Robert Handjes is marketing manager at the Royal Dirkzwager Distillery, an important family business in both on- and off-trade. “Trends in the Dutch market?” he asks. “As long as it is cheap!” is his cynical response. Any other trends? “Rosés are getting paler and paler, Prosecco seems to plateau and the French category remains under pressure.” He pauses. Then: “Also, the €1.99 price point is gone; the Dutch Government had it skillfully disappeared. And for the first time in history, we have seen an ad campaign on television and radio by an online wine seller.”
“Who is misleading the consumer by [offering] seemingly deep discounts versus inflated ‘regular’ prices,” adds Joris Snelten, CEO of the importer and distributor Delta Wines, an international player with a leading role in the Dutch market. “Discounting, especially in retail, has gone to the next stage: spoiling consumers with deep discounts such as BOGOFs.” Another trend Snelten sees is ‘blurring’: mixed alcoholic beverages and cocktail wines with fruit flavours as alternatives to ciders and fruit-flavoured beers are making their way in the wine category. “Non-alcohol wines are on the rise too (parallel to the success of alcohol-free beers and mixed beer-based beverages) and Eastern Europe seems to be back on the shelves.”
Trend Number One: Price
“As long as it is cheap,” as Handjes says. Price indeed seems to be even more critical in the Dutch market than two years ago. And yet subsequent duty increases by the Dutch Government – the most recent being a 5.75% increase on 1 January 2014, lifting it to €88.36 ($116.68) per hL from €59.02 10 years ago – have skillfully killed the entry level €1.99 price point. This is confirmed by the Nielsen Statistics: two years ago the €1.99 price point had a volume market share of 3.5%, versus just 0.3% last month. But the pressure on price remains, and Snelten sees a continued growth of wines of basic quality from the New World imported in bulk and bottled in the EU as a result. Pressure on prices is also fuelled by deep discounting, a relatively new phenomenon in the Dutch market.
Two: Deep discounting
“Discounting as such is not automatically leading to increased sales anymore,” says Handjes, “in the current market conditions it is the depth of your discounting which makes the difference.” Snelten agrees: “Buy one, get one free (BOGOF) offers, introduced in Holland by Albert Heijn with the Dragon wines from Berberana, are now more generally offered in supermarkets.”
It’s a “phenomenon blown over from the UK market, where they have learned the hard way that BOGOFs are disastrous to brand loyalty and the trade in general,” says Snelten, “creating promo junkies and retailers addicted to the temporary sales boost and higher fair shares but also to discounts which need to get repeated more and more often to sustain the growth.”
Discounting, however, could not prevent Dutch wine consumption from stalling in 2013.
Three: Stagnation
It is not just Prosecco as Handjes says (which, with 2.1% in turnover, is still a small category in The Netherlands) but total Dutch wine consumption which plateaued in 2013. And although it is still too early to tell, Snelten doesn’t expect growth in 2014 either. “Growth of consumption may pick up next year again but for now the stagnation is remarkable as wine consumption in the Netherlands has grown uninterrupted since World War II –including in times of recession.” A factor which definitely plays a role is the increased competition with other drinks such as non-alcoholic wines, ciders and fruit-flavoured beers. It also explains the phenomenon of blurring.
Four: Blurring
“The wine category is getting blurred with the arrival of mixed drinks based on wine with flavours such as elderflower [the Hugo: a mix of spumante, elderflower/mint waters and concentrated lemon juice], pomegranate, raspberry, red fruits and peach,” says Snelten. So-called ‘cocktail wines’ – wines with fruit flavours, often frizzante in style - have been introduced to lure younger consumers away from ciders and fruit-flavoured beers to wine. (And, by the way, the legal drinking age has been increased from 16 to 18 years.) Gert Zwitser, senior category manager for wine at Albert Heijn, confirms a much broader selection of these drinks on offer than a few years ago. Nielsen figures confirm that mixed drinks based on wine have more than tripled in the past 52 weeks compared to the same period two years ago.
Five: Eastern Europe
Snelten notices more and more Eastern European wines on the shelves, successfully competing with wines from established wine countries such as France, where producers are faced with higher costs and smaller harvests.
“Romania especially is doing well with excellent price versus quality and the use of international varieties such as Merlot, Cabernet, Pinot Noir, Chardonnay and Sauvignon Blanc,” says Snelten. “Hungary is also benefitting from this development, as is Slovenia. Bulgaria still suffers from an image problem in Holland but will return to the shelves as well.” Handjes agrees, although he thinks loss of market share by the French is as much due to themselves as the competition: “It is their inability to get their wines on the shelf, let alone get them off the shelf [with a promotional package].”
Six: More white and paler rosé
In most northern European countries, reds have a bigger market share than whites and Holland is no exception. However, Snelten has the impression that white wines are currently growing at the expense of reds and rosés, which is confirmed by Marten Suurmeijer, senior consultant at the Nielsen Company: “Although white wines have not yet surpassed reds in the Dutch market, we are nearing the moment it will.” Regarding the rosé category, a different trend is visible. Handjes says that each year the colour of rosé is getting paler and paler. This is because of the trendiness of Provence rosé, which started in speciality stores and the high street (with brands like AIX, ProByVence, MIP, La Légende, and Mad), but which has now blown over to supermarkets. Multiple grocers are selling ‘Provence-like’ rosés from other regions and/or varieties, but in a similar colour and style.
For reds, full-bodied blockbusters (‘Parker-wines’) are out of fashion, while elegance and drinkability is in. Lighter-style reds, which are increasingly served cool in restaurants, and lower-alcohol wines are also enjoying increased popularity. Amongst other things, it has resulted in a revival of premium dry German wines in Holland.
Seven: Retail concentration
The past 10 years have seen a continued concentration of supermarket chains in Holland. And most of the remaining supermarkets have been concentrating their purchasing power in a buying group called Superunie. Jumbo supermarkets is growing fastest. This regional player started opening supermarkets nation wide in 2000, had 100 stores in 2007, 300 in 2013 (after the acquisition of Laurus) and will have 600 stores when all C1000 supermarkets are converted into Jumbo’s, after the acquisition in 2012. As a result, Holland will have two giant multiple grocers, Albert Heijn and Jumbo. For both, wine is an important category. When they decided to change the shelf navigation to style rather than origin, most Superunie supermarkets followed suit.
Eight: Changing shelf navigation
More and more retailers like market-leaders Albert Heijn and Jumbo have adopted shelf navigation based on taste profile rather than origin.
According to Gert Zwitser from Albert Heijn, this has been done in an effort to make it easier for consumers to choose. “With the new navigation in 10 different taste profiles, we feel that consumers also get a better overview over our total portfolio.” Not everyone is convinced of the new system. Handjes: “I get lost in the supermarkets nowadays; I used to find my wines at their usual spot on the shelves, now I have to convert my wine into a taste profile first, in order to find it.” The new system also poses some challenges to brand managers, as visibility of the brand is significantly reduced, and facings widely spread. It also makes the wine shelves more messy with many different brands and bottle shapes next to each other. Snelten: “A dilemma for many category managers.”
Nine: Internet sales
Wijnvoordeel.nl (literally: wine advantage) is a web-based direct marketing organisation that’s part of the Baarsma Wine Group.
Recently, Wijnvoordeel.nl had a series of commercials on national television and radio, promoting Casa Safra, a Terra Alta blend from 2007, as ‘Gran Reserva Seleccion Oro’, a rare wine which was offered to Wijnvoordeel.nl by way of favour. The commercials resulted in massive ordering and more than 80,000 new e-mail addresses to Wijnvoordeel.nl.
The site also recently used social media to expose a ‘secret discount code’ which would give an additional €20.00 off the bill for a wine which was already discounted by 50%. Six bottles could be bought for a tenner whereas the ‘regular’ price was €48.00. This marketing ploy (most consumers assumed it was a mistake by Wijnvoordeel.nl) again resulted in massive ordering and thousands of new e-mail addresses.
Most offers at Wijnvoordeel.nl illustrate the effect of (perceived) deep discounting to trigger the consumer to order. Internet is also growing in other segments of the Dutch market, even in the premium segment. Wineinblack.nl, a German based website, offers premium wines at usually significantly lower retail prices than is available elsewhere, and is gaining ground rapidly.
Ten: Packaging changes
“Back to the future,” says Snelten, showing Les Dauphins at Albert Heijn in a fashionable retro look. Small packages are also gaining popularity – that is, small PET bottles with fitted glass for convenience stores at train stations and other takeaway locations – and more producers use sleeves for added brand communication. The pouch is not growing tremendously yet, but is looking nevertheless very promising, including for more premium wines. Bag-in-box, on the other hand, seems destined to remain in use only for the cheapest wines in Holland.
Eleven: Organic
Increasing interest in sustainability, health, nature and the environment are stimulating the demand for organic wine, biodynamic wines and Fair Trade (and Fair for Life) wines. More and more consumers have an interest in the way wines are made, the people behind the bottles on the shelf and the vineyards and social responsibility issues. In its slipstream, there is increased demand for ‘no sulphur added’ wines and vegan-friendly wines.
Authenticity, according to the trend-watchers in the Netherlands, will become even more of a factor for society in the decade to come.
Perhaps, after all, Handjes may be mistaken: maybe it’s not only about price in Holland.
