An insider’s look at the wine market: the latest developments in wine consumption habits
How does weather affect wine consumption? Is the premium product trend impacting wine? Who buys wine in Germany and where do they prefer to shop for it? As with many other consumer goods, developments in the consumption and sale of wine are raising questions.
First up, and the most important finding: Despite recent market research and online surveys carried out by experts, the structure and development of Germany’s population continue to dictate the type of wine that is purchased and consumed. The second point worth mentioning is that people drink wine almost immediately after purchasing. The majority of end consumers no longer keep extensive, well-stocked cabinets. Most buy wine with the intention of enjoying it within the next few days.
No tourism in wine-producing regions
While tourism has a pretty significant impact on wine sales in countries such as Austria, Italy, Spain and France, the same cannot be said for Germany. Its 13 wine-producing regions are becoming more and more popular with German day-trippers and those enjoying a weekend getaway. However, only Rheingau and the cobbled Drosselgasse – which is located in the heart of Rüdesheim and epitomizes the romantic charm of the Rhine – have seen any notable tourism from international vacationers.
Boasting 26,758 hectares, Rheinhessen is Germany’s largest wine-producing region, followed by Palatinate (23,554 hectares) and Baden (15,828 hectares). Compared with other countries all over the world, Germany has quite a small wine-producing area with just around 10% of that of the leader, Spain (1 million hectares).
Even though Germany’s major cities like Berlin, Hamburg and Stuttgart and famous tourist attractions such as Bavaria’s fairytale castles attract a multitude of visitors each year, Germany’s wine regions are like sleeping beauties, yet to wake up from their deep slumber.
Wine consumption in Germany hold steady at 20 million hectoliters
Sales in the food service industry are generally difficult to determine. According to estimates, the food service industry accounts for approximately 10% to 15% of all German wine market sales, with wine being served and consumed in more than 200,000 restaurants and bars throughout the country. This number is greater than in many countries but less than in Austria and Italy, for example, where both local residents and tourists enjoy wine in bars and restaurants.
Portugal has the highest per-capita wine consumption with around 58.8 liters followed by France with 50.7 liters and Italy with 44 liters. In China, however, wine consumption is still negligible with per-capita consumption of only around 1.5 liters.
Germany’s annual wine consumption rates have held steady for several years at around 20 million hectoliters. This results in a theoretical average consumption rate for the German population (68.8 million) at around 29 liters of wine and sparkling wine per person aged 16 and over per year. Further broken down, sparkling wine accounts for 4.4 liters of the per capita amount and still wine accounts for 24.6.
Keep in mind, however, these averages are by their very definition only theoretical data. What is much more interesting to explore is the question of how consumption varies based on different generations, social classes and gender.
Consumer behavior: 9.6 million “frequent drinkers”
Some reasonably valid statements regarding purchasing habits and consumption can be made based on market research conducted via representative survey as a part of the Geisenheim University Wine Consumer Analysis. According to the results, 9.6 million of the 68.8 million potential wine consumers identified themselves in the 2018 survey as “frequent drinkers” of wine, meaning they regularly drink wine once or more times a week. “Occasional drinkers,” those who drink wine at least once but usually 2-3 times a month, account for 15.1 million potential consumers. “Rare drinkers”, meaning they drink wine less than once a month, account for 14.5 million potential consumers, while no fewer than 29.6 million consumers (43% of potential wine drinkers) stated they almost never or actually never drink wine.
As the study’s author, Gergely Szolnoki, Professor of Market Research at Geisenheim University, pointed out, people consume sparkling wine very differently. Even though only 7% of people classified themselves as not being drinkers of sparkling wine, it is enjoyed much less frequently – with around 60% of consumers saying they were “rare drinkers” of sparkling wine. The beverage continues to be served in more formal atmospheres such as private celebrations and work functions, and therefore can be viewed as a drink reserved for special occasions.
Purchasing habits depend on age and social class
While cash and carry wholesalers dominate the sparkling wine market, they are much less common when it comes to non-sparkling wine. Sales at food retailers (supermarkets, hypermarkets and discount stores), account for around two-thirds of the volume of the entire market. Consumer purchases from specialty stores, directly from producers, and from other retail outlets together account for the remaining third. Considerable purchasing habit differences can also be identified based on age and social class. While younger consumers tend to prefer discount stores, as consumers age they tend to buy more from specific, wine-focused retail outlets and specialty stores or buy directly from producers and wineries.
Furthermore, the higher the social class, the higher the proportion of people who purchase and drink wine more frequently. They buy more of their wine from specialty wine stores and directly from producers and wineries and consume considerably more per capita.
Only 30 million liters sold online
Combining the findings of the Geisenheim University wine market study with the data of prominent market research institutes helps paint the picture showing where Germans purchase their wine for home consumption. Discount stores account for sales of around 530 million liters. Approximately 520 million liters are sold in the remaining food retail sector, which includes traditional supermarkets and hypermarkets such as Edeka, Rewe, Kaufland and Real. Sales in specialty stores total around 150 million liters and direct sales from producers and wineries amount to about 170 million liters.
With a total of approximately 30 million liters, online and mail-order sales account for a growing but still very small proportion of total sales. More and more young consumers who enjoy wine and surfing online are beginning to purchase wine this way. Through generational shift and the aging of generations, these new wine lovers will increase the significance of this purchasing channel.
€10 billion from sales of wine and sparkling wine in Germany
The study shows that the total turnover from still wine sold to private households in Germany amounts to approximately €7 billion. When turnover from the food service industry and from sparkling wine is included, the wine and sparkling wine market in Germany is valued at well over €10 billion.
Hot weather causes wine sales to slow down
And what effect does the weather have? The heat wave during the summer of 2018 caused a real slump in wine consumption in Germany. Sales, specifically of red wine, slowed down over the summer. There is a simple explanation which can be linked to gender-specific consumer behavior. While women drink proportionally more white wine and considerably more rosé wine, men drink disproportionately more red wine. A decrease in men’s consumption led to the dip in sales.
The reasons are completely understandable. A nice cold beer served out on the terrace or balcony when temperatures hit 30°C or higher is without doubt a more tempting option than a room-temperature glass of red. As such, even though wine marketers do prefer nice weather, they don’t want tropical temperatures.