Situation Report of the VDP Prädikatsweingüter

 
Worldwide stable market conditions for top German wines

Despite recent global economic upheavals, the most severe that the German Federal Republic has experienced since the end of WW2, the economic position of Germany’s VDP Prädikat Wine Estates has remained stable. Through the end of 2008, VDP estates did not register any business setbacks related to the global crisis; circumstances remained so in 2009, with the exception of some sales declines in certain export markets. All in all, though, the ongoing business of VDP members has remained stable.

Compared with recent years, it has been “business as usual” at VDP estates, which shows how resilient their business is in light of general economic conditions. VDP president Steffen Christmann notes: “Our estates are economically viable. Several have even reported that 2008/2009 was the best financial year of their history, thereby confirming the increasing demand for authentic wines. Particularly in times of economic crisis, our strategy of long-term thinking and sustainability has proved to be an asset. Our estates think in terms of generations, not decades.”

Domestic market

Sales figures for the domestic market in 2009 were completely stable. As always, some 80% of VDP wines were sold in Germany, whereby a trend that was just starting in 2008 has now clearly emerged: on-premise sales are down, yet only by one percent, i.e. not as much as feared. Wine enthusiasts increasingly tend to consume less wine in restaurants and bars, but rather purchase more wine for home consumption. In general, the popularity of VDP wines has continually increased in the domestic market, to the extent that they have almost achieved “cult” status. German consumers are willing to pay for the work of VDP vintners. They appreciate the broad range of flavors and aromas that VDP estates bring forth from vineyards that have been cultivated for centuries. In 2009, VDP estates’ combined total sales reached 30 million bottles again, while the German wine industry as a whole reported a two percent decline in volume. The average price per bottle of €9,60 was able to be maintained, even after the 12 percent increase achieved in 2009. In commenting on the current financial state of German producers of top-quality wine, Christmann underscored that “the price increases attained in recent years were not an ephemeral ”?bubble’ but rather built by a solid clientele.”

International market

The situation in foreign markets is extremely varied for VDP estates. Sales in the USA differ from estate to estate. Some report an increase of up to 15 percent, but export setbacks as well. In all, the VDP’s total sales volume in foreign markets remains relatively stable at just over seven million bottles. Certain interesting markets have opened up in recent years, such as Spain, Italy, Russia, Switzerland, and China. Although volume remains small in these markets, they are a lucrative outlet for higher-priced terroir wines. Here, VDP estates are once again breaking ground on behalf of German wine: the sales of high-quality wines in these markets help establish an image of Germany as an exclusive wine-producing country with outstanding vineyards. We expect that this image will provide impetus for healthy sales growth in the years to come. Scandinavia continues to be a growth market for VDP estates, with sales increases of up to 30 percent.

In closing...

Despite the current economic situation, the VDP estates report that wine sales are stable. This is due primarily to a steadfast domestic market and increased demand for higher-priced, top-quality wines of authenticity in foreign markets. According to Christmann: “All in all we are absolutely satisfied. The economic position of our estates continues to be very good.”    

VDP – General Sales Overview in 2009

(Figures are projected, not absolute.)

 

TOTAL SALES in 2009 (0.75-liter bottles)

ca. 30,000,000

VDP membership: 195 estates (as of 01.01.2010)

Collective holdings: 4,900 ha (12,100 acres)

Average yield: 60.3 hl/ha (vintage 2009)

SALES MARKETS (on average)

Domestic: 80% (2004: 86%)

Export: 20% (2004: 14%)

(Export share ranges from 0-80%, particularly on the Mosel.)

 

SALES VOLUME IN EUROs

Total: ca. 288 million Euros

EXPORT TRENDS

Small, but high-caliber, markets in Switzerland, Russia, Spain, Italy, and China.

PRICE LEVEL DOMESTIC MARKET

Average bottle price: €9,60


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