WINE MARKETS

THE NETHERLANDS

Prepared by: Carlos Marques, Paulo Lopes and Richard Sagala

Supervisor: Prof. Florine Livat-Pecheux

Table of contents 1.   Introduction .................................................................................................... 1  

2.   Economic environment ................................................................................. 3  

2.1   Quick facts ............................................................................................................... 4  

2.2   Macroeconomic overview: GDP, Domestic Consumption, International Trade, Inflation, Unemployment ........................................................................................................ 5  

2.3   Political and social situation ................................................................................... 12  

2.4   Demographics........................................................................................................ 13  

2.5   Wine sector ............................................................................................................ 15  

2.5.1   Quick overview ............................................................................................................15  

2.5.2   Regulations..................................................................................................................17  

3.   Production .................................................................................................... 19  

3.1   Historical facts........................................................................................................ 19  

3.2   Vineyards, wine, firms and structure...................................................................... 19  

4.   Consumption................................................................................................ 24  

4.1   Volume per capita and evolution............................................................................ 24  

4.2   Wine and other alcoholic beverages...................................................................... 25  

4.3   Profile of wine consumers...................................................................................... 26  

4.4   Consumption according to the price ...................................................................... 30  

4.5   Consumption according to the type of wine ........................................................... 32  

4.6   Image and reputation of different wines................................................................. 34  

5.   Imports and exports..................................................................................... 39  

5.1   Market landscape................................................................................................... 39  

5.1.1   Imports by country of origin .........................................................................................40  

5.1.2   Exports by countries ....................................................................................................41  

5.2   Competitive environment ....................................................................................... 42  

6.   Distribution................................................................................................... 43  

6.1   Market structure ..................................................................................................... 43  

6.1.1   Off-trade – Supermarkets’ ...........................................................................................45  

6.1.2   Off-trade – Liquor stores..............................................................................................48  

6.1.3   On-trade - restaurants, bars, hotels.............................................................................50  

6.1.4   Direct mail / e-commerce.............................................................................................52  

7.   Market segmentation ................................................................................... 53  

7.1   Sales per type of wine............................................................................................ 53  

7.2   Sales by country of origin....................................................................................... 55  

7.3   Sales per grape variety .......................................................................................... 56  

7.4   Packaging .............................................................................................................. 57  

7.5   Prices ..................................................................................................................... 58  

8.   Conclusion.................................................................................................... 60  

9.   List of references ......................................................................................... 64  

Appendices............................................................................................................ 65  

1

1. INTRODUCTION [CARLOS]

When one thinks about the Netherlands, good things come to mind; some may think of

picturesque cities (and canals), a highly educated and open-minded population, beautiful

people and a stable socioeconomic environment. The purpose of this economic study though,

is to assess the contemporary Dutch wine market.

Although a small country in territorial terms, the Netherlands has played the economic game

consistently well for a long time, being today a relevant market for the European wine

business. Firstly, because of its geographical location and trade history (way back to its

colonial activities and the Dutch East Indian Company in the 17th century), the Netherlands

was and still is an important hub for Europe in terms of goods’ distribution, making the port of

Rotterdam the busiest in Europe. It is in the history, location and nature of the Netherlands to

trade, and, not surprisingly, trade is indeed one of the most important economic activities in

the Netherlands. In such respect, the figure 1, indicating average prices in consumer products

in different countries, shows the Dutch vocation for making trade and purporting competition

and low prices.

Also welcoming to businesses is the Dutch tax system, with low corporate taxation rates,

especially on multinational holdings, making the country nearly a “European tax heaven”. The

upsides are obvious, in terms of attracting financial flows, increasing public revenues and

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generating direct jobs. The downside, not so often mentioned, is the shift of the tax burden to

other sources (such as labor), a reduced competing ability of smaller local companies and the

possible attraction of companies with dubious reputation and/or interested in money

laundering.

Figure 1. Average price index in consumer products. Source: AC Nielsen (2010)

Wine wise, the Netherlands is typically a non-producing country (see figure 2 and more

details in this report), which, however, does not prevent it from intense wine business

activities. Indeed, the Dutch people form a mature yet evolving market, with high consumption

per head and increasing competition, as well as serve a trading hub for the European market.

3

Figure 2. Producing and Non-producing Countries in Europe.

Through-out this work we will approach several key aspects of the Netherlands as a wine

market. More specifically, Carlos put together this introduction and will continue by building up

an overview of the Netherlands as a country and of the Dutch economic environment, and

how it interacts with the local wine scenario. This will be followed by Paulo with a close look on

the wine production and imports, as well as on its distribution and exports. Amidst that,

Richard will approach with depth the situation regarding consumption of wine in the

Netherlands Finally, both Richard and Carlos will go over the price structures and

segmentation of the Dutch wine market. At last, the three group members contributed to a

concluding wrap-up of our study on the Dutch wine market, also indicating which are the main

questions and trends posed for the future. The list of references, of course, will also be a

result of the efforts of the three group members.

Acknowledgements: The group would like to thank Theo Mellenbergh

(Wijngaardeniersgilde); Annette Badenhorst and Andre Morgenthal (WOSA, Wines from South

Africa); Willem Siebelink (Huinck & Co BV / EDC NV) and Tony Battaglene (Winemakers’

Federation of Australia) for all the information on different aspects of Dutch wine market

N.B.: Initially, our group included Barbara Enger and Peter Beaty – two Wine MBA students

from other years. However, we understand that they were not part of our group anymore,

reason why we prepared and finished this report between the three of us.

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2. ECONOMIC ENVIRONMENT [CARLOS]

2.1 Quick facts

The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly

in North-West Europe and with parts in the Caribbean. The Netherlands are an independent

monarchy since 1813 and it is currently, since 1848, a parliamentary democratic constitutional

monarchy, with a centre-right wing government formed by multi-parties’ coalitions. The capital

is Amsterdam and the seat of government is in The Hague.

The Dutch Parliament (or Staten Generaal) consists of two chambers – one, with 75

members, indirectly elected and with limited powers, and the other being directly elected.

Curiously, the Netherlands in its entirety is often referred to as Holland, even by Dutch

people sometimes. Strictly speaking, however, Holland is only the central-western region of

the country comprising two of its twelve provinces – North Holland and South Holland (figure

3). Linguistically thus, it is similar to the frequent reference to Russia as the (former) Soviet

Union, and to England as the United Kingdom.

Figure 3. The Netherlands territory and representation of the Holland region.

The Netherlands was one of the first parliamentary democracies. Among other affiliations the

country is a founding member of the European Union (EU), NATO, OECD and WTO. With

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Belgium and Luxembourg it forms the Benelux economic union. The country is host to five

international courts – the Permanent Court of Arbitration, the International Court of Justice,

the International Criminal Tribunal for the Former Yugoslavia, the International Criminal Court

and the Special Tribunal for Lebanon. Also, it headquarters the EU's criminal intelligence

agency Europol and judicial co-operation agency Eurojust. This has led to the city being

dubbed "the world's legal capital".

A peculiarity of the Netherlands: A quarter of its land mass (where 21% of its population

reside) sits below sea level and with 50% of its land lies less than one meter above sea level.

Industrial activity in the Netherlands consists predominantly of food processing, chemicals,

petroleum refining as well as electrical and electronic machinery. It has a dynamic agricultural

sector and is well known for its plants and cut flowers. Also strong is the international trade

sector, with the port of Rotterdam being the busiest in Europe and serving a vast European

hinterland. The Dutch are somehow trade-dependent, because of their role as a major

distribution hub between Europe and third world countries. The falling down of trade barriers

and the taking off of global liberalization should prove beneficial for the Netherlands.

2.2 Macroeconomic overview: GDP, Domestic Consumption, International Trade, Inflation, Unemployment

Economic wise, the Netherlands has a long history as a capitalist market-based economy

(possibly the first country to introduce joint-stock companies), ranking 15th of 157 countries

according to the Index of Economic Freedom. It is currently the 18th largest economy in the

world, as well as, surprisingly for some, the 6th largest wine importer on the planet. Also, it

ranks at 7th position in terms of GDP (nominal) per capita.

The Dutch economy has a range of encouraging factors contributing to its long-term growth

potential, including, without limitation, a highly skilled workforce, a stable political environment,

a geographical strategic position for trade purposes, low restrictions on making business and

an advanced communication infra-structure.

Confirming such trend, table 1 provides some overall and very illustrative information on the

Netherlands – namely, GDP, Consumer Prices Index, Current Account Balance and

Unemployment Rate –, as compared with other European countries.

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Table 1. Selected European Economies: Real GDP, Consumer Prices, Current Account Balance,

and Unemployment (Annual percent change). Source: IMF (2010).

With respect to the GDP, the Netherlands show a more stable performance than its

neighbors. While the 2009 year was economically tough on all advanced countries, the Dutch

managed to suffer a smaller hit, while quickly recouping for a forecasted positive growth in

2010.

For a more stretched view of the real GDP performances, see the figure 4.

7

Figure 4. Past Annual GDP Growth Rates. Source: Eurostat.

Following on is figure 5 with GDP growth forecasts by Eurostat, Country Watch and IMF for

2010 and next years. You will see that both predictions, though not spectacular, are eventually

positive and converging.

Figure 5. GDP Growth Forecasts. Source: IMF, Eurostat, Country Watch.

It is safe to say that the Dutch economy has been performing consistently well for the last

20 years, with a sole negative growth in 2009, greatly influenced by the global financial

meltdown. Even so, some internal government measures facilitating credits and supporting tax

-­‐6  

-­‐4  

-­‐2  

0  

2  

4  

6  1990  

1991  

1992  

1993  

1994  

1995  

1996  

1997  

1998  

1999  

2000  

2001  

2002  

2003  

2004  

2005  

2006  

2007  

2008  

2009  

Past  Annual  GDP  Growth  Rates  

Annual  GDP  Growth  

-­‐1  -­‐0,5  

0  0,5  1  

1,5  2  

2,5  3  

2010   2011   2012   2013   2015  

Forecasts  -­‐  GDP  Growth  

IMF   Eurostat   Country  Watch  

8

incentives made it easier for the economy to pick up again already in 2010 – which is not the

reality for all European countries nor among the more developed countries.

Also relevant is the distribution of such GDP among the population; the Dutch have the

second highest GDP per capita in Europe (only behind Luxembourg, Norway and Switzerland,

being the latter two out of the EU), 31% above the average of the EU countries for the year

2009 (figure 6).

Figure 6. Volume Index of per capita GDP, 2009.

In terms of domestic consumption, the Netherlands also performs relatively well. Its retail

market was worth US$118 billion in 2008 – the 7th largest in the EU – and the Dutch are

among the richest people in Europe. Many of the Dutch consumer markets are mature, which

is also true for food and beverage segments. In fact, food, beverage and tobacco consist in

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the largest domestic market in the Netherlands, with a predicted spending of US$55.3 billion

by Dutch households by 20141.

Even so, the domestic consumption, including public and private spending, either profit

purposed or not, is greatly influenced by global flows and, therefore, is not as stable as other

indicative figures. Below is an illustration thereof.

Figure 7. Total consumption cycle in the Netherlands from 2001 to 2010. Source: Statistics

Netherlands.

The Netherlands went, in terms of private consumption, from 1.8% in 2007 to a worrying -

2.5% in 2009. Although figures are not yet available, interim numbers indicate a positive

variation again in 2010. Still, no breakthroughs are expected, since the levels of consumer

confidence and willingness to buy remain negative. In terms of public consumption, 2009

represented a 3.7% spike, as to help the dynamics of the economy, but present and future

numbers should be more moderate2.

As previously mentioned, the Dutch has a long tradition in international trade, and proof of

that is the fact that the Netherlands derives more than two-thirds of its GDP from merchandise

trade. The country is one of the world’s 10 leading exporting countries, comprised mainly of

natural gas, food and agricultural products, while it imports mostly machinery and transport

1 The Economist, Industry Report: Consumer Goods and Retail, October 2009. 2 IHS Global Insight, Netherlands, September 2010.  

10

equipment, chemicals, fuels, foodstuffs and clothing. The EU is by far its largest trading

partner, accounting for about 75% of exports and 56% of imports.

Even so, the Netherlands was not able to escape from the global disaster caused by the

financial crisis. Numbers of both exports and imports had double-digit declines in 2009, but

seem to be recovering rapidly, as per the forecasts below.

Figure 8. International Trade Performance Source: IHS Global Insight.

In spite of that, the Netherlands managed to have robust trade surplus in 2009, and has

being positive in its trade balance since 1981, for 30 years. Indeed, in 2009 the surplus was a

sizeable 6% of the GDP, slightly down from previous years but still better than most of the

European trade partners. For the last 5 measured years (between 2005 and 2009), the Dutch

have managed to have a surplus between 34 and 42 billion Euros.

Current inflation in the Netherlands is between 1.4% and 2.0% per year, according to most

economic sources3. As it may happen with inflation measurement, the indexes may vary

according to the price baskets and convention parameters being used. Still, Netherlands’

inflation has been consistently slightly below the European and US averages.

3  Statistics Netherlands, Eurostat, Dutch Statistics Office.  

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Figure 9. Evolution of the Trade Balance in the Netherlands from 2006 and 2010 (Billion EUR).

From 1997 until 2010, the average inflation rate in Netherlands was 2.08 percent reaching

an historical high of 4.50 percent in April of 2001 and a record low of 0.20 percent in July of

2009. Below is a graph representing one of the reputable historical inflation rates.

Figure 10. Evolution of the inflation rates in the Netherlands from 2006 and 2010 (Billion EUR).

Unemployment rates in the Netherlands are roughly above 4% per year, having ranged in

the last 10 years from 2.5% to 5%. Using the European reality as a comparison, the Dutch are

doing pretty well, having the lowest rate in the EU and also below Japan and the USA (figure

11).

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Figure 11. Unemployment Rates in the EU. Source: Eurostat.

2.3 Political and social situation

Owing to the country's multiparty system, the political scene in the Netherlands is often

fragile, characterized by coalition governments and decisions taken through consensus. The

continuation of Dr. Balkenende as the prime minister of the Netherlands since 2002, has given

a sense of stability to the otherwise fragile multiparty system of the country. However, since

the government collapse in 2010, the confidence is not that great anymore and there is a

sense of political uncertainty.

At the same time, the country is also reassuringly ranked in the 94.7 percentile in the rule of

law indicator of the World Bank’s governance indicators, and is the 13th most free market

capitalist economy out of 157 surveyed countries in accordance with the Index of Economic

Freedom.

The Netherlands are among the most liberal states in the world, and the country possesses

an elaborate legal system which ensures the protection of its liberal society.

Presently, the chief focus of the government is the economy, followed by environmental

policies. The collapse of major banks has forced the government to intervene in the economy

and it is expected to continue with this policy for the foreseeable future. The government,

though largely continuing with its traditional liberal social policies, has become stricter on

illegal immigrants.

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The government’s policies to increase labor force participation also represent an important

step in meeting the future needs of a society with an aged population (see more on

demographics below). Implementation of these policies has enabled the government to gain

more support and encouragement.

Importantly, the education system is very strong, with literacy levels at 99% of the

population, and UNICEF ranked the Netherlands 1st in child well-being.

The Netherlands has also an extensive system of social support through insurance and

governmental assistance. The government makes it mandatory to have equal pay for equal

work, and prohibits discrimination on grounds of marriage, pregnancy or motherhood. Not

surprisingly then, the Human Development Index (HDI) for Netherlands is 0.964, which gives

the country a very good ranking of ninth out of 181 countries. This indicates the better than

average social conditions of the country.

The Netherlands are one of the most generous countries in terms of coverage and benefit

levels to the disabled and senior citizens in the entire EU and among the OECD countries.

There are currently almost one million people receiving disability benefits in the Netherlands.

Other aspects of social welfare includes substantial healthcare initiatives, with expenditures

above 10% of the GDP (higher than the OECD average of 9%) and a heath spending per

capita around 30% above the OECD average. The government is making efforts to increase

support for child development and care. However, the fertility rate in the Netherlands has been

declining (see more about demographics below).

There is some debate as to how long the country will be able to support such a supportive

welfare system in light of a diminishing work force and leaner economic results.

2.4 Demographics

The Dutch overall population is around 16.5 million people, being very concentrated in its

major cities of Amsterdam, Rotterdam and The Hague. Also, because of territorial and high

density characteristics, the population is very urbanized (above 80%), in the sense that the

majority of the Dutch are close to commercial and servicing infra-structures.

The population has increased roughly 50% in 50 years, from 11.4 million in 1960 to the

current 16.5 million4, and the current growth is around 0.39% (figure 12).

4  Eurostat (2010)  

14

Figure 12. Population Growth Rates in the Netherlands.

Similar to other European and developed countries, the Dutch population is aging and is

expected to continue aging on average. Indeed, the population of working age is expected to

continue to grow modestly in absolute terms up to around 2015, which should be followed by

a period of relative stabilization and a slow decline up to 2020, and finally by a steeper fall in

2020-30. Such forecast is exacerbated by the declining mortality rates

In all three decades, the proportion of the population of working age relative to the total

population will fall. One reason for this trend, other than the aging of the population itself, is

that immigration is likely to be less than what it was during the last 20 years. True enough, net

migration was negative (that is, emigration has exceeded immigration) between 2003 and 07.

This tends to place a greater burden on the working-age population of the country, and is a

cause for concern in terms of future productivity and economic activity.

The impact of the decline in the working-age population on the labor force should be partly

offsetted by an upward trend in the participation rate, encouraged by a number of actual and

expected policy changes, which are expected to raise the retirement age from 65 to 67,

restrict the early retirement possibilities and increase the participation rate of people in the 55-

65 age group.

15

Figure 13. Age composition (i.e. Population Pyramid) in the Netherlands in 2010. Source: Statistics Netherlands (2010).

2.5 Wine sector

2.5.1 Quick overview

The Netherlands is the 6th largest wine importer in the world, proving to be an interesting and

important wine market. In terms of overall importance, 20% of the country’s GDP is spent on

food and beverages.

Within the alcoholic beverages’ sector, wine is the second most important category,

responding for approximately 30.5% of such market’s overall value. The market leaders are

beer, cider and FABs (flavored alcoholic beverages) with 56.3%, while spirits respond for the

remaining 13.2% (Datamonitor 2010).

The Dutch alcoholic drinks market witnessed slow growth rate between 2005 and 2009, as a

result of declining sales growth in the beer, cider and flavored alcoholic beverages category.

Wine, however, grew and continues to grow (Datamonitor 2010).

16

In terms of volume and value, the Dutch alcoholic drinks market generated total revenues of

$14.1 billion in 2009, representing a CAGR of 0.2% for the period spanning 2005-2009 (figure

14). In comparison, the French rate was of 0.6% and the German recorded flat growth.

Market consumption volumes declined with a CARC (compound annual rate of change) of -

0.5% for the period 2005-2009, to reach a total of 1,728.4 million liters in 2009, and the

forecasts are of similar decreases in the next years (figure 15). The performance of the market

is forecast to remain sluggish, with an anticipated CAGR of 0.2% in value for the five-year

period 2009-2014, which is expected to lead the market to a value of $14.2 billion by the end

of 2014. Anyhow, as we will show during this report, the numbers and estimates are not so

negative for wine specifically.

Figure 14. Evolution of the alcoholic drinks market value. Source: Datamonitor 2010.

Figure 15. Evolution of the alcoholic drinks market volume. Source: Datamonitor 2010.

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2.5.2 Regulations

The Dutch market is a regulated or semi-regulated market, where the legal age drinking is 16

years old for beverages with less 15% of alcohol and 18 years old for spirits beverages over

15% of alcohol. Furthermore, the sale of alcohol sale is totally forbidden in petrol stations in

order to dissuade the drinking before driving. The Dutch law does not allow the sale of

alcoholic spirits (> 15% of alcohol) in the supermarkets. These outlets can only sell low-

alcohol beverages: wine, sherry, port, vermouth and beer.

In terms of regulation, there are the rules and directives mandatorily applied to all EU

member states (related to trade and customs, for instance) and there is local complementary

regulation issued by the Dutch government. The wine activity regulation in Netherlands is

outsourced to different governmental or semi-governmental organizations (Van Deudekom

2005). Part of the regulations follows the European policies and another part comes from the

local and the national governments. Through the Productschap Wijn (semi-governmental

organization) the regulations are focused more on the wine imports and sales. The

Department of Customs is responsible for the excise (indirect tax or duty levied) that the

winegrowers have to pay.

Customs wise, countries member of the EU are not required to pay customs duties or to

present import license (table 2). However, it is mandatory for all countries to pay trade taxes

according to the type of imported wines (table 3). Wine imported from “third countries” (non-

EU countries) also require a CAP (Common Agricultural Policy) Import License and must be

accompanied by a VI1 document until such wine can be freely circulated.

The Dutch market has developed specific rules on storage, transport, registration and

labeling imported products. Exporting companies should, either directly or through its importer,

contact the Netherlands Chamber of Commerce to facilitate the necessary documentation and

registration with the relevant association. In addition, wine exporters must notify the Central

Bureau of Statistics of Netherlands (CBS) about the wine volume negotiated. Wine importers

must also be registered with Productschap Wijn, which charges a total of €1.14 per hectoliter

traded in the Netherlands.

The Netherlands are highly concerned about the environmental issues, and in November

2007 the Dutch parliament approved a law including a new charge for packaging (€ 0.04 per

bottle) – exempt being made to importers that brings less than 15,000 kg of packaging. Wine

imported in the Netherlands must also comply with European regulations requiring exporters

to provide information on the size and origin on the label of the product. In addition, labels

must be translated into Dutch. In the case of table wine, it is not necessary to specify the area

of origin of wine. In contrast, quality wines are submitted to strict specifications and should

18

indicate the region of origin and the D.O. In addition, the importer must make mention of

alcohol in moderation. The wine in Dutch market is highly taxed: wine tax is € 0.64 / liter;

environmental taxes, as above, are € 0.4 / liter) and VAT is 19%.

Table 2. Excises customs duties for imported from outside the EU.

Source: Productschap Wijn

Table 3. Excises duties for imported wines, which were set on February 2010.

Type of beverage (alcohol content, % Vol.) Excises duty (€ per hectoliter) Group A (1.2 to 8.5%) Still wines and other fermented beverages 35.28 € Sparkling wines and other sparkling beverages 45.63 € Group B (8.6 to 15%) Still wines and other fermented beverages without added alcohol 70.56 € Sparkling wines and other sparkling beverages with added alcohol up to 13% 240.58 €

Group C (8.6 to 10%) Other beverages with added alcohol 70.56 € Group D (10.1 to 15%) Other beverages with added alcohol 87.14 € Group E (> 15%) Still wines and fortified wines (Port, Jerez, Vermouth) 122.78 € Sparkling wines 240.58 €

Source: ICEX 2010

On that matter, the taxes should be paid only by the winegrowers that produce wine for

commercial reasons and if their vineyard is larger than 1,000 m2. However, only if the farmer

is growing grapes in a vineyard with at least 4 ha, he/she should register with the Wine

Marketing. Since only a small percentage of Dutch vineyards are above 4 ha, this means that

most of wine produced in Netherlands is not official declared, making it more difficult getting

insights and data about the Dutch wine productive activity.

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3. PRODUCTION [PAULO]

The impact of domestic wine production is still negligible in the Netherlands. Although the

viticulture and wine exist in Netherlands, there is little information about this recent

development and the few written documents that exist don’t go deep into the Dutch wine

production sector.

3.1 Historical facts

Although Dutch wine production is miniscule, viticulture in Netherlands is not a new

phenomenon; it was already taking place since the Roman ages. Viticulture was reported in

Maastricht on 12th of February 928 and reports from the Roman period show that drinking

wine in this region was normal and vine plots could be found on the hills of Maas, Geul, and

Jeterdal (Markantoni 2007). Maastricht, in the Middle Ages was as a centre of wine production

and consumption, connected with other wine centers in Europe through the properties of the

Saint Servatius and religious communities in Belgium, France, and Germany (Box & Van der

Zwet 2003). From 16th to the 20th centuries, it was observed a decline in Dutch viticulture

mainly due to the change of the climate, resulting in a period of cold temperatures, but also

due to the emerging interest in beer. In 1800 the lifting of heavy taxes on non-French wines by

Napoleon led to the disappearance of the last vineyards from the Netherlands.

The revival of Dutch viticulture is due to Jean Bellefroid, who went to Moselle (Germany)

during World War II to learn the techniques of wine making and of vine growing. Afterwards he

returned in Belgium to start his vineyard in 1963. Bellfroid introduced to Frits Bosch in

Maastricht (Netherlands) the modern viticulture. Frits Bosch then started his vineyard at

Slavante (Limburg) in 1967 (Box & Van der Zwet, 2003). Bosch brought Hugo Hulst in contact

with Jean Bellefroid and they were both taking viticulture advices from him. However, the two

men had different aspirations and ambitions about their vineyards. Hulst was becoming a

commercial winegrower, whereas Bosch remained a hobbyist. This led to the emergence of

two different approaches in Dutch viticulture: the hobbyists’ and the commercial-

professional winegrowers’ (Box & Van der Zwet 2003).

3.2 Vineyards, wine, firms and structure

According to the Wijngaardeniersgilde (WNG), the organization of Dutch wine producers,

there is currently about 183 commercial winegrowers (over 1000 m2) and 400 hobby

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vintners5. In 2006, the numbers of vineyards (both hobby and commercial) were 183. In figure

1 can be observed the growth of the commercial vineyards in Netherlands from seven large

vineyards (of a hectare and above) to over fifty in 2005 (Jan Oude Voshaar 2006). Currently,

Netherlands count 82 large and 78 small commercial vineyards6.

Figure 16. Number of Vineyards in Netherlands in 1997 and in 2005 with more than 1 ha. Oude

Voshaar (2005).

The vineyards are spread all over Netherlands with more concentration in the South,

especially in the province of Limburg where are 50 vineyards, in the provinces of Gelderland

and Brabant where are 52 and 20 vineyards, respectively. From the South to the North, the

vineyards are less and more spread, for example in the provinces of Drenthe and Groningen

there are only 3 and 1 vineyards, respectively (figure 16 an 17). The largest Dutch wine

growers are located in Wageningen, Maastricht, Vlaardingen, Made and Lelystad (Kolkman

2001).

5 Theo Mellenbergh (Wijngaardeniersgilde), personal communication. 6 Wijngaardeniersgilde : http://www.wijngaardeniersgilde.nl/wijngaarden/info

21

Figure 17. Wine regions and number of vineyards per each region. (The numbers in the regions

of right map indicate the number of vineyards per region, Gelderland: 52 vineyards, Limburg: 50,

Noord Brabant: 20, Noord Hollad: 13, Overijssel: 12, Zuid Holland: 11, Zeeland: 8, Utrecht: 5,

Friesland: 4, Flevoland: 4, Drenthe: 3, Groningen: 1). Markantoni (2007).

In 2001, total area devoted to commercial Dutch wine-growing amounted to 35 hectares. In

2006, 47% of vineyards were less than 0.2 ha planted area, while 13.7 % were relatively big

with more than 2 ha and 39.3 % were between 0.2 and 2 ha planted (figure 18). Currently,

Wijngaardeniersgilde estimates that overall vineyard area is about 220 hectares, where 85

vineyards have more than 1ha and the other 75 are below 1ha. The vineyards are mostly

located in Gelderland and Limburg regions (55% of the total Dutch vineyard surface)7.

In 1999, Dutch wine production was approximately 1300 hL. Nowadays, the Dutch wine

production is estimated on 9900 hL, which corresponds about 1 million bottles. However,

wine production is naturally dependent on the weather and, therefore, changes every year.

Dutch wine producers are mainly small artisanal producers who operate more as a hobby than

commercially. Essentially, the wine produced is to winegrowers self consumption and their

friends. However, commercial vineyards are able to sell their wines locally or regionally into

small liquor stores, wine shops, restaurants and even at the vineyard facility. Only a very

7 Theo Mellenbergh (Wijngaardeniersgilde), personal communication

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few “larger” winegrowers succeed to sell their wines through national supermarkets. According

to Wijngaardeniersgilde, the Dutch wine is sold within the range of 7 to 13 euros per bottle8.

Figure 18. Percentage of vineyards in planted area (ha) in 2006. Extracted Markantoni 2007.

The climate of the Netherlands is not suitable for vine growing because of the cold climate,

the lack of sunshine and the soil richness. However, there are some varieties, like Regent,

Bianca, Solaris, Johanniter and Merzling, that ripen well in cool climates and made possible

the vine cultivation in the country. These varieties are resistant to mildew, mature earlier and

therefore can be used in the in north cold areas. In southern of the Netherlands, winegrowers

still cultivate the old traditional grape varieties (e.g. Riesling, Auxerrois, Pinot gris, M.

Thurgau). However, under the Dutch climatic conditions, the traditional viticulture is much

more difficult as traditional varieties mature latter which implies additional and sprayings.

Therefore, it is not surprising that white variety wines are more much used than the red

varieties (table 4). The most important wine varieties are the Johanniter and Solaris and in

less extend Merzling, Riesling, Auxerrois, Pinot Gris and Müller Thurgau. The most important

red varieties are the Regent and the Rondo. There isn’t any available information on the on

the relative importance of each variety9.

8 Theo Mellenbergh (Wijngaardeniersgilde), personal communication

23

Table 4. Grape varieties cultivated on Dutch Vineyards.

Type Varieties

White

(32)

Auxerrois, Bacchus, Chardonnay, Faber, Gewürztraminer, Hölder, Huxelrebe, Johanniter, Juwel, Kerner, Kernling, Merzling, Morio Muscat, Müller Thurgau, Orion, Ortega, Phoenix, Pinot blanc, Pinot gris, Rayon d'or, Reichensteiner, Riesling, Ruländer, Sauvignon Blanc, Scheurebe, Schönburger, Seyval, Siegerrebe, Silcher, St. Laurent, Sylvaner, Würzer

Red

(17)

Domina, Dornfelder, Dunkelfelder, Florental, Frühburgunder, Gamay, Landal 244, Léon Millot, Maréchal Foch, Meunier, Pinot noir, Plantet, Portugiezer, Regent, Rondo, Triomphe d' Alsace, Zweigeltrebe

As it was mentioned previously (2.5.2 Regulations), the wine activity in Netherlands is

regulated by the Dutch government, which are outsourced to different governmental or semi-

governmental organizations (Van Deudekom 2005). The Department of Customs is

responsible for the excise (indirect tax or duty levied) that the winegrowers have to pay. The

taxes should be paid only by the winegrowers that produce wine for commercial reasons and

their vineyard larger than 1,000 m2. However, only if the framer is growing grapes in a

vineyard with at least 4 ha should pursuant to Regulation HPA Wine 2002 to register with the

Wine Marketing. Winegrowers have also the obligation to annually declare the estimated

harvest in both quantity kilograms in hectoliters of wine9. Thus, only a small percentage of

Dutch vineyards are above 4 ha, which means that most of wine produced in Netherlands in

not officially declared.

Many farmers believed that producing wine is an alternative to the other farming practices

and they decide to start the vineyard. However, they are realizing that it is not easy to make

wine since it requires not only a lot of investments but also to have the experience and the

knowledge to produce and sell wine. Moreover, the Dutch wine market is highly competitive,

being the imported wines much lower priced than the expensive domestic production.

Consequently, it is expected that a stabilization or a decline in the number of commercial

vineyards for the next years10.

9 http://wijn.nl/site/NEDERLANDSEWIJNBOUWWIJNPRODUCENTEN/Auto_Formulier_inschrijving_Nederlandse_wijnproducent.

php

10 Theo Mellenbergh (Wijngaardeniersgilde), personal communication

24

4. CONSUMPTION [RICHARD]

4.1 Volume per capita and evolution

Wine consumption in Netherlands was insignificant in the early sixties, around 1.6 liter per

capita. However, Dutch now drink as much wine as the U.K.; but contrary to that market,

which seems to have reached its saturation point, the Dutch affection for wine is still growing,

from 14.5 liters per head in 1990 to 22 liters in 2009 (figures 19 and 20).

Figure 19. Evolution of wine consumption per capita in the Dutch market. Source: World Drink

Trends/Productschap Wijn/CBS.

Despite an increasing level of maturity, wine continued to enjoy rising popularity in the

Netherlands, gaining new consumers, particularly amongst the younger segment. More young

Dutch men and women are drinking wine than before, switching from traditionally popular

alcoholic drinks such as beer to wine. This trend helped per capita volumes, which continued

to marginally rise in the next years.

25

Figure 20. Evolution of per capita wine consumption by the most important wine countries.

4.2 Wine and other alcoholic beverages

Dutch people choose drinks for health, but also for enjoyment. Demand for alcoholic drinks

is being influenced by greater interest in healthy products, as Dutch consumers continue to

pursue healthier lifestyles and fitness activities. While demand for higher alcoholic drinks

continued to fall, categories such as wine and low alcohol beer continued to generate healthy

sales (figure 21). More Dutch consumers are discovering the enjoyment in wine consumption,

and they find that it also meets their demand for healthier drinks.

Figure 21. Consumption of alcoholic drinks in the Netherlands between 1992 and 2009. Source:

Trendbox (2010).

26

Figure 22. Evolution of wine consumption as a proportion of alcoholic drinks consumed yesterday. Source: Trendbox (2010).

4.3 Profile of wine consumers

As it was showed previously in demographics section, the Dutch population is ageing.

Depending on the perceived target customer group, this is perceived either as an opportunity

or a threat. In favor of the ageing population, one of the wine dealers noted: “Older people

seem to drink more wine”. Recent research by Trendbox confirms this statement. As

presented in figures 23 and 24, the consumer over 50 years of age is responsible for an

increasingly large part of the total consumption of both red and white still wines.

In the Netherlands there is also quite a significant gender difference in wine consumption.

Beer is usually considered a male drink while wine is considered more of a female drink. This

is reflected in the fact that 60% of women drink wine, compared to only 30% of men.

Two thirds of wine is consumed by people aged between 35 and 64 years. This age

group tends to have already developed buying habits which are relatively hard to change, but

on the other hand this group generally has the higher disposable income. This consumer

segment, and especially over 50 years of age drink wine more frequently than the younger’s,

which drink wine more occasionally (figure 25). The pattern of frequency of wine consumption

for men and women are quite similar.

While wine is generally not so popular with younger target groups in the Netherlands, the

easy and pleasant image of rosé wine seems to improve acceptance of wine. Younger

27

consumers are also more open to New World wines, which offer them a chance to experience

a bit of global culture.

Figure 23. Evolution of the age of red wine consumer between 1990 and 2009. Source: Trendbox

(2010).

Figure 24. Evolution of the age of red wine consumer between 1990 and 2009. Source: Trendbox

(2010).

28

Figure 25. Frequency of wine consumption of Dutch consumers. Base: all type of wine

consumers were considered n =1001. Source: Trendbox (2010).

It is also observed that 75% of Dutch people is buying still wines, while the top 33% buyers

takes care of 84% of total volume (figure 26).

Figure 26. Profile of the Dutch consumers. Source: Willem Siebilink (2010)11.

11 Willem Siebilink 2010, personal communication

29

Figure 27. Place of consumption of the different types of wines by the Dutch consumers.

Source: Trendbox (2010).

Figure 28. Moment of consumption of the different types of wines by the Dutch consumers.

Source: Trendbox (2010).

The large percentage of wine is consumed at home (figure 27). Only 11 to 18% of wine is

consumed on-trade, because “the Dutch don’t take their wives out for dinner”, as a senior

member of the international trade used to say (Van Casteren and Heijbroek 2009). Over 50%

of wines are consumed after dinner, which contrasts with 14 to 23% of wines, which are

consumed before dinner. Consumption of wine with food occurs at dinner, representing

around 40% of wine consumption (figure 28).

30

Only 13% of all day-to-day household spendings on wine occur outside the supermarket,

being 18% of all wine purchase is unplanned (impulse buying) and in 67% of all wine

purchases the wine brand/item is planned before the shop visit. More than 50% of total wine

volume is bought on Friday and Saturday (figure 29).

Figure 29. Type of wine and color preferred by Dutch consumer’s preference. Source: GFK

(2009).

4.4 Consumption according to the price

Price is the most important wine attribute that Dutch consumers consider when buying a

bottle of wine (figure 30).

Despite efforts to educate Dutch consumers on wine quality and variants, mid-priced and

lower priced bands dominated consumption. The current economic slowdown once again

consolidated the preference towards wines priced from 3.4 € up to 5 €, as for most Dutch

people buying a good or acceptable quality wine does not mean spending more money

(Euromonitor International 2010). The strong promotion around wines from South Africa

explained the preference for lower priced bands, a trend which persisted during 2009 as more

people looked to spend less money and paid more attention to price (Van Casteren and

Heijbroek 2009).

The current economic crisis and recession did not have a major impact on wine

consumption, as the preference for mid-priced and lower priced bands meant that most

consumers could afford them. More intense promotion in key distribution channels such as

grocery retailers slightly harmed unit prices, but higher distribution costs allowed a balance to

31

be maintained after the higher price increases registered during 2008 (Van Casteren and

Heijbroek 2009).

Figure 30. Main attributes or aspects that play an important role when Dutch consumers are

buying a bottle of wine. Source: Trendbox 2010.

The following tables show that 50 to 60 percent of all wine sold in 2009 via the off-trade is

below 3.50 € per bottle. However, the lower price segments for red and rosé (less than 3.5 €),

have increase slightly from 2004 to 2009; while the higher segment decline (over 6.5 €) during

the same period. Conversely, white wines increase slightly their sales in the higher segment.

Regarding the sparkling wine, the preference is towards wines priced from 10 € up to 13 €,

29.4% in 2009; while the lower segment (less than 6.0 €) represent around 33%.

Table 5. Volume sales of still red wine by price segment 2004-2009.

% off-trade 2004 2005 2006 2007 2008 2009 Under 3 € 28.5 28.6 28.9 29.1 29.3 29.5 3.01 to 3.5 € 28.1 27.6 27.2 27.0 28.2 28.7 3.51 to 4.5 € 25.9 27.3 27.1 27.8 26.3 26.0 4.51 to 6.5 € 14.8 14.0 14.4 14.0 14.2 14.0 6.51 € and above 2.7 2.5 2.4 2.1 2.0 1.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

32

Table 6. Volume sales of still white wine by price segment 2004-2009.

% off-trade 2004 2005 2006 2007 2008 2009 Under 3 € 26.7 26.9 27.1 27.2 27.5 27.9 3.01 to 3.5 € 26.0 26.3 26.5 26.9 27.0 27.5 3.51 to 4.5 € 25.3 25.8 25.1 24.3 24.0 23.6 4.51 to 6.5 € 15.1 14.9 14.6 14.2 14.0 13.9 6.51 € and above 6.9 6.1 6.7 7.4 7.5 7.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

Table 7. Volume sales of still rosé wine by price segment 2004-2009.

% off-trade 2004 2005 2006 2007 2008 2009 Under 3 € 28.5 28.9 29.0 29.2 29.5 29.7 3.01 to 3.5 € 25.0 25.2 25.7 25.9 25.5 25.6 3.51 to 4.5 € 20.2 20.5 20.3 19.9 20.3 20.5 4.51 to 6.5 € 22.3 22.1 21.9 21.5 21.1 21.0 6.51 € and above 4.0 3.4 3.1 3.5 3.6 3.2 Total 100.0 100.0 100.0 100.0 100.0 100.0

Table 8. Volume sales of still sparkling wine by price segment 2004-2009.

% off-trade 2004 2005 2006 2007 2008 2009 Under 3 € 12.5 13.3 13.6 13.9 14.3 14.7 3.01 to 6 € 16.0 17.5 17.9 18.0 18.3 18.6 6.01 to 10 € 20.0 19.2 19.0 18.7 18.1 18.0 10.01 to 13 € 28.5 28.7 28.9 29.0 29.1 29.4 13.01 to 15 € 10.0 9.2 9.1 8.9 8.3 8.1 15.01 € and above 13.0 12.1 11.5 11.5 11.9 11.2 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

4.5 Consumption according to the type of wine

Within still light grape wine, rosé continued to drive growth, registering the highest growth,

with sales increasing by 7% in current value terms and 6% in volume terms (table 9 and figure

31). Rosé is no longer a wine consumed only in the warmer months, but more Dutch people

are buying it throughout the year, while the consumer base benefits from being able to attract

younger people, including males (figure 32 and 33). Still white and red wine are more mature,

but still generated healthy growth in 2009 (table 9).

Other sparkling wines emerged as one of the best performing categories in 2009, due to the

sudden popularity of variants such as Italian Prosecco; seen as a cheaper but good

alternative to champagne, while still rosé wine continued to generating lower but healthy

33

growth. Good weather during the spring and summer periods further contributed to

maintaining demand, as spending time outside is one of the favorite activities for Dutch people

during their free time.

Table 9. Volume of consumed wine in the Dutch market between 2000 and 2009.

Dutch adapt their wine drinking with their lifestyle and activities. For instance, while they are

on holidays, they will enjoy Italian wines in Italy (acid and tannins) but when they will go back

home, they will prefer a different taste profile; since a majority drink their wines after dinner,

they tend to like them a bit sweet, without tannins, wines that are considered of an easy

drinking style.

Figure 31. Evolution of the proportion of red-rosé-white wines consumed in the Dutch market.

Source: Trendbox 2010.

34

Figure 32. Type of wine and color preferred by Dutch consumer’s preference. Base: consumers

that drink at least once every two weeks n =1404. Source: Trendbox 2010.

Figure 33. Evolution of the sales per type of wine during the year in the Dutch market. blue=red

wine yellow=white wine green=rosé wine. Source: Trendbox 2010.

4.6 Image and reputation of different wines

The Dutch preference still goes to wines of Old World such as France; however, non-

European wines grew to a 33% market share. Despite the Dutch consumer are openminded

35

for new wines, the reality is that New World wines, still suffer from the consumer’s belief that

they are inferior (Van Casteren and Heijbroek 2009).

In comparison to other countries, brands currently possess a small market share in the

Netherlands. In the Netherlands, the combined market share of the largest 20 brands is 15%,

in the UK 21% and in the USA even 38%. On the other hand, in Germany, large brands only

possess 11% of the market. The share of private label is relatively important (29.1%) within

still light grape wine, due to the role of grocery retailers, who act as direct importers (Van

Casteren and Heijbroek 2009).

Table 10. Brand shares of still light grape wine 2006-2009.

% total volume Brand (Global Brand Company 2006 2007 2008 2009 Owner) JP Chenet Grands Chais de France 3.8 3.2 3.2 3.1 SA, Les Berberana (Arco Bodegas Berberana SA - 1.6 1.6 1.7 1.9 Bodegas Unidas SA) Grupo Berberana SA Undurraga Viña Undurraga SA 1.5 1.6 1.7 1.7 Kaapse Pracht Kaapse Vreugd Kelder 1.4 1.3 1.4 1.5 Peter Mertes Mertes KG Weinkellerei, 1.0 0.9 1.0 1.0 Peter Swartland Swartland Cooperative 0.9 1.0 1.0 0.9 Beamonte (Bodegas Bodegas Beamonte SA 0.9 0.9 0.9 0.9 Julian Chivite SA) Lindemans (Foster's FGL Wine Estates 0.7 0.7 0.8 0.8 Group Ltd) Norton Bodegas Norton SA 0.7 0.7 0.7 0.7 Hardys Thomas Hardy & Sons Ltd 0.6 0.7 0.7 0.7 (Constellation Brands Inc) Casillero del Chacali Fine Wines 0.7 0.6 0.7 0.6 Diablo (Viña Concha y Toro SA) E & J Gallo E & J Gallo Winery 0.9 0.7 0.6 0.6 Torres (Miguel Bodegas Torres SA 0.4 0.5 0.5 0.5 Torres SA) Rosemount (Foster's FGL Wine Estates 0.1 0.2 0.2 0.2 Group Ltd) Penfolds (Foster's FGL Wine Estates 0.1 0.2 0.2 0.2 Group Ltd) Nederburg Distell Group Ltd 0.0 0.0 0.1 0.2 Drostdy-Hof Distell Group Ltd 0.1 0.1 0.1 0.1 Penfolds (Southcorp FGL Wine Estates - - - - Holdings Ltd) Lindemans FGL Wine Estates - - - - (Southcorp Holdings Ltd) Private label 28.9 28.9 28.7 29.1 Others 55.6 56.3 56.0 55.2 Total 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

36

The most important brands in volume are: JP Chenet (de-listed from Albert Heijn in 2009),

Berbarana (Spain), Undurraga (Chile), Kaapse Pracht (South Africa) and Peter Mertes

(Germany) and Hardy’s (Australia), all sold through the most important supermarket chain,

Albert Heijn (table 10). In the last three years these five brands have shown a growth in

volume to about 5% market share and 7.2% in value.

Within still light grape wine, a gradual tend towards concentration continued in 2009, with

larger firms such as Constellation Brands Inc working to expand sales and capture share in

the face of more intense competition from retailers. Retailers, and in particular grocery

retailers, usually import a range of their own still wine products, with their own purchasing

teams travelling to the countries of origin to seal agreements and marketing plans. Chilean

and Argentinean wines, such as Undurraga and Norton are doing very well in grocery

retailers, being supported by increased advertising and more frequent promotions. Dutch

consumers appreciate their good quality and fair price, with some brands continuing to build a

stronger presence. Undurraga and Norton gained 2% and 1% volume shares respectively in

2009, being the largest Chilean and Argentinean still wine brands in the Netherlands.

Spanish wines also enjoy strong popularity in the Netherlands. Torres was one of the top

selling brands in 2009, accounting for a 0.5% volume share. Bodegas Torres SA invested in a

new promotional campaign during this period, including print advertising combined with trade

marketing activities, including draws which allowed consumers to win trips to Catalonia and

visit the production site of the brand, leading to more frequent price promotions. Torres as a

brand enjoys consumer preference as it is well known by Dutch people travelling to Spain, and

fits the balance between quality and fair price sought by consumers.

The search for alternatives and new flavours benefited newer still wine brands which entered

the market. For example, still wines from New Zealand are gaining a presence in the Dutch

market, boosted by advertising and increased distribution. Flaxbourne (Marlborough) is an

example of a new brand gaining more distribution in grocery retailers, such as Albert Heijn in

2009, with the supermarket using its house journal to promote the brand and the value of

wines coming from New Zealand.

LVMH Moët Hennessy Louis Vuitton led champagne sales with a 52% volume share in 2009,

with their 3 brand: Moët & Chandon, Veuve Clicquot and Mercier (table 11). The firm

encountered increased competition from other sparkling wines; nonetheless it continued to

support the brand Moët & Chandon with promotional actions at specialists. For example, the

manufacturer usually resorts to special gift packs around key seasonal periods such as the

end of the year or Christmas, further contributing to boosting sales of champagne during these

periods.

37

Table 11. Brand Shares of Champagne 2006-2009.

% total volume Brand (Global Brand Company 2006 2007 2008 2009 Owner) Moët & Chandon LVMH Moët Hennessy 28.1 27.4 28.1 28.5 Louis Vuitton Veuve Clicquot LVMH Moët Hennessy 17.0 17.9 18.2 19.3 Louis Vuitton Piper Heidsieck Rémy Cointreau Group 12.3 11.8 12.3 13.0 Mumm (Pernod Ricard Pernod Ricard Netherland 9.8 10.4 11.4 10.7 Groupe) Canard-Duchêne Champagne Canard- 9.6 9.8 10.3 10.6 (Champagne Thiénot) Duchêne SA Mercier LVMH Moët Hennessy 3.9 4.0 4.2 4.5 Louis Vuitton Mumm (Allied Domecq Allied Domecq Spirits & - - - - Plc) Wine (Benelux) BV Others 19.3 18.7 15.5 13.4 Total 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

Prosecco and Cava tried to benefit from the sudden popularity of these products, intensifying

promotions and working with retailers to gain improved display to boost impulse sales.

Nevertheless, the sales of these types of products have been losing some market since 2006

(table 12).

Table 12. Brand Shares of other Sparkling wines 2006-2009.

% total volume Brand (Global Brand Company 2006 2007 2008 2009 Owner) Freixenet Maxxium Nederland BV 20.2 20.6 19.8 18.8 (Freixenet SA) Canei Baarsma Wine Group Holding - - - 11.5 Veuve Amiot Bacardi-Martini 12.1 11.8 11.1 10.2 (Bacardi & Co Ltd) Nederland NV Martini Asti Bacardi-Martini 8.7 8.8 8.5 8.1 (Bacardi & Co Ltd) Nederland NV Codorníu Codorníu SA 6.1 6.2 5.9 5.7 Martini (Bacardi & Bacardi-Martini 3.0 3.4 3.5 3.4 Co Ltd) Nederland NV Chiarli Lambrusco Chiarli 1860 4.0 3.9 3.6 3.4 Rosso Chiarli Lambrusco Chiarli 1860 2.6 2.8 2.7 2.7 Bianco Chardonnay Brut Pierre Legendre 2.6 2.6 2.5 2.3 Canei (Pernod Pernod Ricard Nederland 14.1 13.9 12.5 - Ricard Groupe) Private label 18.2 17.2 15.8 15.6 Others 8.3 8.9 14.2 18.3 Total 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

38

Domeq, Conqueror and Offley were the top selling brands within fortified wine and vermouth

in 2009 (table 13). The brand shares of fortified wines and vermouth have been relatively

stable in the last 4 years. Most of the Port wines brands had increased their market share with

the exception of Sandeman. Most fortified wines and vermounth intensified its in-store

promotions during 2009, leading to an increase display and placement on supermarket

shelves during key seasonal periods such as the beginning of the summer. Such actions led

to increased sales of these types of products which enjoys greater consumption during the

warmer months in the Netherlands.

Table 13. Brand Shares of fortified wine and vermouth 2006-2009. % total volume Brand (Global Brand Company 2006 2007 2008 2009 Owner) Domecq (Pernod Pernod Ricard Nederland 13.8 14.2 14.2 14.3 Ricard Groupe) Conqueror (Private Albert Heijn BV 9.9 9.8 9.8 10.0 Label) Offley (Sogrape - Bacardi-Martini 8.8 9.1 9.4 9.4 Vinhos de Portugal Nederland NV SA) Sandeman Sogrape - Vinhos de 9.0 7.6 7.6 7.8 Portugal SA Martini (Bacardi & Bacardi-Martini 7.5 7.3 7.2 7.1 Co Ltd) Nederland NV Kopke CN Kopke & CA LDA 4.0 4.1 4.2 4.2 Dow's (Symington The Symington Family 2.9 3.1 3.4 3.9 Family Estates) Cinzano Campari Milano SpA, Davide 3.6 3.4 3.3 3.2 Warre's (Symington The Symington Family 1.6 1.7 1.8 1.9 Family Estates) Cavelli Cavelli SpA 1.4 1.2 1.2 1.1 Madeira Henriquez Vinhos Justino 0.4 0.4 0.4 0.4 Henriques, Filhos, LDA Honjozo (Okunomatsu Sake Europe BV 0.3 0.3 0.3 0.4 Sake Brewery Co Ltd) Domecq (Allied Allied Domecq Spirits & - - - - Domecq Plc) Wine (Benelux) BV Private label 26.5 27.0 26.6 26.4 Others 10.3 10.7 10.6 9.9 Total 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

A detailed list of the most wine brands per country of origin and their respective performance

on both off-trade and on-trade from 2000 to 2009 are represented in Appendix 1 to 6.

39

5. IMPORTS AND EXPORTS [PAULO]

5.1 Market landscape

The impact of domestic wine is still negligible in the Netherlands. The market relies on

imports to supply demand. The size of the Dutch wine market is difficult to measure as the

country serves as a transit and distribution point for other countries in Europe with a large

proportion of imported wines re-exported to other European countries. Although 430 million

liters of wine were imported in 2009, a more realistic estimate of the size of the local market is

around 350 million liters (table 14). According to the OIV official statistics, the Netherlands is

the 6th largest wine importer in world, importing around 330 million liters in 2009 (figure 34).

In 2009, Dutch wine market had a value 1.6 billion of Euros (+6% than in 2008), whose import

wine represented 940 million of Euros (+4% than in 2008).

The Dutch market is a mature market where you can find wines of good quality at low prices.

In total there are over 30,000 different wines in Dutch market. The growth in this market is

expected to accelerate marginally in the forthcoming five years12.

Figure 34. Evolution of wine imports in the 10 biggest importing countries between 2006 and

2009 (thousands of liters). Source: OIV 2010.

12 Willen Siebilink 2010, personal communication

40

Table 14. Wine Production, Imports and Exports: Total Volume 2003-2008

million litres 2003 2004 2005 2006 2007 2008 Wine – Imports 351.1 355.8 380.2 347.8 389.5 352.3 Wine – Exports 37.3 26.9 46.8 33.3 36.0 24.7 Wine – Production 0.2 0.1 0.2 0.2 - - Wine – Apparent 313.9 329.1 333.6 314.7 - - consumption

Source: Euromonitor international 2010.

5.1.1 Imports by country of origin

In 2008 (no recent data are available), most of the wine imported into the Netherlands came

from France (27%), followed by Germany (18%), Spain and Italy (approximately 10%) (table

15). New World wines made up around 25% of imported wine in 2008. Wine imports from

France decreased by 27% from 2003 to 2008, while other countries, mainly those from the

New World increase significantly the wine exports to Netherlands during the same period. For

example, Chile and Argentina imported wines grew by 68% and 315% from 2003 to 2008,

respectively. The important increase in imported wine from U.K. (+ 825%) correspond to bulk

wine that is imported all over the world to the U.K where is bottled and then re-exported to

Netherlands.

Table 15. Wine imports by country of origin: total volume 2003-2008

million litres 2003 2004 2005 2006 2007 2008 Wine – TOTAL 351.1 355.8 380.2 347.8 389.5 352.3 Wine – France 133.0 119.8 110.5 104.1 114.9 96.6 Wine – Germany 31.2 38.3 41.9 48.3 61.7 62.6 Wine – Spain 33.5 35.1 40.9 34.7 38.6 36.2 Wine – Italy 27.8 27.3 29.0 30.5 34.4 34.3 Wine – South Africa 41.2 47.7 48.6 37.0 31.1 29.5 Wine – Chile 12.9 17.8 22.9 21.1 27.1 26.4 Wine – Australia 12.6 16.4 19.5 16.8 21.5 17.9 Wine – Argentina 3.3 2.8 8.5 9.6 11.4 13.7 Wine – United Kingdom 1.2 1.8 3.5 4.5 11.0 11.1

Source: Euromonitor international 2010.

In terms of value, France largely dominates the Dutch market (34%), although the value of

2008 is quite similar to those obtain in 2003 (table 16). The popularity of New World wines

continued to increase from 2003 to 2008, at the expense of wines from traditional wine

countries, like France, Portugal and Spain. New World wine countries such as, Australia, Chile

41

and Argentina grew between 60 to 300% between 2003 and 2008. It was also observed an

important increase of wines imported from Germany; however, a large portion is wine

imported to the Germany where is bottled and then re-exported to Netherlands.

Table 16. Wine imports by country of origin: total value 2003-2008

EUR million 2003 2004 2005 2006 2007 2008 Wine – TOTAL 722.6 719.8 739.5 729.6 859.0 831.9 Wine – France 282.5 262.6 238.5 268.7 319.2 285.0 Wine – Germany 44.2 57.3 62.9 71.5 84.1 97.5 Wine – Italy 50.9 50.2 56.7 60.0 75.4 82.4 Wine – Spain 64.7 65.4 67.7 61.6 72.0 68.9 Wine – Chile 28.0 36.8 47.0 44.3 53.9 53.5 Wine – South Africa 68.7 75.0 70.5 53.4 52.0 52.7 Wine – Australia 30.0 37.9 45.2 38.2 53.2 48.1 Wine – Portugal 46.3 37.9 38.7 37.5 43.0 35.5 Wine – Argentina 6.9 4.5 15.0 17.9 21.3 27.2

Source: Euromonitor international 2010.

5.1.2 Exports by countries

The size of the Dutch wine market is difficult to determine precisely as the country serves as

a transit and distribution point for other countries in Europe with a large proportion of imported

wines re-exported to other European countries. The main destination of Netherlands wine

exports are Germany, Poland, Belgium, Norway in volume (table 17); while in value Norway

and Germany are the main markets (table 18). The Netherlands wine exports has been highly

variable these last year’s; however, it seems that there is a slightly decrease in the

Netherlands wine exports for most of the countries. The only exceptions are the Latvia and

Ireland in terms of volume and Norway and Hong Kong in value.

Table 17. Wine exports by country of destination: Total volume 2003-2008

million litres 2003 2004 2005 2006 2007 2008 Wine – TOTAL 37.3 26.9 46.8 33.3 36.0 24.7 Wine – Germany 19.6 13.6 28.3 17.5 12.3 9.0 Wine – Poland 0.1 0.1 2.5 2.4 4.1 2.6 Wine – Belgium 4.2 4.7 4.9 2.7 2.7 2.6 Wine – Norway 0.0 0.0 0.2 0.9 4.3 1.9 Wine – Others 2.9 1.9 1.8 1.7 2.5 1.4 Wine – Latvia 0.3 0.4 0.7 0.6 0.7 1.0 Wine – Ireland 0.4 0.0 0.1 0.3 0.5 0.9 Wine – France 3.6 2.0 1.6 1.9 1.6 0.9 Wine – United Kingdom 1.9 1.3 1.6 1.4 1.7 0.7

Source: Euromonitor international 2010

42

Table 18. Wine exports by country of destination: Total value 2003-2008

EUR million 2003 2004 2005 2006 2007 2008 Wine – TOTAL 120.2 82.7 140.2 132.7 152.7 132.0 Wine – Norway 0.0 0.1 0.5 3.2 26.1 27.3 Wine – Germany 48.0 27.5 67.1 49.3 30.6 25.0 Wine – Others 11.8 7.6 11.5 14.8 14.6 10.6 Wine – Hong Kong 0.2 0.4 0.9 2.5 7.1 10.0 Wine – France 11.0 7.5 7.8 11.5 14.0 8.8 Wine – Japan 9.5 7.6 10.7 16.2 8.0 7.9 Wine – Poland 0.3 0.2 6.2 7.3 12.9 7.5 Wine – Belgium 15.1 15.1 11.6 7.4 7.5 7.0 Wine – Australia 0.0 0.1 0.8 1.2 4.6 3.2

Source: Euromonitor international 2010

5.2 Competitive environment

In the Netherlands there are approximately 1200 importers, of which the top 50 account for

the bulk of wine imports, the rest being small players. Most Dutch supermarket chains have

their own import structures for the larger volumes of the wine imports reducing the position of

the traditional wine importers, but also relying on a small group of independent importers for

the smaller trade flows in their portfolio

The Real Wine Importers Association (KVNW), with 100 members represents over 80% of

wine imports in this market13. The most important wine importing companies in the

Netherlands are represented below14:

Largest traders/importers:

• Baarsma (including Oud Reuchling & Boelen, the quality arm of Baarsma. Consolidator

in wine distribution in NW European through a range of acquisitions in the Netherlands,

UK, Switzerland. Revenues over EUR 200 million. Is partner of Heineken to supply

Heineken on-trade customers, and Lovian with organic wines);

• DGS (including Coenecoop), about half the size of Baarsma;

• Groupe LFE, part of Castel Frères, the largest French wine company, about half the

size of Baarsma;

• Delcave, part of the Dirkzwager Group, which also owns or manages a range of bottle

shops, including Mitra;

13 Wine Importers Association (KVNW), www.kvnw.nl 14 Annette Badenhorst, Manager for WOSA (Wines of South Africa), personal communication

43

Midsized traders/importers:

• L’Exception/Cordier;

• Great Grapes;

• Jean Arnaud;

• Kwast Wijnkopers;

• Poot Agenturen;

• Verbunt;

• Vinites;

• W&S Group;

• Wijntransport;

• Belgium suppliers (like Chaccali);

• Spirit companies (like Diageo and Moët/Henessy);

• some producers have their own offices (like Constellation, Gallo, Pernod Ricard).

About 70% of total imports are made by nine companies: Groupe LFE, Baarsma,

Delcave, DGS, Verbunt, Goessens, Vinita, Wijntransport and Pernod Ricard.

6. DISTRIBUTION [PAULO]

6.1 Market structure

Wine sales in The Netherlands were up in 2009 and Dutch wine importers, wholesalers and

retailers had a very good year15. According to the Euromonitor International (2010), the total

wine volume was 389.2 million liters, which represented an increase of 18.3% and 3.4%

compared to 2004 and 2008, respectively (table 19). The off-trade account for 87% percent

of all Dutch wine sales, being the on-trade responsible for the remaining 13%.

Table 19. Sales of wines by on-trade vs off-trade split: Volume 2004-2009.

million liters 2004 2005 2006 2007 2008 2009 Off-trade 286.6 300.6 311.0 322.0 331.8 340.4 On-trade 42.2 43.5 44.9 46.1 47.6 48.8 Total 328.9 344.2 355.9 368.1 379.4 389.2 Source: Euromonitor International 2010.

15 Annette Badenhorst, Manager for WOSA (Wines of South Africa), personal communication

44

In terms of value, the Dutch wine sales reached the € 2,341.9 millions, which represented an

increase of 20.9% and 3.2% compared to 2004 and 2008, respectively (table 20). The off-

trade account for 59% of all Dutch wine retail sales (€ 1,371.6 millions), an increase of

3.6% compared to 2008. The share of on-trade was 41% (€ 970.4 millions).

Table 20. Sales of wines by On-trade vs Off-trade split: Value 2004-2009.

EUR million 2004 2005 2006 2007 2008 2009 Off-trade 1,123.0 1,157.2 1,198.7 1,237.1 1,323.7 1,371.6 On-trade 814.6 843.0 874.5 900.5 944.9 970.4 Total 1,937.6 2,000.2 2,073.2 2,137.6 2,268.6 2,341.9 Source: Euromonitor International 2010.

In terms of value, the Dutch wine sales reached the € 2,341.9 millions, which represented an

increase of 20.9% and 3.2% compared to 2004 and 2008, respectively (table ). The off-trade

account for 59% of all Dutch wine retail sales (€ 1,371.6 millions), an increase of 3.6%

compared to 2008. The share of on-trade was 41% (€ 970.4 millions).

In the Dutch wine market, the smaller players are struggling to uphold their position. Judging

from the division of market share, supermarkets are winning steadily at the cost of the smaller

players in the market. Figure 35 shows that supermarkets have increased their market share

in the Dutch wine market about 14% over the last 14 years, up to almost 80% in 2009. The

liquor stores have been suffering from this success. Historically, Dutch liquor stores have a

strong competitive position in the Netherlands. In an effort to fight the abuse of strong liquor,

the Dutch government installed the “Drankwet” (Liquor Law) in 1882. Due to this law, issuance

of liquor selling licenses was limited, thereby allowing established liquor stores to obtain a

strong foothold in the market (Jansen 2008). Nowadays, the wine sales are essentially made

in supermarkets, which are allowed to sell alcohol up to 15% (with exception of fortified wines

such as Port, Jerez, etc). Supermarket chains embarked on new price competition, which led

to increased consumer interest in the promotions offered by them. Wine and beer were

elements of attraction behind price promotions, while continuing to affect other channels such

as liquor stores, which continued to lose share to supermarkets and alternative channels such

as online sales, which seem to be slowly gaining territory (Van Casteren and Heijbroek 2009).

According to a recent press release of 2008, over 25% of the wine consumers have ordered

wine over the internet at least once16. A growing market share for online purchasing is

expected.

16 Press release productschap wijn, 20th of March 2008, source: www.wijn.nl

45

The on-trade have also been affected as the increase in wine sales was mainly in off-trade

once entertaining with friends and family at home become more popular. The smoking ban

and slower economic conditions prompted more people to avoid spending money on eating

and drinking out.

Figure 35. Evolution of purchase of wine in the Netherlands (% of market share). Source:

Trendbox 2010.

6.1.1 Off-trade – Supermarkets’

Netherlands is a “take home” market, as close to 80% of the total wine consumed in

the Netherlands is sold in the 7000 supermarkets. For domestic consumption, the market

share of supermarkets is 87%. More than 80% of supermarket volume sales are made by 7

chains of supermarkets, being most the important Koninklijke Ahold NV (Albert Heijn) with

750 points of sale and Superunie with 1800 (table 21). Other major supermarkets are: C1000

and Super de Boer (Bijeen group, 700 stores), Lidl and Aldi.

Retailer Ahold have been dominating the food retail market with Albert Heijn supermarkets

(36.6% of value in 2008) (figure 36). The second most important retailer is Superunie, a group

representing 15 smaller retail chains with a total of 1,800 shops (24.3%). Bijeen (C1000 and

Super Boer) group represent ~17% (Jumbo entered to the Bijeen group in 2009). Discounters

Aldi and Lidl hold market share of 15.2% and 6.6% respectively. This competitive environment

and the fact that Dutch supermarkets also import wines give them a major influence over the

46

supply chain. Generally, Dutch supermarkets insist on wine exclusivity, and through their

buying power they make sure they get it17. Brands sold at different retailers face fierce price

competition, as is the case, for instance with beer. For example, in 2009, Albert Heijn de-listed

the largest French brand, JP Chenet, as Grand Chais de France didn’t give Albert Heijn brand

exclusivity. This exclusive listing at a single retail chain means that the overall volume of

brands always remain limited to the sales of that specific retailer, which results in

diversification for the brands.

Table 21. Supermarkets in the Netherlands in 2009.

17 Annette Badenhorst, Manager for WOSA (Wines of South Africa), personal communication

47

Figure 36. Marketshares turnover (x 1000) in different retail chains between 2006 and 2008.

Source: Nielsen 201018.

Supermarkets was a key driver in developing wine consumption in the Netherlands, as

retailers self-import brands from around the world on their own, and tend to promote their

products with information leaflets and articles in supermarket magazines. Retailers also tend

to place their own brands in preferential displays, giving them more opportunity to boost

impulse purchases.

Aldi and Lidl place enormous pressure on market prices through a strategy of trade few

largest brands at low prices. Dirck III (Supernie), Jumbo and C1000 (Bijeen group) are

perceived by the consumers ‘good price to quality’ and ‘good reflection of the market place’. In

contrast supermarkets chains such as Albert Heijn and Plus Supermarkets are praised for its

‘by far broadest range’ including more expensive wines than the competition, and its

consistency in quality and service (figure 37).

The supermarkets are generally located in the cities center and offer several advantages

such as convenience, one-stop-shopping, value for money. In contrast, the self space is

limited (average self 6-12 meters) as the shop surface has average 600 m2. The Dutch

supermarkets don-t offer either a depth or high end assortment of wines (95% of wines are

under 5.5 €) due to the lack of space. Thus, for new wine comers, wine listing is very

challenging18.

18 Willem Siebilink 2010, personal communication

48

Figure 37. Supermarkets position matrix in the Netherlands (consumer perception), (Hard) Discount, Middle (value for money and quality discount) and Service14.

6.1.2 Off-trade – Liquor stores

Not all wine off-trade sales are via the supermarkets. Liquor stores, the so-called “slijters”,

have a unique competitive advantage in the Netherlands, as they have a monopoly on the

distribution of spirits for which they need a licence. They sell a full range of alcoholic and

non-alcoholic beverages, which the supermarkets are not allowed to do it. The Netherlands

has still around 3000 slijters; however, the number is shrinking due to the competition of the

supermarkets. Nowadays, the sales of wines on liquor store represent around 10% of the total

off-trade wine sales (figure 38).

The majority of the liquor stores are owned by supermarket chains. Gall & Gall, is a part of

the Dutch group Koninklijke Ahold NV (the same group of Albert Heijn supermarkets), has 530

shops, many of them strategically located nearby an Albert Heijn supermarket. Even

belonging to the same parent company, Albert Heijn and Gall & Gall operate independently.

Mitra and Dirck III with 320 and 70 liquor stores, respectively, are other important players in

this channel. These 3 players represent more than 60% of liquor store business. Only about

500 slijters are really independent, of which a significant number are ‘pap & mom’ shops with

an annual turnover of less than € 250,000.

49

Figure 38. Evolution of the off-trade wines sales in both supermarkets and liquor stores.

Table 22. The most important liquor stores in the Netherlands.

Points of sale Liquor stores

≥ 50 Gall & Gall, Dirck III, Mitra, Euro Slijter, Gildeslijter, Gulle Bottelier, Mix-Inn, Vini

France, Voordeelslijterij

≤ 50 Curio Cave, De Drankenier, Henri Bloem’s

Dutch Liquor stores typically are small (< 200 m2), relatively disorganized places, which are

generally located in city centre. In general, the staff is unprofessional and unmotivated, and

the working period is rigid16. Therefore, these stores are unappealing to young consumers,

having lower penetration, only 10%, among regular (female) shoppers. This situation

combined with little investments or innovations, even in high growth areas (Almere,

Amersfoort, Utrecht) makes this business hardly profitable. Consequently, the liquor stores

have been disappearing, 20% of them have disappeared in last 25 years. Only the fine wine

specialist performs very well with the wealthy older generation.

50

Figure . An example of Dutch liquor store owned by the Mitra group19.

6.1.3 On-trade - restaurants, bars, hotels

The Dutch on-trade is only responsible for about 15% of wine sales in volume. Even if habits

and lifestyle are gradually changing, in general, it can be said that the Dutch do not have the

habit of going to restaurants, mainly because the high prices. Until a few years ago, many

restaurants (especially those of higher rank) remained at the expense of businessmen. With

the amendment of the legislation, the costs of these meals become no longer attractive from a

fiscal perspective which led to a switch/ downgrade of many establishments (Van Casteren

and Heijbroek 2009). Meanwhile, volume sales through the on-trade channel declined as

more people reduced their spending on eating and drinking out. More entertaining at home

with friends and family resulted in a better performance in off-trade channels. Generally,

Horeca channel doesn’t want to carry wines on wine list which are sold in supermarkets due to

the margin issues.

The on-trade in the Netherlands represents approximately 30,000 Horeca establishments

supplied by a mix of the independent wine importers and supermarkets (trade wholesale

outlets also fall under this heading), depending on the type of wine sought (Van Casteren and

Heijbroek 2009). New World wines are often purchased through independent wine importers,

19 Willem Siebilink 2010, personal communication

51

while more established wines from countries such as France are mostly purchased through

“cash and carry” type wholesale outlets. The remainder of wine sales is estimated to be split

between high end specialist wine stores and restaurants. Below are represented the main

suppliers of the Dutch on-trade channel20:

Multiple specialists:

• Bart Wijnimport (Purmerend);

• Fourcroy-Lensselink;

• Goessens (Maastricht) ;

• La Gironde (Rotterdam).

Selling both to on- and off-trade:

• Vos&Partners (Delcave) ;

• Cordier/L’Exception ;

• ORB (Baarsma).

General on-trade wholesalers: supplying non-food as well as food and beverages:

• Sligro (55 stores, head office Veghel);

• Hanos (30 stores, head office Apeldoorn);

• Makro (30 stores, headoffice Best, part of Metro Group Germany),

• Zegro (few stores, area Rotterdam);

• Kweker (few stores, area Amsterdam);

• ISPC (one store in Netherlands and two in Belgium, premium end of wholesaling,

Breda).

Despite the lack of reliable statistics, most on-trade specialists estimate the market share of

European wines in the Dutch on-trade at 90%; France is the strongest supplier with 60% or

more (Van Casteren and Heijbroek 2009). This dominance of the Old World in the on-trade

might be caused by: a preference for an Old World wine style when eating out; a tendency to

choose ‘safe’ in the horeca, but also because this channel is dominated by ‘Old World’

restaurants (Italian, French, Greek and Spanish).

The on-trade sales of wine are expected to suffer during the next years, as more people

restrict their spending on eating and drinking out. Dutch consumers will shift to entertaining at 20 Annette Badenhorst, Manager for WOSA (Wines of South Africa), personal communication

52

home with friends and family, resulting in a better performance for off-trade sales. As wine

consumption within the on-trade channel is also dependent on weather conditions, it is difficult

to predict growth for certain products, which are mainly consumed during the warmer months

as these are dependent on whether conditions.

6.1.4 Direct mail / e-commerce

Despite the lack of reliable statistics it seems that direct mail, including e-commerce,

selling directly to the final consumer, is gaining market share, in particular for the

distribution of premium wines. Many are small established specialists, in business for many

years with national or multi-regional coverage (Van Casteren and Heijbroek 2009). One of the

largest specialists is Okhuysen, in addition to high street direct mailers like Leon Colaris and

Wielinga. The leading wine importer Baarsma has its own direct mail division; Bourse du Vin-

Wijnbeurs/ Wine Clubs Europe as well as its own e-commerce channel (wijnvoordeel.nl).

Moreover, many of the retail chains have their own direct e-commerce business; AH with

Wijndomein.nl being likely the largest. Wijndomein.nl is Albert Heijn’s initiative to convert its

wine club “Vrienden van de Goede Wijn” into its newly designed e-commerce business. This is

a clear attempt to get more market share in the premium wine sector in the Dutch market,

directly taking on the multiple specialists. Below are represented some Dutch players that sell

directly to the final consumer either by direct mail or e-commerce21:

• Thiessen (Moermans, Maastricht),

• Sauter (Kwast Wijnkopers, Maastricht),

• Berger (Roermond),

• Colaris (Baarsma, Weert),

• Robbers & Van den Hoogen (Arnhem),

• De Bruijn (Nijmegen),

• Okhuysen (Haarlem),

• Noordman (Leiden),

• Cees van Noord (Utrecht),

• Adventure Wine Trading (Arnemuiden),

• Aridjis (Utrecht), Brand (Leiden),

• Cave Cadier (Wijnmakelaarsunie, Cadier en Keer),

• De Lange (Oosterhout),

• De Portugese Wijnkopers (Nijmegen),

21 Annette Badenhorst, Manager for WOSA (Wines of South Africa), personal communication

53

• Deils Wijnhuis (Deil),

• Dielen (Venlo),

• Toorank (Zevenaar),

• Hosman Vins (Schiedam),

• Huinck (Zaandam),

• Kelders Wijnimport (Udenhout),

• Neerlands Wijnhuis (Groot Ammeren),

• Jos Rijnaarts (Alkmaar),

• Schermer (Hoorn),

• ThreeWines Benelux (Teteringen),

• Verlinden (Den Bosch),

• Victory Wines (Edam),

• Vinoblesse (Baarn),

• Vojacek (Maastricht).

7. MARKET SEGMENTATION [CARLOS AND RICHARD]

7.1 Sales per type of wine

The still wine represents 90% of the wine Dutch market by volume. The fortified wines

account for 7%, while the sparkling and Champagne represent 2 and 1% of total wine sales by

volume, respectively. Red wine is the most important category, representing 44% of total

sales volume (table 22). The white and rosé wines account for 32 and 14% of the wine sales,

respectively. In terms of growth, the still wine sales increased by 20% between 2004 and

2009, which represents a CAGR of 3.7%. Both red and white sales increased by 12% (CAGR

of 2%), while rosé wines knew an increase of 98% (CAGR of 14.7%) during the same period

of time. Champagne and sparkling wines sales increased by 25 and 40%, respectively.

Conversely, fortified volume sales decreased by 1.6%. All this referring to the period between

2004 and 2009.

Still wine sales in 2010 proved the most lucrative for the Dutch wine market, generating

77% of the total revenues. The sales of fortified wine generated 15% of the market's value.

Champagne and sparkling wines represent 5 and 3% of the market value in 2010,

respectively.

Table 22. Sales of wine by subsector: total volume 2004-2009. million litres 2004 2005 2006 2007 2008 2009

54

Still Light Grape Wine 292.8 307.4 318.9 330.8 341.7 351.3 - Still Red Wine 155.0 159.9 161.6 165.3 168.7 172.5 - Still White Wine 109.8 111.9 115.6 117.9 120.2 123.0 - Still Rosé Wine 28.0 35.6 41.7 47.6 52.7 55.8 Sparkling Wine 6.2 6.6 7.0 7.5 8.2 8.7 - Champagne 1.9 2.0 2.1 2.2 2.3 2.3 - Other Sparkling Wine 4.3 4.6 5.0 5.3 5.9 6.4 Fortified Wine and 27.5 27.9 27.7 27.6 27.4 27.1 Vermouth - Port/Oporto 7.4 7.6 7.9 8.1 8.3 8.5 - Sherry 15.5 15.6 15.3 15.0 14.6 14.3 - Vermouth 3.9 3.9 3.8 3.7 3.6 3.5 - Other Fortified Wine 0.7 0.7 0.8 0.8 0.8 0.8 and Vermouth Non-Grape Wine 2.3 2.3 2.2 2.2 2.1 2.1 - Fruit Wine 2.3 2.3 2.2 2.2 2.1 2.1 Wine 328.9 344.2 355.9 368.1 379.4 389.2 Source: Euromonitor International 2010.

The Dutch still wine market grew 24.7% since 2004 in value, which represents a CAGR of

4.5%. One reason for the growth of sales has been the increasing consumption of rosé wine,

which grew by 96.8% (CAGR 14.5%) to reach a market share of 11% of supermarket sales by

volume. Rosé is no longer a wine consumed mainly in the warmer months, but more Dutch

people are buying it throughout the year, while the consumer base benefits from being able to

attract younger people, including males. Still white and red wine are more mature, but still

generated healthy growth in 2009, impacted by sustained demand and less impacted by the

current economic slowdown. Sales of white wine gained 16.4% of sales revenues since 2004,

reaching 27% of sales volume. Red wine is still the most popular wine, accounting for 38% of

sales revenues. Fortified sales revenues went up by 2.1% (CAGR 0.4%).

Sparkling wine reached sales worth EUR192 million in 2009, representing an increase of just

over 3% in current value terms compared with 2008. Poor value growth was attributed to the

economic slowdown. Despite efforts from champagne manufacturers to introduce year-round

consumption, and not just for special occasions, sales of sparkling wine remained seasonal.

Another deterrent to increasing sales of sparkling wine is that consumers prefer still wines

when eating or when entertaining.

Other sparkling wine saw slower growth in 2009 than in 2008, but still registered the highest

performance, led by the sudden popularity of Prosecco since 2008. Dutch consumers, in light

of the economic slowdown, shifted demand from champagne to Prosecco due to its price, and

the fact that these products were more intensively promoted. Manufacturers aimed to diversify

the offer by presenting more alternatives to consumers.

Table 23. Sales of wine by subsector: total value 2004-2009.

55

EUR million 2004 2005 2006 2007 2008 2009 Still Light Grape Wine 1,434.0 1,487.1 1,552.9 1,608.1 1,722.7 1,788.6 - Still Red Wine 767.1 781.5 797.2 815.0 864.5 892.8 - Still White Wine 531.7 537.3 557.2 571.1 610.3 629.8 - Still Rosé Wine 135.2 168.4 198.5 222.0 247.9 266.1 Sparkling Wine 147.3 154.7 163.3 173.9 185.4 191.8 - Champagne 87.1 91.3 96.1 101.5 107.7 110.8 - Other Sparkling Wine 60.2 63.4 67.2 72.5 77.7 81.0 Fortified Wine and 332.8 335.2 334.2 333.2 338.3 339.6 Vermouth - Port/Oporto 94.7 97.4 99.2 101.2 104.5 106.9 - Sherry 170.7 171.2 169.1 166.9 168.6 167.7 - Vermouth 56.6 55.8 54.9 54.1 54.1 53.7 - Other Fortified Wine 10.7 10.8 11.0 11.0 11.2 11.3 and Vermouth Non-Grape Wine 23.5 23.2 22.8 22.4 22.2 21.9 - Fruit Wine 23.5 23.2 22.8 22.4 22.2 21.9 Wine 1,937.6 2,000.2 2,073.2 2,137.6 2,268.6 2,341.9 Source: Euromonitor International 2010.

The impact of organic products in general is still relatively small in the Dutch alcoholic drinks

market. Organic command a very small share and lack special promotions or popularity

amongst Dutch consumers. One of the main reasons given to their low impact is price (which

is one of the main drivers of Dutch wine consumers), but also the fact that consumers are not

able to taste the difference in quality to justify buying them. While promotion of organic wines

is uncommon, organic products in general rely on special promotions by large retailers such

as Albert Heijn or Plus, which stock a few variants and offer discounted prices to boost

demand.

7.2 Sales by country of origin

Although France still dominates the wine sales with a 40% market share, historical links

from both the Old to New World have favored the acceptance of South African wines. The

languages are similar, aiding pronunciation of names. South Africa thus went from nothing in

1995 to 13% market share in just fourteen years, taking both white wine market share from

Germany (now at 10%) and red share from France, Spain and Italy (now at 8%). That is all the

more remarkable because Spain and the Netherlands were historical allies and have long

been strong trading partners. For years, Spain was Netherlands’s second largest supplier,

fuelled by sherry imports. Although European wine producing countries still dominate the

Dutch market, all growth today comes from Argentina, Australia, Chile and New Zealand (table

24). The traditional volume products from France, Spain, Italy and Germany will have to adapt

if they don’t want to see their market continuing to erode.

56

Table 24. Still wine sales in Dutch market from 2000-2009.

Source: IWSR’S Netherlands report 2010.

New World wines made up around 33% of wine sales. The popularity of New World wines

continued to increase since 2000, at the expense of wines from traditional wine countries, like

France, Germany, Spain and Italy. French wines decreased by 1.3% per year (CAGR) since

2000; while Germany, Italy and Spain had a marginal or low increase during the same period

of time. Portugal and U.S also increased their CAGR by 6% during the same period, while

U.S. wines increased their sales by 26.6% between 2008 and 2009. New World wine

countries such as Argentina, Chile, Australia and New Zealand increased their CAGR by 10

and 20% from 2000 and 2009. The largest market share increase was observed in New

Zealand wines. Eastern countries strongly decrease their sales from 2000 to 2009.

7.3 Sales per grape variety

In terms of grape varietal, traditional varietals such as Cabernet Sauvignon for still red wine

and Chardonnay for still white wine dominated between 2004 and 2009 (table 25 and 26).

Shiraz is becoming popular for red and mainly to rosé wine, although not yet as popular as

Cabernet Sauvignon (table 27). Shiraz profited from intensified promotion in 2009 in such

niche, which led to a 25% volume share in 2009.

Table 25. Sales of still red wine by grape/varietal type 2004-2009.

57

% total volume 2004 2005 2006 2007 2008 2009 Cabernet Sauvignon 38.0 38.1 38.2 39.4 39.8 40.1 Merlot 21.8 21.4 21.1 20.6 20.3 20.0 Shiraz/Syrah 13.0 13.2 13.3 13.5 13.9 14.5 Others 27.2 27.3 27.4 26.5 26.0 25.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

Table 26. Sales of still white wine by grape/varietal type 2004-2009. % total volume 2004 2005 2006 2007 2008 2009 Chardonnay 38.0 36.1 35.9 35.6 36.4 36.9 Chenin Blanc 13.6 13.9 14.1 13.3 13.9 14.3 Sauvignon Blanc 23.1 22.9 22.4 22.0 21.5 21.2 Others 25.3 27.0 27.6 29.1 28.2 27.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

Table 27. Sales of still rosé wine by grape/varietal type 2004-2009. % total volume 2004 2005 2006 2007 2008 2009 Cabernet Sauvignon 33.0 33.2 33.6 34.0 34.4 34.6 Garnacha/Grenache 14.9 14.8 14.4 13.8 14.1 14.8 Shiraz/Syrah 21.8 22.0 22.1 23.2 23.9 24.5 Others 30.3 30.0 29.9 29.0 27.6 26.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International 2010.

7.4 Packaging

Wine in the Netherlands remains mostly packaged in 750 ml glass bottles, representing

around two-thirds of total volume sales (figure 39). Manufacturers and retailers explored

alternative sizes targeting different types of consumers by launching smaller sized bottles.

Interestingly, small wine bottles (up to 0.5 liters) are gaining popularity in the Netherlands (Van

Casteren 2009). In 2009 in the Dutch market, the popularity of wine bottles 0.375 liters won

11% in volume terms and 31% in value. Small bottles represent today in the Netherlands

about 2% of the total wine market. Other packaging formats exist, such as Tetra Pak, but their

impact is still marginal, being mostly available through discounters, as the majority of Dutch

consumers shows no preference for this type of packaging for alcoholic drinks. Other

alternatives such as boxes or cans are less attractive and are used only seasonally.

Therefore, Dutch consumers can be considered resistant to significant changes in product

packaging of wine. Extreme innovations decrease the value of the product. A good innovation

for ready-to-drink wine is the screw cap or synthetic closures. Many New Wine countries

prefer using the screw cap or synthetic closures instead of cork, because of better shelf life,

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no cork flavor, good locking, and the availability of many colors. In The Netherlands, about

70% of wines closures are synthetic or screw caps22.

Figure 39. Type of packaging based on the value share within total still wines ex. perl based on

GfK life cycle. Source: GKF (2009).

7.5 Prices

In 2009, the average price for a 75 cL bottle of wine in the Dutch supermarket was 2.83 €,

and 2.76 € in 2008. These prices already include 19% of VAT and 54 cents of excises, other

taxes and respective margins of both distributor and supermarkets. An example of two prices

segments in Dutch market is represented in table 28.

Table 28. Price formation for different wines price point in the Dutch market. Landed price 0.89 € 1.74 € Average margin distributor 0.10 € 0.15 €

Logistics & Warehouse 0.05 € 0.05 €

Wine board fee 0.01 € 0.01 €

Packaging tax 0.04 € 0.04 €

Excises 0.54 € 0.54 €

Average margin supermarket (~35%) 0.88 € 1.47 €

VAT (19%) 0.48 € 0.80 €

Consumer price 2.99 € 5.00 €

22 Willem Siebelink, personal communication

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Over 80% of wine sales with the discount retailers such as Aldi and Lidl is under 2.50 €,

(compared with ‘only’ 30% for Albert Hein) with another 15% between 2.51 and 3.50 €. The

increasing market share of these discounters forced the other retailers to bring down their

(Van Casteren and Heijbroek 2009).

New World wine saw an increased share during 2009. Not only for their good quality, but

also for their price, Dutch consumers praise New World wines from countries such as South

Africa, Australia and Chile, as retailers continue to be the main source of promotion and

education behind imports from less traditional wine countries (Van Casteren and Heijbroek

2009). South African wines command the highest share amongst still wines in the Dutch

market, with virtually every grocery retailer giving them a preferential position on shelves and

promoting them as a good alternative in terms of price and quality. The average price for

South African wine in the discounters is 2.25 € (2009), about the same as France; Germany is

price taker with 1.80 € per bottle (figure 40). Other New World countries, such as Chile and

Australia, have higher perceived values than South Africa, but inferior to Spain and Italy.

Detailed price per type of wine, brand and country are represented in Appendix 7 to 11.

Figure 40. Average prices of still wines (0.75 liter bottles) per countries in different outlets 2007-

2009.

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Figure 41. Relationship between the price segment and the net income level per month of Dutch

consumers.

8. CONCLUSION [CARLOS, PAULO AND RICHARD]

To better assess its wine market in context we covered different aspects of the Netherlands

delivering an overview of the country economic macro-environment, its political, social and

demographic structure. We then proceeded to its wine market – including, production,

consumption, imports and exports, distribution, pricing and segmentation.

In terms of its recent economic performance, the Netherlands have performed relatively well,

mostly better than its European neighbors. However, there is concern whether the slow pace

of its economic recovery growth will be sufficient to support such an extensive and expensive

welfare system, a system which will only become costlier with the diminishment of the (ageing)

working population who will soon retire and cease contributing their taxes while becoming

beneficiaries themselves. Also worth noting is the dependence of the Dutch economy to its

international trade and, as such, its sensitivity to external factors.

Geographically, The Netherlands are a small and densely populated country with 17 millions

of inhabitants (and no domestic viticulture of significance), but it punches above its weight in

wine imports. At 430 million liters, it is the 6th largest wine import market in the world. As in

many northern European countries, wine consumption in Netherlands was almost non existant

in the early sixties, but the Dutch now drink as much wine as the UK; but, contrary to that

market which seems to have reached its saturation point, the Dutch affection for wine is still

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growing, and went from 14.5 liters per head in 1990's to almost 22 liters in 2009. The most

popular still wines in the Netherlands are reds followed by whites and Rosés, the latter being a

top performer and showing the highest growing rate. Generally, Dutch consumers are

sensitive to price and the country of origin and, to a lesser extent, by the type of grape or

other type of wine attributes. The Dutch preference still goes to wines of Old World such as

France; however, non-European wines grew to a 33% market share.

Despite the fact that Dutch consumers are seen as open-minded for new wines, the reality is

that New World wines still suffer from a negative perception image and the consumer’s belief

that they are of inferior quality compared to their European counterparts. Therefore, after

years of losing market share against the New World in the off-trade, it is expected that France

and other Old World exporters will bounce back, both in the supermarkets as well as in the

multiple specialists stores and direct mailers, in particular at the higher price points.

Netherlands imports and exports numbers tend to be confusing since there is a large

proportion of bulk wines exported to the Netherlands that are bottled there and then re-

exported to other countries. However, the Dutch importations are essentially controlled by

three major importers: Baarsma Wine Group, DGS and Coenecoop and supermarket chain

Albert Heijn, which is the main chain of supermarkets where the wine is purchased. The off-

trade and especially supermarkets are a key driver in developing wine consumption in the

Netherlands (which is a “take home” market) since close to 80% of the total wine consumed in

the Netherlands is sold in the 7000 supermarkets. Their market share will continue to increase

at the expense of the “slijters” liquor stores. On-trade sales of wine, which are responsible for

15% wine sales in volume, are expected to suffer in the next coming years, as more people

will continue to restrict their spending on eating and drinking out. Direct mail, including e-

commerce, selling directly to the final consumer, is gaining and will continue to gain market

share, in particular for the distribution of premium wines. Dutch consumers lifestyle shift to

entertaining friends and family at home, resulting in a better performance for off-trade sales.

Only 13% of all day-to-day household spending on wine occurs outside of the supermarket,

where 18% of all wine purchase is unplanned (impulse buying) and 67% is pre-planned

beforehand. More than 50% of the total wine volume is bought on Friday's and Saturday's.

The average price of wine (including still wine, sparkling, fortified and vermouth) in 2009 was

2.83 € per bottle of 0.75 liters and 95% of wines sold below the price of 5 € per bottle; while

Sparkling wines were around 8 to 10 € per bottle.

According to Euromonitor International (2010) the total volume of sales are expected to

expand by a CAGR of 3% from 2009 to 2014, despite increased maturity in the level of wine

consumption. Wine still has a great deal of potential for growth, not only in volume terms but

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also in value terms. The wine drinking culture is still developing amongst Dutch people, with

more young Dutch men and women drinking wine than before and switching from

traditionally popular alcoholic drinks such as beer to wine. While wine is expected to remain a

driver of growth within the alcoholic drinks market, it will reach a new phase of maturity after

the steep growth experienced during the last years, which means that pace of growth will be

slower, but nonetheless healthy, as the consumer base will continue to expand.

Of Note:

Stakeholders will be paying special attention to the female consumer since it is

essentially women who are buying (wine and the rest) in supermarkets, this driving factor

will be important in the Dutch market for the coming years. Producers and marketers will try to

induce buying from the female consumer with specially designed wine and alcoholic products

and special ad campaigns.

Consumer focus on health and environment. Because of the ageing population, the

consumer focus on health and environment issues related to living a better quality life in

retirement age will matter more for the Dutch consumer. Prophilaxy: Organic and biodynamic

wines will gain better acceptance as people (especially babyboomers) will see them as a

healthier way of drinking, i.e. more of a source to remain in good health and live a longer life.

The current economic slowdown is expected to maintain demand for mid and lower-priced

wines. More intense retail competition will translate into more price offers, resulting in

increased pressure on unit prices. However, rising distribution costs will offset this, resulting in

stable prices over the forecast period. Due to the fragmented nature of wine distribution,

companies wanting to gain share are likely to pursue more aggressive pricing strategies in

order to stimulate demand for their brands; another factor which will contribute to a more

competitive environment for wine in the Netherlands.

Although, still white and red wine are more mature products, i.e. growth in constant value

terms during 2009-2014 period is expecting to be lower, their sales will remain positive and

healthy, driven by a gradual expansion in the consumer base. However, the hardest challenge

still remain; how to rejuvenate the Dutch consumer base?

The uplift in the Rosé category will continue to drive growth with nearly 4 % CAGR in

total constant value terms expected over the forecast period.

Sparkling wine is expected to follow Rosé with a CAGR of 3% in total constant value terms

over the forecast period. As with champagne, sparkling producers are committed to grow their

market share with the increase in consumption in the Netherlands. Due to intense promotion

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around Christmas and New Year, sparkling wines such as Cava are well-known to the Dutch

consumers. Intense marketing efforts to promote other sparkling wines are expected to result

in positive growth and further expansion of sales (Euromonitor International 2010).

Fortified wine will continue to suffer, resulting in lower sales. Sherry, Port and vermouth

are expected to register 11% and 14% in total volume declines up to the year 2014

respectively. These products are considered old-fashioned by young consumers, who

otherwise are exposed to more modern and trendy drinks, including still light grape wine. In

addition, Dutch consumers are more and more consuming wine at home, after dinner, which

means that softer wine styles are required. The challenge for producers of fortified wine will be

to develop softer wines with a more modern look in order to make them trendy, and be able to

attract younger consumers.

Branding in the wine industry could have a high impact on the Dutch consumer wine

market. In comparison to other countries, brands currently possesses only a small market

share in the Netherlands. The combined market share of the largest 10 brands in the Dutch

market is 15%, in comparison with 21% in the UK and 38% in the USA. Branding influences

the Dutch consumer wine market on many levels. It increases transparency, because it is

easier to compare products. Brands can also bring in marketing funds that will increase their

exposure. This is a novelty in the Dutch market and Brands that will be able to gain

acceptance in the mind of the consumers based on their "reliability" will win. Dutch people will

be on the lookout and will travel the distance to buy their favorite Brands the cheapest. Would

this work for all market segments? Probably not, for the super premium and icons wine but it

should work for those products already widely available in supermarkets

In light of the expected positive future for wine, an increasing number of producers which

were traditionally linked to the spirits trade are considering investing in and expanding

into wine. Falling spirits volume sales are seen as a threat for large companies such as

Pernod Ricard Group and Diageo Plc, which are increasingly choosing wine to maintain their

strong positions within the overall alcoholic drinks market. Smaller wine importers and

distributors will see more competition from spirits firms who will venture into wine, using their

knowledge capital, financial muscle and long established presence to influence distribution

and capture a share of sales.

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