The 2016 fiscal year was a largely positive one for the member estates of the VDP.Prädikatsweingüter: German wines are in demand around the globe. The stumbling market for bulk wine stands in sharp contrast to the premium bottled wine segment served by the VDP, with a stable domestic market and ongoing growth in exports. Demand for Riesling continues to climb, and rising demand for Spätburgunder (Pinot Noir) has also been observed on the international market. The positive economic outlook is expected to gain further speed from the 2016 vintage, which 182 VDP member estates will be presenting to international visitors at the upcoming VDP.Weinbörse. This leading trade fair for German wines will be held in Mainz on 23-24 April.
“Wines from the 2016 vintage are beautifully well-balanced and harmonious. They win hearts and palates through fine acidity and charming, elegant fruit. Although the wet spring weather posed challenges for many winegrowers, harvest volumes ultimately proved satisfactory in many regions and should be sufficient to meet demand. As such we’re very optimistic heading into the VDP.Weinbörse,” VDP President Steffen Christmann says of the new vintage.
VDP Sales Structures
Sales for VDP member estates totaled approx. 34 mn. bottles. Average prices per 750ml bottle rose slightly in a year-on-year comparison. VDP.GUTSWEIN sold for approx. €9.70 on average, while VDP.ORTSWEIN were priced at approx. €12.70. The more premium categories, VDP.ERSTEN LAGE® and VDP.GROSSE LAGE®, earned an average of approx. €17.00 and €32.00 respectively per bottle. VDP.GROSSE LAGE® wines represented approx. 15% of sales (and roughly 5% of overall volume). They serve as the calling cards for VDP member estates and have contributed enormously to the growing profile of premium German wines on the wider world market. Total 2016 revenues across all VDP member estates totaled approx. €323 mn.
Prices trended stable to slightly higher across all classification segments, with the brightest results coming in the Ortswein (village) and Lagenwein (single-site) segments. Surveys found growing understanding and acceptance of the VDP Classification pyramid as a guide to the different quality levels that can be expected based on classification of origin. VDP.GUTSWEIN have established themselves as the gateway to the premium price segment, and VDP.ORTWEIN and VDP.ERSTER LAGE® wines in particular have proven particularly popular for the restaurant/catering industry. Consumers tend to look towards regional specialties for their luxury items, and terroir-driven wines under the ‘Traubenadler’ eagle-and-grapes seal suit their needs well.
Domestic sales figures tracked slightly upward. Roughly 77% of the wines were sold within Germany. Based on the satisfactory volumes for the 2016 vintage, demand was successfully met.
As with last year, direct ex cellar sales represented 42% of the domestic market. An additional 5% sold from the online shops of VDP member estates, and these have come to represent an important supplemental revenue stream for ex cellar sales. Wine lovers expressed an appreciation for the in-person buying experience, as well as the chance to interact directly with the producers. Brick-and-mortar retail sales, the second-most important sales channel at 35% of sales for VDP estates, have ceded ground to third-party online retailers, who currently serve 5% of the market. Restaurants and catering (17% of domestic sales) are increasingly drawing on the various sales structures available to them, and have become less likely to buy directly ex cellar.
Each of these sales channels (retailers, restaurants, sommeliers, importers) shares one common factor: the need for intensive attention and personal service by the winegrowers.
The digitization of wine purchasing has crept into the orbit of the VDP.Prädikatsweingüter, and has helped increase flexibility within the wine industry. 10% of VDP wines are now being sold online (total from ex cellar and external online retailers), with pure online wine retailers showing increased strength in direct competition with established brick-and-mortar retailers and direct online ex cellar sales. Wine aficionados often take advantage of multi-channel distribution paths, giving preference to whichever medium best fits their shopping situation. Ordering and/or purchases are made on a needs basis.
Export sales rose by 23% in 2016, based in no small part on larger harvest volumes from the past two years that allowed for better servicing of demand in the premium bottled wine segment. The key export markets remained unchanged: Benelux, USA and Scandinavia. The Scandinavian market in particular has expressed strong demand for organically produced wines. Minimal-intervention cultivation is one of the VDP's philosophical pillars. VDP estates currently cultivate 12% of all organically maintained vineyards in Germany. Eastern Europe remains an enticing market, but the threshold to market entry remains thorny.
Asia, and China in particular, is seen as a rising future market with tremendous potential. Export rules can be complicated here, however. Language barriers and other hurdles make the necessary business contacts expensive to establish and maintain.
“Wine markets are highly competitive, both nationally and internationally. Working with the clear positioning of our premium wines and the strict, origin-based quality classification hierarchy, our members have increasingly succeeded in establishing demand in all classification levels. Naturally the big volume sales come in the base segment involving VDP.GUTSWEIN. But we also see enormous growth potential in the range of the VDP.ORTSWEIN and VDP.ERSTE LAGE®. Customers, including those in export markets, are looking for regional wines with character, and understand that origin is the decisive quality characteristic,” says VDP President Steffen Christmann.
The 198 VDP.Prädikatsweingüter... have committed to strict internal quality standards and benchmarks – from the grape to the cellar. The VDP Traubenadler logo (a stylized eagle bearing a cluster of grapes) on the bottle capsule is the seal of approval for VDP wines. It stands for artisanal wine preparation from excellent vineyards.
Total sales in 2016 (750ml bottles)
Total VDP approx. 34 mn. bottles
Per estate approx. 171,000 bottles
HECTARAGE UNDER VINE
Total VDP 5,260 ha
Per estate 26.5 ha
Domestic 77% (2015: 82%)
Export 23% (2015: 18 %)
46.7 hl/ha (2013 vintage)
52 hl/ha (2014 vintage)
54 hl/ha (2015 vintage)
56 hl/ha (2016 vintage)
· Benelux, USA, Scandinavia: established
· Organic boom in Norway and Sweden
· Eastern Europe (especially Russia) with potential
· Europe stable (Italy and Spain are most interesting markets)
2016 Sales volumes
Total VDP approx. 323 mn. euros
Per estate approx. 1.63 mn. euros
2016 Bottle prices
VDP.GUTSWEIN 9.70 €
VDP.ORTSWEIN 12.70 €
VDP.ERSTE LAGE® 17.00 €
VDP.GROSSE LAGE® 32.00 €