel Valley, and doing well at £4.99.  Lastly, a new initiative from Siegel Wine Agencies, and just taken on by Waitrose, is a Riesling from the Pfalz in a traditional German bottle and in an off-dry style.

"We don’t want to disguise its origins," says David Wright, "because we think the Germans make the best Rieslings."  Then again, the new brand is called the rather un-Teutonic The Naked Grape, and it is hoped there will be other Naked Grapes, and from places other than Germany.

"The proposition is purity of flavour," adds Wright, and we hope to take it to other regions/countries."  And it will be interesting to see how the wine performs, especially as ZGM’s Marsula admits that the company’s offdry Mosel Valley is no longer listed in the UK.

"The wine did not perform," he says frankly.  "It was on the sweeter side, it was a more traditional German wine, and the price point was £3.99, and it’s very difficult to do something more conservative at that price point."

But he does add, "I am not giving up on the more traditional side because I believe there are lots of traditional German wine drinkers who should be upgraded to the next level.  But the residual sugar, in the case of Mosel Valley at 25 grams, was not enough."

State of the category

But what about German wine sales in the UK overall? How does their performance compare to the rest of the Old World? And are these branded wine sales increases enough to drive it forward? Well, to answer the last question first, the New Wave German wines are yet to really make their influence felt, and, as noted earlier, Germany’s wine volume sales in the UK off-trade have slipped 3%.

However, to compare this to other nations, Germany is declining at a slower rate than other Old World-producing countries.  For instance, France has declined 7% and Bulgaria 14%.

Furthermore, Germany’s volume sales decline is believed to be slowing, but it is still losing share to the New World, something Reh Kendermann’s managing director, Richard Jones, puts down to a longterm decline in the consumption of Germany’s cheap and sweet offerings in the UK.

"The trend is one which will continue," he says, although he adds, "There will always be some appeal for wellpriced, medium easy-drinking wines."  The question is, will Germany continue to provide for those tastes, because, as Jones adds, "Some of the wines from California are fulfilling that role [medium, easydrinking wines] and are regarded as being more contemporary."

On top of this, there is also a decrease in the volume sales of German wine through the ontrade, as much as 12.9% (MAT May/June 2004), although once more, France’s fall off is greater at 14.9%.

This more traditional market, and hence one classically skewed to towards Old World wines, is slowly starting to mimic offtrade trends – branded and New World wine are on the increase.

But to return to the off-trade, when it comes to actual price, as suggested earlier, it appears the average bottle of German wine has fallen from £2.53 (MAT May/Jun 2003) to £2.51at the same time this year, although the Nielsen graphs do show a slow increase in sales of German wines over £2.50, which picks up at over £3.50 and then really accelerates in the £5 to £5.50 area.

The growth areas, as explained above, are connected with Germany’s New Wave offerings but the overall decline in price has more to do with some wineries shifting own-label wines at very low prices.

And for Germany to ensure a healthy future it may have to sacrifice share in the short term and distance itself from the high volume end of its market, the inexpensive sweet and undistinguished wines that have brought this serious wine producing nation into disrepute.

 As Jones thoughtfully comments, "Germany, in the long term, is going to have to look at itself as more of a premium wine producer, especially as it’s not a cheap country to produce wines in – it is on the geographic extremes."

In the meantime, however, Germany must focus on building strong brands which will reassure the consumer that Germany can make good wine because, although the trade knows it, your average consumer doesn’t read the wine press.

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