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Germany Samples the Pleasures of U.S. Wines
With its comparatively robust economy and large, affluent population, Germany offers one of the world's most attractive markets for exporters of many agricultural products, including wines. Average income and food expenditures there are among the highest in the world. Germany's also a leading agricultural importer, with annual purchases of about $40 billion.
Germany imports more wines than any other single country, with sales valued at $1.9 billion in 1996. Imports fulfill almost two-thirds of German wine consumption, and they vary considerably in origin, type, quality and price.
Germany's total wine consumption averages about 20 million hectoliters a year, and per capita consumption is about 25 liters. Per capita annual consumption of still wines has declined slightly over the past decade to about 17.5 liters, while that of sparkling wines has risen to 5 liters.
Although the United States supplies only 1 percent of the German wine market, between 1991 and 1996 its exports grew sevenfold to $22 million, indicating strong growth potential. It's a market that holds out opportunities for U.S. exporters prepared to invest the resources to properly market their products.
Sales Avenues and Catalysts
German retailers generally purchase foreign wines through local importers. One important service the importer provides is ensuring that wines meet all German and European Union (EU) import requirements.
About 66 percent of all wine sales in Germany occur in retail food outlets such as supermarkets and discount stores; 8 percent through specialized wine shops; and nearly 20 percent through hundreds of domestic wineries. Approximately 80 importers distribute more than 200 U.S. wine brands in the German market.
All wine sales are subject to a 15-percent value-added tax. A further excise tax of 2 German marks (about $1.25) per 0.75 liter is applied to sparkling wines.
The General Agreement on Tariffs and Trade (GATT) could open new sales opportunities for U.S. wine exporters. Under provisions of the GATT Uruguay Round, the EU has agreed to reduce wine import tariffs by an average of 20 percent between June 30, 1994 and July 1, 2000.
U.S. wines have penetrated the German restaurant and specialty wine shop market segments, which typically feature higher-priced wines, but they have achieved less success in the lower-priced supermarket segment. However, the lower-priced segment ($2 or less per bottle) is declining, while the mid- and high-priced segments have expanded.
The most important market is the $2- to $5-per-bottle segment, because nearly 60 percent of all wine sales in Germany fall in this category. Some U.S. wines are making inroads in the below-$10 segment, and can increasingly be found in discount supermarkets. In 1995, white wines made up about 33 percent of total U.S. wine sales to Germany, red wines (including rosé and white zinfandel) nearly 60 percent, wine coolers 5 percent and sparkling wines 1 percent.
The Competitive Corkscrew
U.S. wines have developed a growing reputation for quality among German consumers, but they face stiff competition from domestic and imported products.
German wines are heavily promoted by wineries, wholesalers, dealers and the German Wine Institute. Wines from France, Italy and Spain (which comprise 80 percent of German imports) are heavily promoted by government- and industry-funded organizations, as well as major wine traders and dealers. Wines from South Africa, South America and Eastern Europe are increasingly common in Germany, primarily in the low- to mid-price categories.
Labeling Concerns
All German imports of wines for retail sale must carry labels in German (multi-language labels are allowed) and provide the following information:
Grape variety or varieties and vintage are also often spelled out on the wine label.
U.S. exporters must recognize that the EU restricts use of protected European geographical names (such as Champagne and Bordeaux) to grapes produced in those areas. It is recommended that the label bear the grape variety or U.S. regional name. Germany officially recognizes five types of domestically produced wines:
U.S. wines must be certified as eligible for export to the EU by a laboratory approved by the U.S. Bureau of Alcohol, Tobacco and Firearms. For a list of approved labs and general information on EU import requirements, call the Bureau at (202) 927-8110 in Washington, DC.
Packaging Standards
German and EU consumer packaging laws specify mandatory standard retail container sizes for wine, ranging from 0.1 to 10 liters. The most common container size is 0.75 liter.
With the tremendous growth of packaging waste, Germany has stepped up recycling efforts. The Duales System Deutschland has instituted the "Green Dot," a symbol that signifies that a product's packaging is recyclable. The system provides roadside pick-up of all packaging materials with the green dot. Packaging lacking the green dot must also be recycled, but no system exists to do so.
While manufacturers are not legally required to use the green dot, it's almost impossible to market a product in Germany without it. Typically, the importer pays the fee for the use of the green dot (which varies with the type and amount of packaging) and provides the exporter with the necessary packaging information.
This article was prepared by the Office of Agricultural Affairs at the U.S. Embassy in Bonn and the U.S. Agricultural Trade Office (ATO) in Hamburg, Germany.
Key Trade Contacts
Market Information: For more information on Germany's wine market, contact the Office of Agricultural Affairs at the U.S. Embassy in Bonn: phone: (011-49-228) 339-2133; fax: (011-49-228) 334-697; E-mail: 104520.250@compuserve.com
Or the U.S. ATO in Hamburg, Germany: phone: (011-49-40) 4146-070; fax: (011-49-40) 4146-0720; E-mail: 104520.264@compuserve.com.
For information on EU wine market trends and opportunities, contact the Wine Institute of California's office in the Netherlands: phone: (011-31-172) 471-571; fax: (011-31-172) 475-545.
For information on foreign sales offers, contact the German Association of Wine and Spirit Importers: phone: (011-49-611) 521-033; fax: (011-49-611) 599-775.
For more trade contacts and information on German wine laws and labeling, contact the German Wine Association: phone: (011-49-228) 221-401; fax: (011-49-228) 261-683.
Trade Fairs: In Germany, trade fairs help exporters launch new products and find buyers and importers for existing products. Two of the most important fairs for the wine trade are ProWein, held in March of even years, and Interwein, held in June of odd years (except for 1997). For information on trade fairs, contact the FAS Trade Show Office: phone: (202) 720-3623; fax: (202) 690-4374.
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