Study on the competitiveness of European wines : final report.
Date: 2015-02-16
Institutions: Directorate-General for Agriculture and Rural Development
Subjects: EU production, bottled wine, competition policy, competitiveness, domestic consumption, export policy, international competition, international trade, originating product, reform of the CAP, still wine, wine

Study on the 
competitiveness of 
European wines 

FINAL REPORT 

OCTOBER 2014 

WRITTEN BY COGEA S.R.L. 

AGRICULTURE AND 
RURAL DEVELOPMENT 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COGEA S.r.l. 
Represented by Francesca Antilici 
102, Via Po - 00198 Rome (Italy) 
Tel.: +39.06.853.73.51  
Web: www.cogeaspa.it 
E-mail: fantilici@cogea.it 

Scientific Director of the study: Ezio Scotti 
Coordinator of the study: Carlotta Valli  

LEGAL NOTICE 

The  information  and  views  set  out  in  this  study  are  those of  the  author(s)  and  do  not  necessarily  reflect  the  official 
opinion  of  the  Commission.  The  Commission  does  not  guarantee  the  accuracy  of  the  data  included  in  this  study. 
Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which 
may be made of the information contained therein. 

More information is available on the Internet (http://www.europa.eu) 

Luxembourg: Publications Office of the European Union, 2014 

Catalogue number: KF-02-14-995-EN-N 

ISBN: 978-92-79-40735-2 

doi: 10.2762/56910 

© European Union, 2014 

Reproduction is authorised provided the source is acknowledged. 

Printed in Italy 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS  

1  INTRODUCTION .................................................................................................................................. 11 

2  OVERALL APPROACH TO THE STUDY ........................................................................................ 12 

2.1  DEFINITION OF COMPETITIVENESS AND IMPLICATIONS FOR ANALYSIS .................... 12 

2.2  IDENTIFICATION OF MAIN COMPETITORS OF EU WINES AT THE 

INTERNATIONAL LEVEL ............................................................................................................. 13 

2.3  PRODUCT COVERAGE ................................................................................................................. 14 
Import markets for bottled versus bulk wine ..................................................................... 14 

2.3.1 

2.4  SELECTION OF CASE STUDY COUNTRIES .............................................................................. 15 

2.5  DATA SOURCES AND LIMITS ..................................................................................................... 16 
In-depth interviews with key economic actors .................................................................. 17 
2.5.1 
2.5.2  Official statistical sources .................................................................................................. 18 
2.5.3  Market data sources ........................................................................................................... 19 
2.5.4  Web-checks of online wine retailers .................................................................................. 19 

2.6  METHODOLOGICAL APPROACH AND TOOLS OF ANALYSIS ............................................. 20 
2.6.1  Methodological approach and tools of analysis for Theme 1 ............................................ 20 
2.6.2  Methodological approach and tools of analysis for Theme 2 ............................................ 23 
2.6.3  Methodological approach and tools of analysis for Theme 3 ............................................ 24 

3  THE EU WINE POLICY FRAMEWORK .......................................................................................... 25 

3.1  EU WINE POLICY 1962-1999 ........................................................................................................ 25 

3.2  THE 1999 WINE CMO REFORM ................................................................................................... 25 

3.3  THE 2008 WINE CMO REFORM ................................................................................................... 26 
Support measures ............................................................................................................... 26 
Regulatory measures .......................................................................................................... 27 
Trade with third countries .................................................................................................. 28 
Production potential ........................................................................................................... 28 

3.3.1 
3.3.2 
3.3.3 
3.3.4 

3.4  HORIZONTAL MEASURES FOR THE PROVISION OF INFORMATION AND 

PROMOTION ON THE INTERNAL MARKET AND IN THIRD COUNTRIES ......................... 29 

3.5  THE CAP REFORM 2014-2020: WINE PROVISIONS WITHIN THE CMO ............................... 29 
Support measures ............................................................................................................... 29 
Production potential ........................................................................................................... 30 
Regulatory measures .......................................................................................................... 30 

3.5.1 
3.5.2 
3.5.3 

4  WINE POLICIES OF EU COMPETITORS ....................................................................................... 31 

4.1  USA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION .............................. 31 
California Wine Export Program ....................................................................................... 31 
The US Import Duty and Excise Tax Drawback Scheme and its implications ................. 31 

4.1.1 
4.1.2 

4.2  CHILE: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION .......................... 32 
The Chilean Wine Cluster: An Institutional Arrangement ................................................ 32 

4.2.1 

4.3  ARGENTINA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION ............... 32 

4.3.1 

Regulation of the wine market through concentrated grape must: the Mendoza-San 
Juan Agreement ................................................................................................................. 33 

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4.3.2  A public-private partnership to establish a strategic plan for the wine industry................ 33 

4.4  AUSTRALIA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION ................ 34 
4.4.1  Wine Australia: “Directions to 2025” ................................................................................ 34 

4.5  NEW ZEALAND: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION ......... 35 
International Wine Promotion ........................................................................................... 35 
Suppressing barriers to international wine trade ................................................................ 35 

4.5.1 
4.5.2 

4.6  SOUTH AFRICA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION ......... 36 
The promotion of South African wines and reduction of trade barriers ............................ 36 

4.6.1 

5  THEME 1 – DEVELOPMENT OF THE COMPETITIVENESS OF EU WINES .......................... 37 

5.1  THE LEVELS OF ANALYSIS ........................................................................................................ 37 

5.2  GLOBAL COMPETITIVENESS OF EU STILL WINES WITH RESPECT TO 

INTERNATIONAL TRADE ............................................................................................................ 38 
The position of country-systems on the world export market ........................................... 38 
5.2.1 
Import market shares of EU wines on the most important world markets ........................ 39 
5.2.2 
5.2.3  Analytical  approach  to  analysis  of  global  competitiveness  of  EU  still  wines  with 

respect to international trade .............................................................................................. 40 
5.2.4  Global competitiveness of EU still wines in the world market ......................................... 42 
EU still wine exports: PDO and non-PDO wines .............................................................. 46 
5.2.5 
5.2.6 
The export market for bottled vs. bulk wines: A change of strategy ................................. 48 
5.2.7  Global competitiveness of EU still wines in the 10 most important import markets 

and in 3 EU markets (case study Member States) ............................................................. 49 
Price competitiveness ........................................................................................................ 55 

5.2.8 

5.3  GLOBAL COMPETITIVENESS OF EU STILL WINES WITH RESPECT TO DOMESTIC 

CONSUMPTION .............................................................................................................................. 60 
5.3.1  Domestic consumption of still wine in the case study markets ......................................... 61 
5.3.2 
Consumption market shares of EU wines in the case study markets ................................. 61 
5.3.3  Global EU wine competitiveness with respect to domestic consumption in the case 

study markets ..................................................................................................................... 62 
Price/quality competitive positioning of EU wines compared to competitors in the 
consumer markets .............................................................................................................. 65 
Competitiveness of EU still wines in the online retail channel ......................................... 71 

5.3.4 

5.3.5 

5.4  SYNTHESIS OF RESULTS OF ANALYSIS OF THE GLOBAL COMPETITIVENESS OF 

EU STILL WINES ............................................................................................................................ 74 

5.5  INFLUENCES ON THE COMPETITIVENESS OF EU WINES AND THIRD COUNTRY 

WINES: THE PORTER’S DIAMOND ............................................................................................ 76 
5.5.1 
Factor conditions in producer countries............................................................................. 76 
5.5.2  Demand conditions in consumer countries ........................................................................ 81 
Firm strategies (structure and rivalry) ............................................................................... 84 
5.5.3 
5.5.4 
Related and supporting industries ...................................................................................... 91 
5.5.5  Government (Central policies of producer and consumer countries) ................................ 92 
Chances .............................................................................................................................. 99 
5.5.6 
Synthesis of the results of the Porter’s Diamond ............................................................. 100 
5.5.7 

6  THEME 2 – IDENTIFICATION OF THE KEY FACTORS OF COMPETITIVENESS ............ 103 

6.1  PROCEDURE AND METHODOLOGY ADOPTED FOR THE ANALYSIS ............................. 103 
6.1.1 
Identification of factors of competitiveness and assessment of their importance............ 103 
6.1.2  Methodology used to establish cause-effect relationships among factors ....................... 105 

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6.2  RESULTS OF THE ANALYSIS FOR PACKAGED WINE ......................................................... 106 
Factors of competitiveness and their importance ............................................................ 106 

6.2.1 
6.2.2  Degree of response to factors of competitiveness of EU wines compared to NWC 

and domestic wines, based on opinions of market players .............................................. 108 
6.2.3  Application of structural analysis .................................................................................... 111 
6.2.4  Overall results obtained with the MicMac method by country/segment combination .... 117 
6.2.5  Generalisation of results by segment ............................................................................... 119 

6.3  RESULTS OF THE ANALYSIS FOR BULK WINE .................................................................... 121 
Factors of competitiveness of bulk wines and their importance ...................................... 121 

6.3.1 
6.3.2  Degree  of  response  of  EU  bulk  wines  to  factors  of  competitiveness  compared  to 

competitors, based on opinions of market players ........................................................... 122 

7  THEME 3 – HOW TO IMPROVE THE COMPETITIVENESS OF EUROPEAN WINES ........ 123 

7.1  METHODOLOGICAL APPROACH FOR THEME 3 .................................................................. 123 

7.2  EVOLUTION OF FACTOR CONDITIONS IN PRODUCER COUNTRIES ............................... 123 
Future prospects for vineyard areas, wine production and probable impacts .................. 123 
Future prospects relative to export propensity ................................................................. 124 

7.2.1 
7.2.2 

7.3  EVOLUTION OF DEMAND CONDITIONS IN THE CASE STUDY COUNTRIES ................. 125 
Population and GDP prospective growth ......................................................................... 125 
Consumption forecasts for bottled still wine ................................................................... 126 
Expectations about changes in consumer markets and impact on consumption .............. 129 
Expected future developments of wine demand in the case study markets ..................... 130 
BCG matrix based on 2018 consumption forecasts ......................................................... 131 

7.3.1 
7.3.2 
7.3.3 
7.3.4 
7.3.5 

7.4  HYPOTHESES ON THE EVOLUTION OF KEY FACTORS OF COMPETITIVENESS .......... 134 

7.4.1 

7.4.2 
7.4.3 

Perceived  changes  in  the  importance  of  factors  of  competitiveness  for  packaged 
wines, from the current situation to 2025 ........................................................................ 134 
The competitive position of EU bottled wine by 2025 .................................................... 135 
Perceived changes in the importance of factors of competitiveness for bulk wine, 
from the current situation to 2025 ................................................................................... 138 

7.5  POSSIBLE STRATEGIC ADAPTATION OF ECONOMIC ACTORS TO CHANGES IN 
THE COMPETITIVE SCENARIO AND IN THE HIERARCHY OF KEY FACTORS OF 
COMPETITIVENESS .................................................................................................................... 138 
Strategies of expansion or penetration of export markets ................................................ 138 
7.5.1 
Strategies of expansion for products positioned in the higher price/quality segments .... 140 
7.5.2 
Strategies of growth of bulk wine exports to the detriment of bottled wine exports, 
7.5.3 
adapted according to product usage function and market segment ................................. 140 
Strategies of (further) industry concentration .................................................................. 141 

7.5.4 

7.6  CONCLUSIONS ABOUT THE IMPROVEMENT OF EU WINES COMPETITIVENESS ........ 141 
7.6.1  Market access .................................................................................................................. 142 
The decision-making process of economic actors ........................................................... 144 
7.6.2 
Product adaptation to markets ......................................................................................... 145 
7.6.3 

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List of tables 

Tab. 1:  Average CIF price of still wine in bottles imported in the most important markets for the EU, by country of origin, 2012 

(€/lt) .......................................................................................................................................................................................... 59 

Tab. 2: Average CIF price of still wine in bulk imported in the most important markets for the EU, bycountry of origin, 2012 

(€/lt) .......................................................................................................................................................................................... 60 
Tab. 3: Number of products per country market, total and by type of packaging .................................................................................. 65 
Tab. 4: Brands positioning according to price (0.75lt bottles) by market and area of origin (% over total number of brands) ............. 68 
Tab. 5: Composition of wine assortment by country of origin in the online stores ............................................................................... 72 
Tab. 6: Still wines distribution by price segment and country of origin in online stores ....................................................................... 73 
Tab. 7: Geografical indication and mention of variety (% over total still wines assortment) in online stores ....................................... 74 
Tab. 8: Synthesis of results of analysis of the overall competitiveness of EU still wines relative to competitors ................................. 75 
Tab. 9: IBWTI for bottled wine in volume (2012)................................................................................................................................. 80 
Tab. 10: IBWTI for bulk wine in volume (2012) .................................................................................................................................. 81 
Tab. 11: Number of wine brands in the case study country markets by country of origin, 2013 (% over total brands) ........................ 85 
Tab. 12: Market shares of bottled still wines in volume in the case study markets (C4), by wine company and country, 2013 (%) ..... 86 
Tab. 13: Market shares of the major global wine companies in the case study countries (bottled wine volume; %), 2013 ................... 87 
Tab. 14: Number of brands by company: total and by wine origin, 2014 .............................................................................................. 88 
Tab. 15: Number of wine brands by country of origin marketed by the major global wine companies in the case study markets - 

2013 .......................................................................................................................................................................................... 90 
Tab. 16: Wine companies marketing EU and non-EU wines, 2013 ....................................................................................................... 91 
Tab. 17: European Commission financial support for the wine promotion measure (Financial execution 2009-2013; Financial 

table 2014-2018, million Euro) ................................................................................................................................................. 91 
Tab. 18: Financing of promotional initiatives by national or regional organisations in NWCs ............................................................. 92 
Tab. 19: Strategic plan 2020 of Chile: Projected investment in Marketing and promotion - wineries .................................................. 92 
Tab. 20: Fiscal policy and taxation in the most important country markets for EU wine exports ......................................................... 93 
Tab. 21: Formation of wine market price (€/bottle) ............................................................................................................................... 94 
Tab. 22: Price formation for wines of different price at origin and final price/price at origin ratio (£) ................................................. 94 
Tab. 23: Free Trade Agreements with reduced or zero import duties .................................................................................................... 95 
Tab. 24: Policy measures developed by the EU and NWCs with potential effects on market access and competitiveness ................... 98 
Tab. 25: Structural analysis matrix ...................................................................................................................................................... 105 
Tab. 26: Overview of the factors of competitiveness, classified according to their importance (total, by market segment and case 

study country) ......................................................................................................................................................................... 106 

Tab. 27: Total number of factors of competitiveness, both “extremely important” and “important”, by segment, by country and 

overall ..................................................................................................................................................................................... 108 
Tab. 28: Response of EU packaged wines to factors of competitiveness, compared with NWC wines .............................................. 108 
Tab. 29: Response to factors of competitiveness of EU packaged wines vs. domestic wines ............................................................. 110 
Tab. 30: General Matrix of direct relationships between factors ......................................................................................................... 112 
Tab. 31: United Kingdom – General matrix of direct relationships among factors in the Top range segment .................................... 114 
Tab. 32: United Kingdom (Top range) – Hierarchy of factors of competitiveness, by influence and indirect dependence ................. 117 
Tab. 33: Results of MicMac analysis by country and market segment (°) ........................................................................................... 118 
Tab. 34: Size of general sub-matrices by segment ............................................................................................................................... 119 
Tab. 35: Overview of factors of competitiveness for bulk wines ranked by importance, by case study country and total .................. 121 
Tab. 36: Response of EU bulk wines to factors of competitiveness compared with wines of competitors.......................................... 122 
Tab. 37: Forecast evolution of adult population and growth rates in case study countries, 2013-2018 (Million, %) .......................... 126 
Tab. 38: Consumption of bottled still wine and annual average growth rates (2000-2013 and 2013-2018 forecasts), total and by 

origin  – Annual average growth rates of market shares by origin (2013-2018 forecasts) ...................................................... 128 
Tab. 39: Expected future developments in the case study consumer markets...................................................................................... 130 
Tab. 40: Opinions about future evolution of the importance of factors of competitiveness for packaged wines (from the current 

situation to 2025) .................................................................................................................................................................... 134 

Tab. 41: Combination between factors that will increase in importance and factors to which EU wines respond better compared to 

NWC wines ............................................................................................................................................................................. 136 

Tab. 42: Combination between factors that will increase in importance and factors to which EU wines respond better compared to 

domestic wines ........................................................................................................................................................................ 137 

Tab. 43: Opinions about future evolution of the importance of factors of competitiveness for bulk wine (from the current situation 

to 2025) ................................................................................................................................................................................... 138 
Tab. 44: Percentage share of first 10 export markets in 2000 and 2012 (in volume) ........................................................................... 139 

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List of figures 

Fig. 1: Evolution of wine sales* and market shares of EU and competing wines in an expanding market ............................................ 22 
Fig. 2: Evolution of wine sales (volume or value) and market shares of EU and competing wines in a declining market .................... 22 
Fig. 3: Export market shares of main wine exporting countries in value and volume, 2012 (% over world total export) ..................... 39 
Fig. 4: Import market shares of EU still wines in value and volume in the most important EU export markets, 2012 (%) ................... 40 
Fig. 5: World: Total still wine export value, volumes and market shares, 2000-2012 (World 2000= 100) ........................................... 42 
Fig. 6: World: Bottled still wine export value, volumes and export market shares, 2000-2012 (World 2000= 100) ............................. 43 
Fig. 7: Bottled still wine export market shares of main competitors, 2000-2012 .................................................................................. 44 
Fig. 8: World: Bulk still wine export value, volumes and export market shares, 2000-2012 (World 2000= 100) ................................. 45 
Fig. 9: Bulk still wine export market shares of main competitors, 2000-2012 ...................................................................................... 46 
Fig. 10: Map of competitiveness of EU versus non-EU exported still wines in the world market ........................................................ 46 
Fig. 11: Evolution of EU still wine exports towards the rest of the world : PDO and non-PDO wines (PGI, WGI, Varietal wines), 

2000-2013 ................................................................................................................................................................................. 47 
Fig. 12: Cumulative exports of still wine in bottles and bulk, from EU28 (intra + extra EU) and NWC (hl), 2000-2012 ..................... 48 
Fig. 13: Bottled wine export /Bulk wine export ..................................................................................................................................... 48 
Fig. 14: Top 10 third-countries importers of EU bottled still wine:  import values, volumes and market shares, 2000-2012 ............... 50 
Fig. 15: Bottled still wine imports from main competitors, 2000-2012 ................................................................................................. 51 
Fig. 16: Top 10 third-countries importers of EU still wine in bulk: import values, volumes and market shares, 2000-2012 ................ 52 
Fig. 17: Bulk still wine imports from main competitors, 2000-2012 ..................................................................................................... 53 
Fig. 18: Maps of competitiveness of EU versus non-EU bottled still wines in the top 10 third-country markets and in the 3 

Member State markets............................................................................................................................................................... 54 

Fig. 19: Maps of competitiveness of EU versus non-EU bulk still wines in the top 10 third-country markets and in the 3 Member 

State markets ............................................................................................................................................................................. 54 
Fig. 20: Evolution of bulk wine and grape must imports (hl) ................................................................................................................ 55 
Fig. 21: Evolution of the FOB unit value of EU and NWC wines in bottles and bulk (USD/lt and Euro/lt), 2000-2012 ...................... 56 
Fig. 22: EU/NWC FOB unit values ....................................................................................................................................................... 56 
Fig. 23: Evolution of FOB Unit Values of still wines exported by EU Members States and main EU competitors (EUR/lt) ............... 57 
Fig. 24: Average CIF price of still wine in bottles imported in the most important markets for the EU, 2012 (EUR/lt) ....................... 58 
Fig. 25: Average CIF price of still wine in bulk imported in the most important markets for the EU, 2012 (EUR/lt) .......................... 60 
Fig. 26: Packaged still wines consumption trends in the case study markets, 2000=100 ...................................................................... 61 
Fig. 27: EU wine market shares, 2000 and 2013 (% on total still wine consumption) .......................................................................... 62 
Fig. 28: All Case Study countries: still wine consumption by origin and evolution of market shares, 2000-2013 ................................ 63 
Fig. 29: Consumption of still wines from main EU competitors in the group of case study country markets, 2000-2013 (hl) ............. 64 
Fig. 30: Map of competitiveness of EU versus non-EU still wines with respect to consumption in the case study markets ................. 64 
Fig. 31: Prices of selected brands in the case study markets (EUR/lt) ................................................................................................... 66 
Fig. 32: Percentage distribution of wines in 0.75 lt bottles by price range in the case study markets .................................................... 67 
Fig. 33: Percentage distribution of wines packaged in large size bottles, brick and Bag-in-box by price range in the case study 

markets ...................................................................................................................................................................................... 67 

Fig. 34: Price positioning of brands (0.75lt bottles) by market and country of origin (% over total number of brands for each 

country of origin) ...................................................................................................................................................................... 69 
Fig. 35: Percentage of EU and non-EU still wines in the product assortment of online retailers .......................................................... 72 
Fig. 36: Porter’s Diamond: Variables (and their interactions) that restrict / facilitate / orientate domestic demand and wine origin 

(EU/non EU) ............................................................................................................................................................................. 76 
Fig. 37: Evolution of vineyard areas and total wine production, 2000-2012/13 (2000 = 100) .............................................................. 77 
Fig. 38: Average annual rate of change of planted areas and wine production in the EU and in competing countries (2006-

2012/13) .................................................................................................................................................................................... 78 
Fig. 39: Index of export propensity of the EU and its main competitors (average 2001-02 and 2011-12) ............................................ 79 
Fig. 40: Most important country markets for EU wines in bottles and bulk:  Population size in 2000 and growth rate 2000-2011 

(million, %) ............................................................................................................................................................................... 82 

Fig. 41: Most important country markets for EU wines in bottles and bulk:  GDP per capita (in PPP)  in 2000 and GDP average 

annual growth rate 2000-2011 (USD, %) .................................................................................................................................. 83 
Fig. 42: China – Population and GDP by province ................................................................................................................................ 84 
Fig. 43: C4 of wine companies and number of brands in the examined country markets ...................................................................... 87 

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Fig. 44: Exchange rates of the currencies of competitors and of consumer markets with the Euro (Euros per 1 unit of foreign 

currency) (Index: 2000=100) .................................................................................................................................................. 100 
Fig. 45: Porter’s Diamond: A synthesis of the results ......................................................................................................................... 101 
Fig. 46: Influence-dependence space map ........................................................................................................................................... 105 
Fig. 47: UK (Top range) – Direct and indirect influence-dependence maps........................................................................................ 115 
Fig. 48: UK (Top range) – Displacement map and graphs representing factor hierarchy changes, from direct to indirect, for 

influence (A) and dependence (B) ........................................................................................................................................... 116 
Fig. 49: UK (Top range) – Indirect influence/dependence graph ........................................................................................................ 116 
Fig. 50: General indirect influence/dependence graphs in the Entry Level, Medium Range and Top Range segments ...................... 119 
Fig. 51: First six influential factors and first six dependent factors by segment (in decreasing order of importance) ......................... 120 
Fig. 52: EU wine production for vinification, human consumption and their ratio ( 1,000 hl, %) ....................................................... 125 
Fig. 53:  Consumption evolution: 2000-2013 time series and forecasts for 2013-2018 (000s 9-litre cases) ........................................ 127 
Fig. 54: Evolution of wine consumption in traditional markets 2000-2011 (million hl) ...................................................................... 127 
Fig. 55:  Representation of types of wine consumed according to consumer targets and consumption occasions .............................. 129 
Fig. 56:  Growth-Market Share Matrix for still wine – Case study markets* ...................................................................................... 133 
Fig. 57: Evolution of wine consumption in non-tradional markets, 2005-2011 (million hl)................................................................ 140 

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Abbreviations 

AAGR 

Average Annual Growth Rate 

AOC 

AOP 

ARS 

AUD 

AVA 

BCG 

BIB 

CAP 

CIF 

Appellation d'Origine Contrôlée 

Appellation d'Origine Protégée 

Argentine Peso 

Australian Dollar 

American Viticulture Area 

Boston Consulting Group 

Bag-In-Box 

Common Agricultural Policy 

Cost, Insurance and Freight 

CMO  

Common Market Organisation 

DOC/DOCG  Denominazione d’Origine Controllata/ Denominazione d’Origine Controllata e Garantita 

EAFRD 

EAGF 

EC 

EU  

FAO 

FOB 

FTA 

GDP 

GI 

European Agricultural Fund for Rural Development 

European Agricultural Guarantee Fund 

European Commission 

European Union 

Food and Agriculture Organisation of the United Nations 

Free on Board 

Free Trade Agreement 

Gross Domestic Product 

Geographical Indication 

IBWTI 

Index of Bilateral Wine Trade Intensity 

ICE 

ICEX 

IMF 

IWSR 

NWC 

OECD 

OIV 

PDO 

PGI 

PPP 

RDP 

TTB 

USD 

USDA 

VAT 

Istituto nazionale per il Commercio Estero (Italy) 

Instituto Español de Comercio Exterior (Spain) 

International Monetary Fund 

International Wine and Spirit Research 

New World Countries  

Organisation for Economic Co-operation and Development 

Organisation Internationale de la Vigne et du Vin 

Protected Designation of Origin 

Protected Geographical Indication 

Purchasing Power Parities 

Rural Development Programme 

Alcohol and Tobacco Tax and Trade Bureau (USA) 

United States Dollar 

United States Department of Agriculture (USA) 

Value Added Tax 

v.q.p.r.d 

Vins de Quality Produits dans des Régions Determinées 

WET 

WGI 

WTO 

Wine Equalisation Tax 

(wines) Without Geographical Indication 

World Trade Organization 

WWTG 

World Wine Trade Group 

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1 

INTRODUCTION 

This report presents the results of the Study on the competitiveness of European wines. 

The aim of the study is to build on the current position of European wines in the key world markets to derive 
conclusions on how to further advance the policy objective of improving their competitiveness. The study 
analyses the development of EU wines competitiveness and identifies the key factors of competitiveness in 
the most important consumer markets where EU wines enter in direct competition with third country wines.  

The study focuses on still wines and distinguishes between two business areas: bottled wine and bulk wine. 
The analysis also distinguishes wines by price/quality segments and wines with Geographical Indication and 
without, including varietal wines. 

The study examines in detail seven case study markets: China (including Hong Kong), Japan, Russia, USA, 
Denmark, Germany and the United Kingdom. 

The main EU competitors considered in the study are New World Countries (NWC): Argentina, Australia, 
Chile, New Zealand, South Africa and USA. 

The  study  period  is  up  to  the  horizon  2025.  In  order  to  assess  past  and  current  development  of  the 
competitiveness of European wines, data from 2000 onwards are analysed. 

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2  OVERALL APPROACH TO THE STUDY 

This  chapter  presents  the  overall  approach  to  the  study  based  on  the  work  carried  out,  comprising  the 
development  of  the  theoretical  framework,  the  definition  of  the  empirical  approach  to  the  study  (i.e. 
methodologies and analytical tools), the data collection and validation. 

The study develops around three Themes: 

  Theme 1 – Development of the competitiveness of EU wines (past and prospective) 

  Theme 2 – Identification of the key factors of competitiveness (both EU and non-EU wines) 

  Theme 3 – How to improve the competitiveness of EU wines. 

In consideration of the fact that “The general aim of this study is to provide the background knowledge on 
the key factors and mechanisms behind the development of the competitiveness  of European wines, and to 
assess how to further improve it both inside the EU market and in main third country markets vis-à-vis the 
competition from wine-producing third countries”, the development of the empirical approach to the study 
has required, first of all, the definition of the theoretical framework, the scope of the study and the field of 
analysis:  

  A definition of what is meant by wine competitiveness that takes into account the overall objectives of 
the study, the complexity of wine markets at the international level, the implications for the collection of 
relevant data and implications for analysis in the present study; 

  The identification of the main competitors of EU wines on the most important world markets; 

  The  definition  of  the  different  types  of  wine  products  on  which  the  study  must  focus  (i.e.  product 

coverage); 

  The identification of the most important world markets where EU wines compete with wines of other 
origin (i.e. main competitors) on which to focus the analysis. In this respect, the overall analysis based 
on  official  trade  statistics  covers  the  most  important  markets  for  EU  wine  exports  (bottled  and  bulk 
wine), whereas more in-depth analysis focuses on selected Case Study countries (see following §2.4). 

The following sections of the present chapter illustrate these four key elements of the study. 

2.1  DEFINITION OF COMPETITIVENESS AND IMPLICATIONS FOR ANALYSIS 

Competitiveness is defined as the ability of a system to sustainably produce and sell goods and services on a 
given market, in such a way that buyers prefer these goods to those offered by competitors. 

The  goal  of  competitiveness  in  a  specific  market  is  the  consolidation  or  increase  of  market  share  while 
maintaining an adequate return. In expanding markets the goal is achieved with sales growing at a higher rate 
than that of the total market and of competitors, and in declining markets with sales decreasing at a lower 
rate than that of the total market and of competitors. In this sense, competitiveness reflects the ability of the 
system  to  respond  to  a  combination  of  market  conditions  originating  from  intermediate  market  actors 
(distribution) and final consumer markets.  

Furthermore, the analysis of a "specific market" needs to distinguish between: 

a.  the overall country-market (i.e. the wine market in China, Russia, etc.) and 
b.  within  country-markets,  as  different  segments  exist.  Each  market  segment  generates  an  independent 
competitive system and a specific structure of success factors that differ from segment to segment. The 
intensity with which firms respond to these success factors helps to define the degree of competitiveness 
(and therefore the level of market share). 

The distinction of different market levels means that the concept of competitiveness (and its improvement) 
needs to be analysed according to two dimensions: 

1.  The competitiveness of wines originating from different country-systems competing on a certain market 

(e.g. competitiveness of EU wines versus Australian wines on the UK market, etc.); 

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2.  The  competitiveness  of  EU  wine  businesses  (production  and  distribution)  in  comparison  with  the 

competitiveness of non-EU wine businesses, both operating in a certain market or market segment. 

In general, the first dimension cannot be separated from the second, as the result of the implementation of 
strategies and operations of companies seeking to increase their competitiveness on a given market / segment 
(in  essence,  to  increase  their  market  share)  helps  to  determine  the  overall  competitiveness  of  country-
systems.  In  conclusion,  the  growth  of  market  share  is  the  final  expression  of  the  objective  of  improving 
competitiveness. 

It  must  be  taken into account  that  the  globalisation  of  the  wine  market,  together  with  the  evolution  of the 
industry structure towards increasing concentration, potentially makes the analysis of the competitiveness of 
EU  wines  relative  to  wines  of  other  origin  more  complex.  In  fact,  the  extension  of  product  portfolios  (or 
brand  portfolios)  by  global  companies  (mainly  Australian  and  American,  but  also  European)  and  the 
development  of  commercial  networks  that  distribute  both  New  World  and  EU  wines  are  more  and  more 
commonly  used  strategies.  For  these  companies,  the  goal  is  acquiring  and  maintaining  presence  (market 
share)  in  a  specific  market  segment  through  supply  of  a  wide  range  of  different  products  and  brands  -  all 
managed by the same company. Thus, the product origin does not matter as much as the product’s ability to 
enter into the strategic plan of the company (i.e. product/market positioning strategy). In this sense, the focus 
is on the competitiveness of EU versus New World wine businesses rather than on the competitiveness of EU 
wines relative to New World wines. 

2.2 

IDENTIFICATION OF MAIN COMPETITORS OF EU WINES AT THE INTERNATIONAL 
LEVEL 

Following the definition of competitiveness, the next step has consisted in identifying the wine producing / 
exporting  countries  whose  products  enter  into  direct  competition  with  EU  wines  on  the  most  important 
markets  worldwide.  The  main  competitors  of  the  EU  on  international  wine  markets  can  be  thought  of  as 
belonging to the following main groups: 

  New World Countries (NWC) This group counts the 8 most important wine producers worldwide (i.e. 
besides EU member states): Australia, South Africa, New Zealand, Chile, Argentina, the United States, 
Canada and Uruguay1 (NWC8). NWC8 are the most important wine exporting countries after the main 
EU wine producers (i.e. France, Italy and Spain) and their wines represent the main competitors of EU 
wines on the most important world markets. 

  Western  Balkans  wine  producers  comprising  Serbia,  Kosovo2,  Bosnia-Herzegovina,  Montenegro,  the 
former Yugoslav Republic of Macedonia (fYRoM) and Albania. The inclusion of these countries in the 
analysis  finds  its  motivation  in  their  prospects  of  eventually  becoming  EU  member  states  and  the 
strengthening  of  regional  cooperation3.    In  particular,  fYRoM  is  the  leading  producer/exporter  of  the 
region (albeit predominantly exporting wine to other Western Balkan countries, in particular, Serbia and 
Bosnia-Herzegovina). A steady flow of bulk wine from fYRoM is directed towards Germany, however 
such exports do not represent altogether important volumes nor value. 

  Other wine exporting countries that are relevant for certain analysed markets. For example, the inclusion 
of Caucasus wine producers/exporters in the analysis, in particular Georgia (the leading wine producer / 
exporter of the region), is only relevant to Russia and finds its motivation in the embargo on Georgian 
wine imports imposed by Russia in 2006 as a result of conflict between the two countries. The embargo 
led  Russia  to  import  from  other  countries,  including  EU  Member  States.  At  the  same  time,  Georgia 
diverted its exports to other consuming countries since 2006. The lifting of the embargo on Georgia’s 
products in the summer of 2013 could change again the composition of Russian wine imports. However, 
it is argued in the literature that Georgia’s wine exports may not be able to reach pre-ban levels as the 
Russian  market  has  become  more  competitive  since  2006,  with  stronger  presence  of  local,  Western 

1   However,  Uruguay  and  Canada’s  exports  are  rather  limited  and/or  highly  specialized  in  specific  products  (e.g.  Ice  wine  for 

Canada). 

2 This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo 

Declaration of Independence. 

3   In this respect, the Central European Free Trade Agreement (CEFTA), in force since November 2007, aims to attract investments, 
foster intra-regional trade and integrate the region into global trading. In this way it supplements the trade integration initiated by 
the SAAs and autonomous trade measures. 

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European and South American wine brands. Similarly, wine exports from former USSR countries such 
as the Ukraine and the Republic of Moldova are only relevant for the Russian wine market. 

  In the country markets where this is relevant, the analysis also considers domestically produced wines 

among the main competitors. 

2.3  PRODUCT COVERAGE 

The observation of statistical data has shown that the competition arena practically only concerns still wines, 
as  for  other  products  (sparkling  wines  and  liquor  wines)  the  EU  operates  in  a  quasi-monopolistic  regime 
(over 90% market share) both on domestic markets and on export markets. With regard to these two types of 
wine, market competition only involves EU countries.  

As  the  aim  of  the  study  is  to  assess  the  competitiveness  of  EU  wine  products  compared  to  products  from 
third countries, the study focuses on still wines intended for human consumption.  

Furthermore, the analysis takes into account different product types: 

  Quality: wines with geographical indication (PDO and PGI European wines and similar denominations 
of  origin  that  qualify  wines  from  third  countries),  wines  Without  Geographical  Indication  (WGI) 
including varietal wines; 

  Type of packaging at retail: bottled wines and wines in larger containers such as bag-in-box, brick, etc.; 

  Price: price ranges based on IWSR market data (§2.5.3) and on a survey of online wine retailers (Web 
checks - see §2.5.4) and price/quality segments (Entry level, Medium and Top range) used to collect the 
informed opinions of key market players interviewed in the case study countries (see §2.5.1).  

The issue of prices / price-based segments’ comparability across countries was carefully considered in 
the analysis, in order to avoid misinterpretation. In fact, wine purchase prices in different countries (and 
therefore the price range within which a particular wine falls) are influenced to varying extents by the 
following factors: 

- Differences in logistics costs (i.e., transportation, insurance, etc.);  
- The  different  magnitude  and  methods  of  calculating  taxes:  import  duties,  VAT,  magnitude  and 
system used for excise duties (whether excise duties are applied and if they are calculated ad valorem 
or per litre);  

- The different magnitude of profit margins to importers, distributors and retailers. 

In reason of such differences, the same wine could fall into the Entry level in Germany (where no excise 
duty  is  applied)  and  into  the  Premium  segments  in  the  United  Kingdom  (where  excise  duty  is  about 
2£/0.75l).  

Nevertheless,  preliminary  analysis  showed  that the  comparability  problem  arises  in  particular  for  low 
priced  wines  (ex-work  price),  while  differences  between  country  markets  decrease  for  increasing  ex-
work prices.  

In the course of the development of the methodological approach and during data collection it was confirmed 
that it is of paramount importance to clearly distinguish between the two business areas of bottled wine and 
bulk wine, as described in the following section. 

2.3.1 

Import markets for bottled versus bulk wine 

Two distinct international trade markets for wine exist in which different trade partners and market players 
are involved and the key factors of competition may significantly differ: 

  Wine traded already bottled and labelled; 
  Wine traded in bulk.  

In  most  wine  importing  countries  both  markets  for  imported  bottled  and  bulk  wine  exist.  Bottled  wine  is 
clearly identifiable in terms of its origin, winemaker, brand, etc. whereas bulk wine is a commodity that can 
be used in different ways and marketed differently, depending on the import market.  

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Import  of  bulk  wine  has  different  market  implications  depending  on  its  destination  and  use.  For  example, 
wine can be imported in bulk for cost-saving purposes and then labelled by the original producer or by food 
retail  chains  (retailer  labels).  In  other  cases  though,  bulk  wine  imports  are  used  by  local  wine  makers  for 
blending  with  domestic  wines.  Since  the  resulting  products  are  labelled  and  marketed  as  domestic  wines, 
such imported wines lose their original name and character.  In some country markets, however, both cases 
can be found. 

For these reasons, it is important for the analysis to distinguish between wines traded in bottles and in bulk.  

2.4  SELECTION OF CASE STUDY COUNTRIES 

The execution of the present study required the choice of key consumer markets (EU and non-EU) on which 
to focus analysis. Besides the five markets which we were explicitely invited to examine (i.e. USA, Russia 
and  China  -  including  Hong  Kong,  outside  the  EU;  UK  and  Germany,  within  the  EU),  we  have  analysed 
Denmark and Japan as additional case studies.  

Besides the sheer size of each country market in terms of  total wine consumption, the choice of case study 
markets was based on two specific criteria to assess their relevance as key consumer markets: 

  Intensity  of  competition,  measured  in  terms  of  changes  in  market  share  of  EU  wines  on  the  most 

important import markets over the last decade.  

  Demand  trends,  measured  in  terms  of  percentage  change  in  total  wine  imports  over  time  to  assess 
whether consumer demand is on the increase, stable or declining (i.e. to identify markets with growth 
potential). 

These two criteria were then complemented by other available information, such as the results of the recent 
“Evaluation of Common Agricultural Policy measures applied to the wine sector” (2012)4. 

The  choice  of  Japan  and  Denmark  was  also  justified  by  further  considerations  developed  during  data 
collection: 

  The Japanese market presents a somewhat dual structure, as it emerges from review of the literature and 
interviews with key market players. On the one hand, this market is sensitive to quality wines for which 
image and prestige are very important attributes. Quality wines at the top of the price range are mainly 
consumed at restaurants and purchased as gifts. The “gift culture” appears to be quite important in this 
country, as the Japanese exchange presents in many occasions. According to interviews, premium and 
luxury  wines  are  often  used  as  presents  and  for  this  scope  French  wines  are  perceived  as  the  most 
prestigious, followed by other Old World wines. On the other hand, as wine consumption has become 
more widespread across geographical areas and social classes and increased at home in accompaniment 
to meals, the market for Entry level and Medium range wines has developed. In  these markets (lower 
price/quality) NWC wines are very competitive. 

  Although  not  a  wine  producer,  Denmark  has  developed  a  dynamic  wine  export  business,  taking  up  a 
role as an important wine trading centre or simply a transit platform for imported wine, both in bulk and 
bottled. The EU holds a dominant share of the Danish market for imported bottled wine, whereas NWC 
wines  hold  a  slightly  larger  share  of  the  bulk  import  market.  Bulk  imports  comprise  wine  actually 
marketed in bulk and directed to packaging facilities (mostly to be packaged into Bag-in-Box - BIB) and 
wine already packaged in Bag-in-Box (therefore, in containers >2lt). The wine bottling industry is well 
developed in Denmark (e.g. Globus Wine is one of the largest BIB filling facilities in Northern Europe). 
The bottling industry serves both foreign producers selling wine in BIB to supermarket chains, and the 
same supermarket chains that import bulk wine directly. The near totality of re-exports of bottled wine 
and  BIB  is  directed  towards  Germany  and  Scandinavia  (within  the  EU,  Sweden  and  Finland;  and 
Norway). 

A consideration was initially made on whether, depending on market size and structure (i.e. demand more or 
less  concentrated  and  more  or  less  homogeneous  in  different  geographical  areas),  it  would  be  more 

4   See Chapter 7.3 of the Final Report of the “Evaluation of CAP measures applied of the wine sector” (COGEA - October 2012). 

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appropriate to concentrate the analysis on representative regional markets in the largest case study countries 
(USA, China and Russia), as undifferentiated analysis over entire countries may be less significant. 

Initial analysis of (a) characteristics of different markets at sub-national level and related wine consumption 
trends, (b) strategic location of most important import/trading companies and main entry points for imported 
wine and (c) identification/first contact with key market agents in important regional markets, whom we later 
interviewed  (wine  importers;  distributors;  Off-trade;  On-trade),  led  to  identify  the  geographical  areas  of 
interest: 

  USA - East-coast states: New York, New Jersey, Massachussets, Maryland, Connecticut, Pennsylvania 

and Florida; Other areas: states of Illinois, Ohio, Michigan and Texas.  
US demand for imported wine is mainly concentrated in the East-coast states and less in the Central and 
Mid-west  states.  Overall,  East-coast  states  from  Maine  down  to  Florida  account  for  over  50%  of  the 
total. On the West-coast, California is the largest wine market in absolute terms, with however a smaller 
share  of  imported  wine,  as  consumer  preference  is  rather  orientated  towards  California  wines.  In  all 
main US markets, wine consumption is significantly concentrated in the largest metropolitan areas. In 
this respect, besides East and West-coasts, wine consumption has reached appreciable levels and could 
potentially further develop in Illinois (Chicago) and, among the Sunbelt states, in Texas; 

  China  -  Eastern  regions  of  Jiangsu,  Shanghai,  Zhejiang  and  Fujian;  South-eastern  province  of 

Guangdong; North-eastern provinces of Liaoning, Hebei and Shandong; Beijing and Hong Kong. 
China's  demand  for  imported  wine  is  concentrated  in  regions  where  per  capita  income  is  high  and 
distribution  networks  are  better  developed.  In  particular,  the  largest  wine  markets  are  found  in  the 
Eastern  regions  concentrating  about  50%  of  total  wine  sales,  in  the  South-eastern  province  of 
Guangdong (bordering Hong Kong) and in the North-eastern provinces.  

  Russia  -  districts  of  Moscow  and  St.  Petersburg,  exploring  also  a  couple  of  smaller  districts  (Rostov, 

Nizhny Novgorod, or Yekaterinburg).  
Demand  for  imported  wine  is  very  much  concentrated  in  the  districts  of  Moscow  and  St.  Petersburg, 
accounting together for approximately 85% of total national wine consumption. Overall growth of wine 
consumption together with the development of distribution channels should foster a more homogeneous 
geographical distribution of wines, reaching also other smaller urban centres. 

Interviews  with  key  economic  actors  operating  in  the  wine  sector  were  used  to  collect  information  about 
possible regional market differences (current and prospective) with respect to preferences for different types 
of wines of different origin.  

However,  no  significant  regional  market  differences  emerged  for  the  US  market.  It  appears  from  the 
interviews that, in terms of wine origin, the range of wines distributed is  very similar across the examined 
States (i.e. European wines, NWC wines and domestic wines reach pretty much all regional markets), then 
there  are  broad  regional  differences  in  preferences  for  EU  wines  versus  domestic  wines  (mainly  from 
California) versus  wines of other origin. These broad differences have been reported in the US case study 
monograph. What probably changes  more significantly is the distribution at State level of different brands 
besides those controlled by the “big players” (e.g. Gallo, The Wine Group, Constellation, etc.).  

Similarly, interviews in China and Russia did not identify any specific regional market differences. The main 
differences concern urban versus rural areas and the largest metropolitan areas versus smaller-size cities and 
appear to be overall related to the degree of development of the wine market in these countries and to the 
structure of distribution channels/networks for imported wines. 

2.5  DATA SOURCES AND LIMITS 

This part of the report is dedicated to illustrate the data sources used to collect all quantitative and qualitative 
information that constitutes the basis for analysis of the three proposed study Themes. Data were collected 
from a variety of sources:  

  primary data collected through in-depth interviews with key economic actors of wine supply chains in 

the seven case study countries; 

  official statistics (international, EU, national). With respect to trade statistics: Comtrade and Comext;  

  commercial databases specific for the wine market in the selected case study countries;  

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  on-line wine data (wine types, brands, prices, etc.) collected through Web checks in the seven case study 

countries. 

  published market reports from different sources, commercial and non-commercial: national/international 

wine councils and other bodies, national trade offices, market intelligence, etc.; 

  scientific literature (studies, reports) and policy documents (international, EU, national and regional, if 

available); 

The following sections describe in further detail these sources and the type of data collected.  

2.5.1 

In-depth interviews with key economic actors 

Primary information from key economic actors operating in the wine market of the case study countries was 
collected through in-depth interviews. Interviews have been carried out using guidelines designed to record:  

  Spontaneous opinions of key economic agents on a range of topics all related to past, current and future 

competitiveness of wine products and their suppliers on the examined import markets; 

  “Quantitative” judgments (e.g. scores, ranking) on the basis of a concise questionnaire concerning 1) the 
factors of competitiveness characterising EU and non-EU wines and 2) the factors of competitiveness 
characterising wine suppliers, and their order of importance in specific markets/segments.  

Furthermore,  interviewees  were  asked  to  express  their  opinions  and  judgments  distinguishing  between 
different market segments. In order to simplify as much as possible the market segmentation, we considered 
the following broad three segments:  

  Entry level (bottom end of the market, low price/quality wines); 
  Medium range (medium price/quality level); 
  Top range (top end of the market, luxury wines, high price/quality level).  

These  broad  definitions  were  given  to  the  interviewees,  who  were  then  asked  to  confirm  whether  such  a 
segmentation scheme applies to the market they operate in. 

Separate  guidelines  were  designed  to  collect  information  about  wine imported  already  packaged  and  wine 
imported in bulk.  

The  information,  views  and  opinions  collected  through  the  in-depth  interviews  with  key  economic  actors 
have been reported in case study monographs and represent key information used for analysis. 

2.5.1.1  Key economic actors  

Given the focus of the study (i.e. the ability of EU wines to reach consumers in different segments in the key 
markets  in  comparison  to  wines  from  third  countries,  and  thereby  generate  value  added  for  the  EU  wine 
sector), the analysis is centred on the final stages of the supply chain (trade and distribution, both wholesale 
and retail). This seems appropriate given that in the wine sector the "global value chain" is more and more a 
"marketing driven chain". 

Therefore, the data collection focused on the economic actors who have (direct or indirect) relationships with 
the  end  market,  whose  interrelationships (of  interests  and  behaviours)  drive  strategic  decisions  concerning 
the products to offer to the consumer, namely EU wines versus NWC wines and wines of other origin. 

In each case study country market the interviewed economic agents carry out one or more of the following 
activities: 

  Wine production  
  Import of packaged wines  
  Import of bulk wine 
  Bottling/labelling of imported bulk wine   
  Wine trade  
  Wine wholesale distribution  
  Wine brokerage 

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  Retail sale (food retail chains, specialist wine stores/chains)  
  On-trade sale (restaurants, wine bars, etc.)  
  Online sale 

A total of 72 interviews were carried out across the  seven case study countries (China/Hong Kong, Japan, 
Russia, USA, Denmark, Germany and the United Kingdom).  

2.5.1.2  Limits of in-depth interviews 

Information  gathered  through  interviews  suffers  from  the  limitation  of  representing  the  opinions  of 
interviewed individuals.  Again in relation to interviews, we encountered difficulties in finding information 
about uses and destination of wine imported in bulk. None of the stakeholders (with the exception of Russia 
and,  partly,  Japan)  wanted  to  provide  information  about  this  part  of  the  industry.  It  is  clear  that  parties 
involved in import and use of bulk wine in some countries prefer not to make it official that part of the wine 
labelled  as  "Made  in  X",  is  actually  made  from  or  blended  with  imported  wine  of,  sometimes,  uncertain 
quality.  

The  somewhat  incomplete  information  about  the  market  for  imported  bulk  wine  represents  a  limit  for  the 
analysis. 

2.5.2  Official statistical sources 

Different  statistical  sources  were  used  to  collect  international  trade  data.  Trade  statistics  from  two  main 
official sources have been used: 

  COMEXT database (Eurostat) for data on extra- and intra-EU trade of wine products on the basis of the 
combined  8-digit  HS  for  code  2204  for  the  years  2000-2013.  In  essence,  COMEXT  data  are  used  to 
analyse wine imports and transfers of EU member States, and EU wine exports towards the main third 
country markets; 

  COMTRADE database (UN) for data on international wine trade statistics on the basis of the combined 
6-digit HS for code 2204 for the years 2000-2012. This database is used to analyse wine imports into 
third country markets by provenance. 

National, EU and international statistical sources (i.e. FAO, OIV) have been consulted for data concerning 
vineyard  areas  and  wine  production  in  the  EU  and  in  NWC,  and  wine  consumption  in  EU  and  extra-EU 
markets. 

2.5.2.1  LImits of statistical data from official statistics 

With  reference  to  wine  production,  the  available  statistical  data  do  not  allow  to  distinguish  the  domestic 
production of still wines from the total domestic production. Moreover, it is not possible to distinguish the 
part of domestic production made from home-grown grapes and that obtained from wine and/or grape must 
imported in bulk. Again concerning production data, different sources (national statistics, FAO, OIV, etc.) 
provide different data, questioning the reliability of wine production statistics overall. 

United Kingdom 
With respect to UK wine exports to Hong Kong, the ratio of export values to export volumes (Comext data) 
generates abnormal average unit values. The same occurs when using Comtrade data for wine imports from 
the  UK  into  Hong  Kong.  This  leads  to  rule  out  a  statistical  error  at  the  source,  but  it  is  not  possible  to 
establish with certainty the reasons for such occurrence. 

Japan 
Comtrade  data  of  wine  volumes  imported  into  Japan  for  2000  appear  to  be  incorrect  (for  all  wines  of 
different origin the average price is always $ 2.53/litre for bottled wine and $ 1.03/litre for bulk). Therefore, 
we have estimated the volume of imports (according to country of origin) by dividing import values recorded 
in 2000 by the average unit value in 2001 (assuming, therefore, that the average CIF price has not changed 
between 2000 and 2001). 

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2.5.3  Market data sources 

In  addition,  statistical  analysis  is  applied  at  country  level  to  market  data  from  a  commercial  source  that 
regularly  produces  wine  industry,  trade  and  consumption  information.  The  source  identified  as  the  most 
relevant for the aim of the present study is the IWSR – International Wine and Spirit Research.  

The Domestic Database for still wines has been acquired from the IWSR for all seven case study countries 
and  Hong  Kong,  in  addition.  The  data  are  based  on  store-checks  and  annual  interviews  with  a  sample  of 
experts  among  importers,  distributors,  producers  and  retailers.  This  database  includes  the  following 
information: 

  Wine  consumption  data  (in  volume)  for  the  years  2000  to  2013  subdivided  in  “local  wines”  and 
“imported wines”. For imported wines, the country of origin is indicated. For all wines the information 
included covers Brand name, Brand line, Brand owner, Distributor (the latter however is not available 
for every single brand); 

  Wine  price  data  (in  local  currency  for  each  country)  for  the  years  1998  to  2013  again  subdivided  in 
“local wines” and “imported wines”. For imported wines, the country of origin is indicated. In addition 
to the information above (Brand name, Owner, etc.) the size of the bottle/package is provided. Price data 
are collected through store-checks, therefore they do not cover wines sold in the On-trade sector; 

  Still wine forecasts (volumes) 2013 to 2018. 

Market  data  have  been  used  for  analysis  of  the  competitiveness  of  EU  still  wines  within  Theme  1.  Wine 
forecast data were used in the analysis of Theme 3. 

2.5.3.1  Limits of market data 

IWSR data on wine consumption are sub-divided into local and imported wines, then imported wine data are 
further  sub-divided  according  to  country  of  origin.  However,  consumption  data  only  includes  packaged 
wines.  Therefore,  the  data  relative  to  consumption  of  domestic  wine  (i.e.  “local”)  actually  includes  wine 
and/or grape must imported in bulk for blending with wine made from domestic grapes.  

Furthermore, IWSR consumption data are limited to volumes, they do not include values. This represents a 
limit for the analysis (i.e. competitiveness of EU relative to non-EU wines) that can be carried out based on 
these data. 

2.5.4  Web-checks of online wine retailers 

The survey of the wine offer from the various websites of online wine retailers allows to estimate the current 
position of EU wines relative to the competing products in different price segments, in principle correlated to 
quality positioning. 

We completed 7 Web-checks, one for each case study country. The Web-checks have targeted large national 
or international food retail chains as well as specialist online wine retailers with wide international still wine 
selection and good geographical coverage of national markets.  

The following online wine retailers have been surveyed: 

  Edeka (Germany); 
  Tesco (United Kingdom); 
  Everwines (China); 
  Salling/Dansk Supermarked (Denmark); 
  Wine.com (USA); 
  Enoteca (Japan); 
  Wine Butik (Russia). 

A  range  of  information  has  been  collected  through  the  Web-checks,  including  all  detail  provided  by  the 
online retailer: 

  Type of wine (Red, Rosé, White); 
  Information about Geographical Indication (PDO, PGI), as provided by the retailer; 

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  Variety (variety indicated on the label);  
  Informationon on varietal/s, as provided by the online retailer; 
  Wine region / Area of production, as indicated by the online retailer; 
  Country of origin (EU and third countries); 
  Type of packaging (bottles, BIB, etc.); 
  Size of packaging; 
  Price per piece; 
  Brand / Label (name of the wine as indicated by the retailer); 
  Producer’s name. 

It should be noted that the survey includes the information that is explicitly presented by the online retailer 
for each product,  which  is,  therefore, considered to  be  important for the purpose  of  communication  to  the 
consumer.  

Price data have been transformed in order to make them homogeneous across countries. In particular:  

  Prices expressed in national currency per item (of different size) have been transformed into price per 

litre;  

  Prices per litre in national currencies have been converted into Euro using the official exchange rate at 

the time of the Web-check (April 2014). 

2.6  METHODOLOGICAL APPROACH AND TOOLS OF ANALYSIS 

The  aim  of  this  section  of  the  report  is  to  provide  the  overall  methodological  approach  and  the  main 
analytical tools applied in the different parts of the analysis developed to study Themes 1 and 2.  

Specific  methods  and  analytical  tools  applied  to  different  parts  of  the  analysis  are  then  detailed  at  the 
beginning of the corresponding sections where analysis and results for Theme 1 (Ch.5) and Theme 2 (Ch.6) 
are presented. This approach is aimed at making the reading and the understanding of the analysis/results less 
cumbersome and more straightforward for the reader. 

2.6.1  Methodological approach and tools of analysis for Theme 1 

The analytical approach chosen to assess the competitiveness of EU wines and its developments (Theme 1) 
entails two main levels of analysis (illustrated in the two following sections): 

  The first level of analysis aims to assess the global competitive position of EU still wines compared to 

non-EU still wines (i.e. main competitors) over time, regardless of the factors determining it; 

  The  second  level  of  analysis  aims  to  explore  the  environmental  factors  (and  their  interactions)  that 
contribute to influence the behaviour and, therefore, also the competitive position of market players and 
the competitiveness of their products on the market. 

2.6.1.1  Methodology for the assessment of the global competitive position of EU still wines 

At this first level, the analysis centres on the following aspects: 

1.  Assessment of the global competitiveness of EU wines with respect to international trade: 

  At world level, based on EU still wine exports in bottles and in bulk of the EU and the EU’s main 

competitors on the world market, including wine transfers within the EU; 

  For  the  top  ten  countries  main  importers  of  EU  still  wines  (respectively,  the  ten  most  important 
importers of EU still wine in bottles and the ten most important importers of EU still wine in bulk). 

This part of the analysis is based on trade statistics (Comtrade and Comext). 

2.  Assessment of price competitiveness of EU wines relative to competitors in international trade (CIF or 
FOB).  The  analysis  is  based  on  "implicit  prices"  calculated  as  ratios  between  value  and  volume  of 

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imported  (CIF)  or  exported  (FOB)  wines  (again  based  on  the  official  trade  statistics:  Comtrade  and 
Comext). 

3.  Assessment of the competitiveness of EU still wines compared to competitors in the context of domestic 
consumption, thus taking into account also "locally produced” wines (where applicable). The analysis 
was  conducted  considering  packaged  wines  destined  to  the  final  consumer  in  the  seven  case  study 
countries. This part of the analysis is based on IWSR market data. 

4.  Price/quality competitive positioning of EU wines compared to competitors in the consumer market of 

the seven case study countries. This part of the analysis is based on IWSR market data. 

5.  Assessment  of  the  competitiveness  of  EU  still  wines  in  the  online  retail  channel.  This  part  of  the 
analysis  is  based  on  the  data  collected  through  Web-checks  of  online  wine  retailers in  the  case  study 
markets and focuses on product assortment, price segmentation and other factors, such as Geographical 
Indication and mention of grape variety. 

The  following  sub-section  provides  the  rationale  for  the  methodology  chosen  to  assess  the  global 
competitiveness of EU wines with respect to international trade (point 1. above). 

2.6.1.1.1  Methodology for the assessment of global competitiveness of EU compared to non-EU 

wines  

The assessment of the global competitiveness of EU wines compared to non-EU wines on the world market 
as  a  whole  and  in  the  10  most  important  export  markets  distinguishes  between  still  wines  traded  already 
packaged (package <2lt) and wines traded in bulk (package >2lt). Analysis is based on:  

  Level  and  evolution  of  the  value and  volume  of  world  exports  and imports  by  the  10  most  important 

markets5 of EU wines compared to wines from non-EU countries;  

  Level and evolution of the market shares (in value and volume terms) of European wines compared to 

wines from non-EU countries.  

The  need  to  use  two  elements  for  the  analysis  (and  not  only  market  shares)  derives  from  the  fact  that 
variation  in  market  share  is  an  effective  and  sufficient  indicator  only  in  cases  when  demand  for  imported 
wines is stable over time. Indeed, in these cases the sale of one additional unit of product by a competitor 
must  be  equal  to  at  least  an  equivalent loss  of  sales by  the  competitors. The  main  objective  is  to increase 
market  share  (resulting  from  erosion  or  acquisition  of  market  share  from  competitors)  and  market 
competition becomes more aggressive. 

In country markets where demand for imported wines is growing, sales are driven by market growth and all 
players are winners. In such market conditions, competitors mainly aim at increasing their sales volumes and 
only secondarily at increasing market share (i.e. sales growth is greater than demand growth).  

Thus, in expanding markets the variation in market share may not be an effective and / or sufficient indicator 
to  establish  the  level  of  competitiveness  of  European  wines.  The  graphs  in  Fig.  1  provide  an  example  to 
illustrate this concept. 

5 In both cases, the trade flow is from EU and non-EU towards the world market in the first piece of analysis and towards the 10 most 

important wine import markets (respectively, for bottled and bulk wine) in the second. 

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Fig. 1: Evolution of wine sales* and market shares of EU and competing wines in an expanding market 

Evolution of wine imports 

Evolution of import market shares 

*In volume or in value 

In  a  growing  market,  the  entry  of  a  new  competitor  or  its  progressive  growth  can  lead  to  an  erosion  of 
European wines’ market share. However, as shown in Fig. 1, if European wine sales increase more than the 
sales of competing wines (at the end of the period Δ EU > Δ Others), European wines remain competitive in 
spite of the loss of part of their market share. In other words, the market growth is mainly attributable to the 
growth of European wine sales, even if their relative  market share is lowered.  In this case, the strategy of 
(European) wine businesses is to "follow" the market trend (i.e. sales growth) rather than pursuing a market 
share growth strategy. 

By contrast, in the case of country markets where demand for imported wines is decreasing (i.e. all players 
are losers), the main objective is to lose less sales compared to competitors (which means, if it occurs, an 
increase in market share). However, even if sales of one competitor (e.g. the EU) decrease more than sales of 
another  competitor,  the  market  share  of  the  former  could  still  grow.  Therefore,  in  the  case  of  declining 
markets, the competitiveness of European wines may deteriorate in spite of growth of their market share (see 
Fig. 2). 

Fig. 2: Evolution of wine sales (volume or value) and market shares of EU and competing wines in a declining market 

Evolution of wine imports 

Evolution of import market shares 

The steps  of  analysis  based  on  the above  considerations  are  illustrated  in  detail  in  §5.2.3, right  before the 
analysis of Theme 1 is applied and the results presented and discussed. 

2.6.1.2  Methodology to assess the factors influencing the competitiveness of EU and third-country  

wines: The Porter’s Diamond approach 

At this second level, the analysis aims to explore the context variables (and their interactions) that contribute 
to  influence  the  behaviour  and,  therefore,  the  competitive  position  of  market  players  in  the  various  target 
markets.  These  are  all  variables  that  restrict  or  prompt  or  guide  domestic  demand  and  choice  of  wine  by 
origin. According to the general theoretical model of competitiveness proposed by Michael Porter (Porter's 
Diamond – see also §5.5), here adapted to the specific object of the study, the influencing variables can be 
thought of as belonging to the following groups: 

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050100150200250TOTEUOthers∆ EU = 96. ∆Oth= 36∆EU > ∆ Others0102030405060708090100TOTEUOthers∆ EU = -5.5 ∆Oth= 10.90501001502002502000200120022003200420052006200720082009201020112012TOTEUOthersΔEU =  -90ΔOTH =  -300.010.020.030.040.050.060.070.080.090.0100.02000200120022003200420052006200720082009201020112012EUOthersΔEU =  8.2%ΔOTH =  -8.2% 
 
 
 
 
 
 
  Factor conditions in producer countries in the analysis include the evolution of vineyard areas and wine 
production  as  well  as  variables  related  to  country-systems  propensity  to  export  (through  the  Index  of 
Export  Propensity)  and  the  intensity  with  which  they  trade  internationally  (through  the  Index  of 
Bilateral Wine Trade Intensity); 

  Demand  conditions  in  consumer  countries  include  analysis  of  demographic  and  economic  conditions 
such as population size and growth rates in the case study country markets and per capita GDP level and 
growth rates; 

  Firm  strategies  (structure  and  rivalry)  includes  variables  pertaining  to  wine  firms’  conduct  within  the 
competitive systems they operate in and the influence of their conduct on market structure. The analysis 
is  based  on  2013  IWSR  market  data  and focuses  on the  levels  of concentration  and  product  portfolio 
strategies of wine businesses in the country markets of interest; 

  Related  and  supporting  industries  entail  the  presence  or  absence  of  financial  conditions  or  related 
industries  able  to  influence  firms’  competitiveness.  The  analysis  focuses  on  private-public  funding 
available  for  the  financing  of  promotional  activities  of  EU  producers  and  of  its  main  competitors. 
Technology  improvements  in  wine  packaging  are  also  examined,  in  particular  the  introduction  of  the 
Flexitank for transportation of wine in bulk. 

  “Government”  factors  essentially  are  the  central  policies  of  producer  and  consumer  countries.  The 
analysis considers three aspects that are particularly  relevant with regard to wines competitiveness on 
the  international  arena:  a)  policies  of  taxation  of  alcoholic  beverages  in  consumer  countries  (for  still 
wines);  b)  bilateral trade  agreements  between  producing  and  consuming  countries  to facilitate  market 
access;  c)  institutional  strategic  policies  of  producer  countries  to  improve  the  performance  of  supply 
chains, market access and wine competitiveness.  

  Chance  refers  to  events,  usually  beyond  the  power  of  firms,  that  change  the  political,  economic  or 

climate conditions. The analysis here focuses on the evolution of exchange rates. 

2.6.2  Methodological approach and tools of analysis for Theme 2 

The focus of Theme 2 is the identification of the key factors of competitiveness for EU wines (relative to the 
main competitors) from all competitive factors relating to the various product / market combinations. Indeed, 
the goal is to focus the analysis on the essential factors in  order to gain in relevance, keeping in mind that 
this  exercise  is  subsequently  functional  to  the  formulation  of  hypotheses  for  the  construction  of  future 
scenarios.  

This implies the need to reduce the complexity of the system in cases when a large number of factors emerge 
from the analysis. From a methodological point of view, this involves implementing a method that allows to 
identify  the  cause-effect  relationships  among  the  identified  factors of  competitiveness,  and then  to rank  in 
order of importance the (relatively few) key factors that explain the system effectively.  

The analysis was carried out for the case study countries (China, Japan, Russia, USA, Denmark, Germany, 
UK), separately for packaged wines and for bulk wines, in two distinct phases: 

1-  The first phase, based on information collected directly from key market players and from the literature, 
aims at identifying the factors of competitiveness and defining their current importance in establishing a 
competitive advantage. 

2-  The second  phase,  based  on  “structural analysis”6,  aims  at  identifying  direct  and  indirect  cause-effect 
relationships among factors identified in the first phase, therefore establishing which are the key factors 
able to generate competitive advantage. 

Structural  analysis  was  carried  out  through  application  of  the  MicMac  method7.  The  methodological 
approach  is  described  in  detail  in  §6.1.  For  wine  in  bulk,  the  extremely  limited  number  of  identified 
competitive factors prevented the use of this analytical tool.    

6 In other words, analysis of the structure of relations among the factors that characterise the system under study. 
7  The  Micmac  Forecasting  method  (Matrice  d’Impacts  Croisés-Multiplication  Appliquée  à  un  Classement)  was  created  by  Michel 

Godet. 

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2.6.3  Methodological approach and tools of analysis for Theme 3 

The analytical approach to Theme 3 is essentially qualitative as it aims at  formulating a set of hypotheses 
about the likely future evolution of the factors influencing the competitiveness of European wines (resulting 
from  the  analysis  of  Theme  1)  and  of  the  key  factors  of  competitiveness  (resulting  from  the  analysis  of 
Theme 2). The formulation of hypotheses relative to future trends and changes is based on:  

  analysis  of  the  IWSR  2013-2018  market  forecast  data  for  still  wine  in  volume  in  the  case  study 

countries;  
informed opinions of key economic players interviewed in the case study countries;  

 
  analysis of the available literature.  

The  last  step  of  the  study,  i.e.  the  formulation  of  prospects  to  2025  emerges  from  critical  analysis  of  the 
available information and from logical inferences about related causes and effects. Further detail is provided 
in §7.1. 

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3  THE EU WINE POLICY FRAMEWORK 

3.1  EU WINE POLICY 1962-1999  

The common market organisation (CMO) for the wine sector was established in 1962. The CMO was based 
on  instruments  aimed  at  obtaining  adequate  information  about  production  potential  (cadastre,  annual 
declaration  of  must  and  wine  produced  quantities,  forecast  balance  sheet)  as  well  as  on  quality  policy  for 
wines produced in specified regions.  

Regulation  (EC)  No  816/1970  completed  the  1962  CMO  with:  price  and  intervention  regime  (private 
storage, distillation), a regime for trade with third countries (Common Customs Tariff, tax compensation and 
export refunds), rules concerning production and control of planting development as well as rules concerning 
oenological  practices  and processes.  Alongside,  Regulation  (EC)  No  817/70  laid  down  specific  provisions 
for quality wines produced in specified regions (v.q.p.r.d).  

The ban on planting new vineyards appeared in 1976 with Regulation (EC) No 1162/76 aimed at adjusting 
wine-growing  potential  to  market  requirements.  This  temporary  ban  was  then  extended  by  subsequent 
regulations until 2015.  

The  following  CMO  Regulation  (EC)  No  337/1979  and  Regulation  (EC)  No  822/1987  introduced  various 
amendments without however changing the intervention logic. 

3.2  THE 1999 WINE CMO REFORM 

In  1999,  Regulation  (EC)  No  1493/1999  introduced  major  changes  by  removing  the  price  regime  and 
simplifying  distillation  measures.  Among  the  intermediate  objectives  (recital  7  of  Regulation  (EC)  No 
1493/1999) the following may be mentioned:  

  maintain a better balance between supply and demand on the Community market;  
  provide producers with the opportunity to exploit expanding markets;  
  enable the sector to become more competitive;  
  support the wine market. 

To  achieve  these  objectives,  the  CMO  was  based  on  rules  concerning  production  potential,  market 
mechanisms, oenological practices and processes, designations, presentation and protection of products and 
trade with third countries.  

In  addition  to  these  provisions,  the  regulation  included  the  establishment  of  a  classification  of  authorized 
wine grape varieties, of a wine inventory and vineyard register. 

Production potential 

Three measures concerning production potential aimed to achieve a better market equilibrium:  

  The temporary prohibition of planting of vines until 31 July 2010, unless derogation was granted;  
  Premium for the permanent abandonment of vine-growing;  
  Restructuring and conversion of vineyards. 

Market mechanisms 

The three forms of intervention (aid for private storage, distillation system and aid for specific uses) were 
aimed to maintain market equilibrium. Four types of distillation were supported:  

  Compulsory distillation of by-products of wine-making  
  Distillation of wine from dual-purpose grapes (wine and table).  
  Distillation for the production of potable alcohol.  
  Crisis distillation in case of exceptional market disturbance. 

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Oenological practices and processes - Description, designation, presentation and protection of certain 
products 

These  measures  aimed  to  protect  the  health  and  the  interests  of  consumers;  to  protect  the  interests  of 
producers;  to  promote  the  adequate  functioning  of  the  internal  market  and  the  development  of  quality 
products.  

The rules regarding description, designation, presentation and protection of certain products established:  

  Compulsory particulars and those authorized under certain conditions;  
  Provisions governing the protection and control of certain terms and the use of geographical indications 

and traditional specific terms;  

  measures governing the labelling of imported products. 

Quality wines produced in specified regions 

Measures regarding the production and control of quality wines (v.q.p.r.d) aimed to contribute to improving 
market conditions and thereby increase market opportunities. 

Trade with third countries 

The rules governing trade with third countries aimed to stabilise the Community  market.  It provided for a 
system  of  import  duties  and  export  refunds  based  on  the  agreements  reached  in  the  Uruguay  Round 
negotiations. 

3.3  THE 2008 WINE CMO REFORM 

The  2008  reform  of  the  wine  CMO  is  part  of  the  2003  CAP  reform  introduced  by  Regulation  (EC)  No 
1782/2003.  

Regulation  (EC)  No  479/2008  (included  in  2009  into  the  Single  CMO  Regulation  (EC)  No  1234/2007) 
substantially altered  the 1999 wine CMO by establishing a national aid programme, a three-year grubbing-
up  scheme,  by  redesigning  the  system  of  designations  for  quality  wines  and  extending  planting  rights  to 
2015/2018.  Intervention  measures  became  optional  (as  integrated  into  national  programmes)  or  were 
suppressed  (private  storage  aid,  certain  aids  for  the  use  of  grape  must  and  for  distillation,  and  export 
refunds). 

Oenological  practices,  quality  policy  and  trade  with  third  countries  were  reformed  with  the  aim  of 
harmonising the existing horizontal regulations, in particular the PDO / PGI system in force since 1992 for 
other agricultural and food products (EU quality policy).  

Among  the  objectives  of  the  2008  wine  CMO  (Recital  5  of  Regulation  (EC)  No  479/2008)  the  following 
should be mentioned as particularly relevant for the present study: 
  strengthen the competitiveness of wine producers in the European Union; 
  establish the reputation of EU quality wines as the best wines in the world; 
  recover old markets and win new ones within the EU and worldwide. 

The  reformed  wine  CMO  included  four  provisions:  support  measures  (national  programmes),  regulatory 
measures, trade  with  third countries and rules concerning  production potential. These are  illustrated  in the 
following sub-sections. 

3.3.1  Support measures 

Support measures consisted of the aid programmes established by each Member State. The objective of these 
measures was to strengthen competitiveness. Member States could choose the measures financed by their aid 
programme within 11 possible instruments: 

  6 new measures: 

-  Single payment scheme, according to Regulation (EC) No 1782/2003 (art. 9); 
-  Promotion  on  third  country  markets  (art.10).  The  objective  was  to  improve  the  competitiveness  of 

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- 

European wines (PDO, PGI and varietal wines) on the concerned markets; 
Investment aid (art.15): Material or immaterial investments in processing facilities, wineries and wine 
marketing; 

-  Green harvesting (art.12), with the objective of restoring balance between demand and supply; 
-  Mutual funds (art.13): The objective was to allow producers to hedge against market fluctuations; 
-  Crop insurance (art.14): This measure aimed to safeguard farmers' incomes against natural disasters. 

  2 measures extended from the 1999 CMO: 

-  Restructuring and conversion of vineyards (art.11), to increase wine competitiveness; 
-  By-product distillation (art.16). 

  3  transitional  measures  were  maintained  until  31  July  2012  to  mitigate  the  effects  of  the  end  of 

traditional market measures: 

-  Potable alcohol distillation (art.17); 
-  Crisis distillation (art.18); 
-  Use of concentrated grape must and rectified concentrated must to increase the alcoholic strength of 

products (art.19). 

Application of the measure for “Promotion on third country markets” 

Promotion on third-country markets is aimed at increasing the competitiveness of EU wines on third country markets. 
This measure only applies to PDO / PGI wines and to varietal wines (wines with an indication of the grape variety).  

Five types of promotional activities can be financed:  

- public relations, promotional or advertisement actions, in particular highlighting the advantages of products from the 

Union, especially in terms of quality, food safety or environmental friendliness;  

- participation at events, fairs or exhibitions of international importance;  
- information campaigns, in particular on the Union's systems for designations of origin, geographical indications and 

organic production;  

- studies of new markets, necessary for the expansion of market outlets;  
- studies to evaluate the results of the information and promotion actions.  

The  support  granted  by  the  EU  must  not  exceed  50%  of  the  eligible  expenditure,  but  it  may  be  supplemented  by 
national  support.  In  such  cases,  the  action  must  be  in  line  with  the  rules  on  State  aid.  The  legislation  establishes 
eligibility conditions, the main ones can be summarised as the following:  

- the products covered by the measure must have export opportunities or market outlets in the targeted third countries 

and display high added value;  

-  the  beneficiaries  must  have  enough  capacity  and  resources  to  face  the  specific  constraints  of  trade  with  the  third 

countries concerned and to ensure that the measure is implemented as effectively as possible;  

- the beneficiaries may be private companies as well as professional organisations, producer organisations, inter-branch 

organisations or (where a Member State so decides) public bodies;  

-  preference  is  given  to  micro,  small  and  medium-sized  enterprises  within  the  meaning  of  Commission 

Recommendation 2003/361/EC. 

3.3.2  Regulatory measures 

Regulatory measures consist of five tools: General rules; Oenological practices and restrictions; Designations 
of  origin,  geographical  indications  and  traditional  terms;  Labelling  and  presentation;  Producer  and  inter-
branch organisations.  

Concerning designations of origin, geographical indications and traditional terms, the objective of the 2008 
reform was to bring together v.q.p.r.d. labelled wines under the PDO label and table wines with geographical 
indication (GI) under the PGI label. 

Similarly to trademarks, Geographical Indications (GIs) are intellectual property instruments. They represent 
an  income  creation  opportunity  depending  on  price  formation  systems  in  markets  characterised  by 
monopolistic competition. Control over these labels allows to develop or exploit competitive advantage to be 
achieved through product differentiation.   

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Traditional  terms  provide  the  consumer  with  information  on  the  characteristics  and  quality  of  wines 
complementing  the  information  provided  by  the  designation  of  origin  and  geographical  indication.  These 
may include methods of production, aging, quality, colour, place or a particular event linked to the history of 
the product. 

Regarding labelling, the 2008 reform sought a simplification and a single framework for all types of wines. 
Wines  without  GI  can  bear  the  mention  of  grape  variety  and  vintage  year,  thus  Reg.  (EC)  No  479/2008 
created the category of "varietal wines". 

3.3.3  Trade with third countries 

The  2008  wine  reform  removed  export  refunds  provided  for  in  the  framework  of  Regulation  (EC) 
1493/1999. The other measures were maintained. 

In the absence of any different provisions (such as additional duties under safeguard measures), the rates of 
duty  in  the  Common  Customs  Tariff  are  applied  to  wine  products  and  the  application  of  the  Common 
Customs Tariff depends on their entry price. Moreover, the wine CMO foresees the option to require import 
and  export  licenses,  safeguard  measures,  the  possibility  of  suspending  inward  and  outward  processing 
arrangements, tariff quotas and additional import duties for certain products. 

The Common Customs Tariff is 32 €/hl for wines under codes NC 2204 10 (sparkling wine) and 2204 21 
(other wine and grape must whose fermentation has been prevented or arrested  by the addition of alcohol). 
Bilateral  agreements  were  signed  by  the  EU  with  trade  partners  on  the  mutual  recognition  of  protected 
designations of origin (GIs) and sometimes of authorized oenological practices and processes (Australia in 
1994 and renewed in 2008; South Africa in 2002; Chile in 2002; Swiss Confederation in 2002; USA in 2006 
updated in 2011; Mexico in 1997; Singapore in 2012). 

In addition, interim agreements on trade and accompanying measures have been established between the EU 
and Serbia (2010), Bosnia and Herzegovina (2008), the Republic of Montenegro (2007), Albania (2006), the 
former  Yugoslav  Republic  of  Macedonia  (2001).  These  agreements  establish  preferential  zero-duty  tariff 
within quotas and the rules of reciprocal protection of designations of origin: 

  Zero-duty concessions for imports into the Community: 16,000 hl respectively for Bosnia-Herzegovina 
and  Montenegro,  7,000  hl  for  Albania,  300,000  hl  for  the  former  Yugoslav  Republic  of  Macedonia, 
63,000 hl for Serbia (53,000 hl quality sparkling wines and other wines <2lt; 10,000 hl wines >2lt). 

  The EU benefits from duty-free quotas for up to 6,000 hl imports into Bosnia and Herzegovina, 1,000 hl 
into the Republic of Montenegro, 10,000 hl into Albania, 3,000 hl into the former Yugoslav Republic of 
Macedonia (increased by 300 hl per year) and 25,000 hl into Serbia. 

Finally, Regulation (EC) No 2793/1999 opened a duty-free quota of 335,000 hl of still wine and 45,000 hl of 
sparkling wine in favour of South Africa. 

Under a Free Trade  Agreement with the EU, entered into force in 2003, Chile’s tariffs on most EU wines 
were  phased  out  over  a  5  year  period,  as  well  as  Chile’s  use  of  protected  EU  geographical  terms  such  as 
Champagne, Burgundy and Bordeaux. 

3.3.4  Production potential 

The rules regarding production potential were maintained on a transitional basis in order to limit the potential 
effects of their removal. In particular: 

  The  transitional  planting  right  regime  established the extension  of  planting  rights  until  31st  December 
2015. Member States may decide to maintain the prohibition on their territory or parts of their territory 
until 31st December 2018; 

  A grubbing-up scheme was introduced until the end of the 2010/2011 campaign. 

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3.4  HORIZONTAL  MEASURES  FOR  THE  PROVISION  OF 

INFORMATION  AND 

PROMOTION ON THE INTERNAL MARKET AND IN THIRD COUNTRIES 

In addition to the measure for “Promotion on third country markets” introduced with the 2008 wine CMO 
reform,  Council  Regulation  (EC)  No  3/2008  establishes  the rules  for  the  provision  of information  and  the 
implementation of institutional promotion actions for agricultural products on the internal market and in third 
countries. This horizontal regulation concerns several sectors, including the wine sector.  

Compared  to  the  CMO  measure  for  “Promotion  on  third  country  markets”  that  allows  to  promote  (under 
certain  conditions)  individual  or  collective  wine  brands,  Reg.  (EC)  No  3/2008  only  allows  collective 
information  actions to  consumers  concerning  product  quality  and  variety.  Given  the  institutional  nature  of 
such promotion policy, actions implemented within the framework of Reg. (EC) No 3/2008 can be used in a 
complementary way to promotion / advertising directly implemented by enterprises8. 

On November 21st, 2013 the Commission presented the legislative proposal for a better targeted information 
and promotion policy aimed at developing and opening up new markets for agricultural products within the 
EU and in third countries, and to increase consumer awareness of products quality (COM(2013) 812 final). 
The new regulation will enter into force on December 1st, 2015. Compared to current policy, the proposal 
entails  a  gradual  but  significant  increase  of  the  budget  allocated  to  information  provision  and  promotion 
measures for agricultural products (from €61.5 million in the 2013 budget to €200 million in 2020). 

As the Union's promotion measures relating to wine are well covered by the aid programmes available to the 
wine sector  under the  CAP,  the  eligibility  of  wine  under  the  new  horizontal promotion  policy  is proposed 
only  for  wine  when  associated  with  another  agricultural  or  food  product.  With  regard  to  both  spirits  and 
wine, measures targeting the internal market shall be limited to informing consumers of the European quality 
schemes relating to geographical indications.  

3.5  THE CAP REFORM 2014-2020: WINE PROVISIONS WITHIN THE CMO 

The December 2013 reform of the wine provisions within the CMO is part of the wider reform of the CAP 
for  the  period  2014-2020.  The  new  norms  are  contained  in  Regulation  EC  No1308/2013  of  the  European 
Parliament and the Council establishing a common organisation of the markets in agricultural products and 
repealing Regulation (EC) No 1234/2007. 

The regulatory framework of the 2008 reform is maintained, but some substantial changes were introduced 
for wine relating to support measures and production potential. In addition, some clarifications were included 
for regulatory measures concerning designations of origin and geographical indications. 

3.5.1  Support measures 

Eight support measures for financing (art.39-54) remain, due to the abolition of the single payment scheme9 
and the introduction of the new measure “innovation in the wine sector”. In addition, some modifications or 
extensions were introduced for measures already in place. Briefly:  

  The  measure  for  Promotion  (art.45)  is  extended  to  information  and  promotional  activities  within  the 
Member States. However, in contrast with the activities allowed for promotion on third country markets, 
the  measure  aims  at  "informing  consumers  about  the  responsible  consumption  of  wine  and  about  the 
Union systems covering designations of origin and geographical indications”10; 

  The measure Restructuring and conversion of vineyards (Art.46 ) is amended in its objectives through 
the introduction of “improvements to vineyard management techniques, in particular the introduction of 

8   According  to  analysis  carried  out  within  the  Evaluation  of    Common  Agricultural  Policy  measures  applied  to  the  wine  sector 
(2012), expenditure for promotion / information for the wine sector within the framework of Reg. (EC) No 3/2008 has been very 
limited.. 

9   The 2014-2020 CAP reform provides for a system of direct payments to replace, from 1st January 2015, the single farm payment.  
10   In essence, this implies a clear differentiation in the terms of intervention in relation to the target market. Therefore, the effects of 
the extension of the Promotion measure on the competitiveness of European wines on the EU market will depend on the types of 
actions that it will be possible to accomplish within the EU, according to what will be established by the corresponding regulation 
for the implementation of the reform. 

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advanced systems of sustainable production”. The change may therefore entail the provision of strategic 
support  to  increasing  wine  competitiveness,  by  focusing  on  the  factors  that  determine  purchase 
decisions  of  consumers  who  are  particularly  sensitive  to  the  essential  characteristics  of  the  product, 
production processes and their mention on the label; 

  The introduction of a new “Innovation in the wine sector” measure (art.51): “Support may be granted 
for  tangible  or  intangible  investments  aimed  at  the  development  of  new  products,  processes  and 
technologies concerning the products referred to in Part II of Annex VII. The support shall be intended 
to  increase  the  marketability  and  competitiveness  of  Union  grapevine  products  and  may  include  an 
element of knowledge transfer”. 

3.5.2  Production potential 

The total ban on the planting of new vineyards is abolished: the transitional planting rights will be replaced, 
from 2016 to 2030, by a new system of authorizations for vine planting (Articles 61-70), for which “Member 
States shall make available each year authorisations for new plantings corresponding to 1% of the total area 
actually planted with vines in their territory, as measured on 31 July of the previous year”. 

Planting rights granted to producers in accordance with Regulation (EC) No 1234/2007 before 31 December 
2015, which have not been used by those producers and are still valid by that date, may be converted into 
authorisations as from 1 January 2016. Such conversion shall take place upon a request to be submitted by 
those producers before 31 December 2015. Member States may decide to allow producers to submit requests 
to convert rights into authorisations until 31 December 2020. 

Thus, the essential elements of change introduced by Reg. (EC) No 1308/2013 can be summarized as:  

  The principle that the European vineyard cannot grow in an uncontrolled manner is confirmed;  

  The  reform  introduces  the  possibility  of  giving  flexibility  to  the  production  potential,  in  order  to 

facilitate the adjustment of supply to market trends;  

  Planting rights are abolished, which represented personal transferable securities against payment. As a 
replacement, personal authorizations are granted free of charge, which are no longer transferable to the 
market. 

3.5.3  Regulatory measures 

With regard to designations of origin and geographical indications, art. 93 introduced two clarifications to 
the completion of the corresponding article 118b in Reg. (EC) 1234/2007, specifically: 

  For PDO, the requirement that  "the production must take place in the geographical area” and  “shall 
cover  all  the  operations  involved,  from  the  harvesting  of  the  grapes  to  the  completion  of  the  wine-
making  processes,  with  the  exception  of  any  post-production  processes”  means  that  post-production 
activities such as, for example, bottling, can be done outside of that geographical area. 

  For PGI, “the maximum 15% share of grapes which may originate outside the demarcated area shall 

originate from the Member State or third country in which the demarcated area is situated”. 

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4  WINE POLICIES OF EU COMPETITORS 

The purpose of this section is to give account of public policies developed in NWC in support of domestic 
wine  and,  in  particular,  policy  measures  aimed  at  facilitating  or  directly  supporting  trade  towards  export 
markets.  It  is  assumed  that  such  policies,  similarly  to  EU  wine  policy  measures,  have  an  impact  on  the 
competitiveness of individual NWC wine products on international markets. For this purpose, the main wine 
policy  interventions  in  USA  (California),  Argentina,  Chile,  Australia,  New  Zealand  and  South  Africa  are 
illustrated in the following sections. 

Detailed  data  regarding  support  to  promotional  activities  in  the  EU  and  non-EU  competitors  are  directly 
illustrated in the analysis of Theme 1. 

4.1  USA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION 

4.1.1  California Wine Export Program  

In 1984, the US Congress passed the Wine Equity and Export Act in order to reduce and suppress barriers to 
trade  in  wine  “on  a  basis  which  assures  substantially  equivalent  competitive  opportunities  for  all  wine 
moving to international trade”. A few months later, the Wine Institute (California) established the California 
Wine Export Program, aimed at protecting the interests of the industry in international trade and participation 
in international trade fairs to expand market opportunities for California wines. 

The Wine Institute represents about 1,000 wineries and affiliated businesses in California. Members of the 
Institute  account  to  95%  of  Californian  wine  production  and  include  some  of  the  major  wineries.  The 
Institute counts an office in Canada and a network of 16 representatives managing programs in 25 countries. 
The purpose of the representatives is to assist domestic wineries to promote their wines in foreign countries 
and to provide critical information about target markets.  

The  Wine  Institute  is  responsible  for  administrating  the  USDA’s  Market  Access  Program  (MAP)  for 
Californian  wine  exports.  The  MAP  is  the  largest  market  development  program  of  the  USDA’s  Foreign 
Agricultural  Service.  According  to  the  USDA,  as  one  of  the  main  beneficiaries  of  the  Market  Access 
Program, the Wine Institute received $US 49,423,105 over the last seventeen years (1996-2012). Among the 
institutional  arrangements,  the  Wine  Institute  cooperates  closely  with  the  office  of  the  US  Trade 
Representative  and  with other  governmental  agencies  (USDA, TTB, etc.)  to  suppress trade barriers  and to 
negotiate free trade agreements (FTA).  

In  2010,  the  US  President  announced  a  National  Export  Initiative  in  order  to  renew  and  revitalize  US 
exports. This initiative involves export promotion, increasing the availability of export financing, and finding 
new opportunities for US wine companies. 

4.1.2  The US Import Duty and Excise Tax Drawback Scheme and its implications 

The “drawback” scheme allows for refunds, total or partial, of paid duties and taxes when an imported good 
is re-exported. The scheme dates back to 1789, but it was only applied to wine (non-sparkling wine of 14% 
alcohol or less) about a decade ago. The rationale of the program is to stimulate trade or manufacturing, thus 
encouraging domestic value added. It allows American companies to compete in foreign markets without the 
handicap of including taxes and duties in the costs. 

The  scheme  allows  for  a  refund  up  to  99%  on  duties  and  excise  taxes  paid  on  imported  goods,  including 
wine.  The  main  purpose  of  this  program  is  to  facilitate  imports  of  products  that  later  will  be  re-exported 
(Sumner et al., 2011, 2012). “Interchangeable” wines (i.e. same colour and within 50% of the import price) 
must be exported under the same conditions as they were imported within a period of three years11.  

Research by Sumner et al. (2012) indicates that for bottled wines, the drawback is usually worth less than 
10% of the import value for bottled wine, whereas it is often close to 50% of the import value for bulk wine.   
Thus,  the  scheme  has  little  interest  for  bottled  imports,  but  it  can  be  of  great  interest  for  bulk  wine 

11 Wine exported to Mexico or Canada is not eligible as a match for imports in applying for drawback of paid duties and excise tax. 

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importers12, who may benefit from a significant net price advantage with respect to competitors. As reported 
by Sumner et al. (2012), drawbacks on bulk wine have increased from 13 million litres to 121 million litres 
between 2005 and 2010 (in this latter year, drawbacks were claimed on about two-thirds of the total import 
volume of wine in bulk). Findings also show that when exports considerably exceed imports, the drawback 
scheme  is  analogous  to an  import  subsidy.  Wines  imported  into the  US  through  the free  trade  agreements 
with Australia and Chile are of particular interest for this program, as the worth of the drawback increases 
with reduced import tariffs. 

Reasearch results also demonstrate that when imports and exports are in balance the program stimulates both 
imports and exports. Furthermore, the drawback scheme allows countering the impact of the low American 
dollar exchange rate value on demand for foreign bulk wine (Rabobank, 2012).  

Wineries  with  significant  export  volumes  can  receive  a  rebate  on  the  cost  of  imported  bulk  wines  that 
maintains  the  attractiveness  as  a  source  of  supply.  Further,  firms  producing  and  trading  wines  find  this 
program easy to implement (Sumner et al., 2011). 

4.2  CHILE: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION 

4.2.1  The Chilean Wine Cluster: An Institutional Arrangement  

The  Chilean  wine  industry  is  organized  as  a  ‘cluster’.  Clusters  are  “geographic  concentrations  of 
interconnected companies and institutions in a particular field” (Porter, 1998, p.78) and are based on trust, 
the leadership of the main (wine) firms, the ability to solve collective action problems, and the availability of 
efficient  intermediaries  (e.g.  grape  and  wine  brokers,  distributors,  etc.).  The  Chilean  cluster  is  based  on 
vertical and horizontal relationships and complementarities between buyers, suppliers and other stakeholders 
aiming at the long-term survival and development of the industry.  

In  the  case  of  the  Chilean  wine  industry,  the  leading  firms  are  joint  members  of  a  national  association  of 
wine producers accounting for over 95% of Chilean wine production. The industry is highly concentrated, 
with the top four wineries - Concha y Toro, Santa Rita, San Pedro and Santa Carolina - accounting for over 
84% of wine sales in the domestic market. The industry is organized as a public-private partnership with the 
major public agencies providing support to the wine cluster either at regional, national or international level. 

Wines  of  Chile  (WoC)  is  an  industry  body  in  charge  of  promotion  activities.  WoC  established  a  strategic 
plan for the industry – Strategic Plan 2020 – with the goal to achieve $US 3 billion dollars in export sales by 
the year 2020, i.e. corresponding to an average annual growth of about +9.9%. 

The  economic  agency  Corfo  provides  financing  for  product,  process,  and  organization  innovation  in  the 
different areas of a cluster. This agency has representative offices in the Chilean regions but also a dedicated 
branch  to  attract  foreign  investors  (nurseries,  cellars,  wineries,  etc.)  to  invest  in  different  areas  of  the 
industry, particularly where the industry is less competitive. 

At  a  broader  level,  Prochile  is  the  government’s  promotion  agency  with  15  regional  offices  and 
representatives in over 55 foreign locations. The main activities of Prochile involve the expansion of Chilean 
export basis by engaging new companies in export activities. It also provides support for companies facing 
competitiveness problems. 

Further,  the  development  of  Chilean  exports  at  the  international  level  is  ensured  through  reduction  or 
elimination of trade barriers. Over the years, the Chilean government signed many bilateral and multilateral 
agreements, including a free-trade agreement with the European Union. 

4.3  ARGENTINA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION  

Argentina has a long tradition as a wine producer and exporter. Intervention of Argentinian public authorities 
in vine and wine policies operates at different levels, as described in the following paragraphs. 

12 Also due to the fact that to be cost-ecffective the drawback claim should be made for relatively  large volumes, which are  more 
likely for wine traded in bulk than in bottles. Furthermore, importers of bottled wine may not have interest in re-exporting, nor the 
connections to export markets. 

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4.3.1  Regulation  of  the  wine  market  through  concentrated  grape  must:  the  Mendoza-San 

Juan Agreement 

Argentina is one of the world’s most important grape  must producers and exporters. In 1994, the regional 
governments of Mendoza and San Juan established the “Mendoza-San Juan Agreement” which included the 
two  main  wine  producing  provinces.  The  agreement’s  main  goal  was  to  foster  the  diversification  of  the 
national grape and wine industry, either in terms of products (basic wines, quality wines, musts) and markets 
(domestic and international). The agreement uses grape must as a way to achieve a balance in wine stocks 
(i.e. avoid surpluses) and to promote wine exports. 

At the same time, the Mendoza law (law 616/94) established a regional fund – Fondo Vitivinicola Mendoza 
– to promote the wine industry and exports. The Fondo Vitivinicola Mendoza is a public-private organisation 
financed through a mandatory levy of approximately 0.01 $/kg of processed grapes, starting from the 1995 
harvest. However, for that year, the law exempted the companies who processed at least 20% of their total 
grapes in must. Each year the percentage of grapes processed into must is adjusted and decided through a 
common  agreement  between  Mendoza  and  San  Juan  governments.  Thus,  the  regional  governments 
introduced a regulatory system to balance prices in the wine market and to diversify grape processing. This 
means that the Fondo plays a key role in the regulation of wine prices in the  market.  The funds collected 
through the mandatory levy are used to promote exports of wines, musts, fresh grapes and consumption of 
wine-related products. 

This  agreement  considerably  encouraged  grape  must  production,  mainly  targeted  to  export  markets 
(approximately 80% of Argentinian grape must is exported). This policy measure benefitted from the price 
increase  on  the  international  grape  must  market.  In  2012,  the  Rioja  government  joined  this  agreement 
looking to diversify regional grape production. 

One of the main consequences of this new regulatory system is the provision of measures to avoid generating 
“wine lakes”, impacting particularly the low-end of the wine quality range. 

4.3.2  A public-private partnership to establish a strategic plan for the wine industry 

A  second  area  of  public  intervention  is  the  joint  participation  in  a  strategic  plan  for  the  Argentinian  wine 
industry.  In  2003,  the  Corporacion  Vitivinicola  Argentina  was  established  to  manage  and  coordinate  the 
implementation of the Strategic Plan for the Wine Industry to 2020 (PEVI 2020). The plan includes all wine 
supply chain stakeholders, regional and national governments, and R&D institutes.  

The  main  goal  of  the  strategic  plan  is  to  position  the  Argentinian  wine  industry  at  the  forefront  of  the 
international wine market by 2020. More precisely, it seeks to achieve total wine sales of approximately $US 
2 billion, to reach 10% of world wine exports and to increase consumer awareness of Argentinean wine. The 
overall  system  is  financed  based  on  a  mandatory  levy  applied  to  all  members  of  the  National  Institute  of 
Viticulture (INV). The levy is calculated on the basis of processed wine or must volume (litres). 

The plan includes three main strategic goals:  

1)  Position  Argentinian  wines  in  export  markets,  particularly  in  the  Northern  Hemisphere.  This  goal  is 
implemented through the Wines of Argentina body that is responsible for communication actions and 
generic promotion in different locations across the world. These activities are financed both by members 
(wineries) and public organisations in charge of promotion. The annual budget of Wines of Argentina is 
estimated at $US 4 million (Gennari et al., 2010);  

2)  Expand the presence of Argentinian wines in Latin American markets and boost sales on the domestic 

wine market;  

3)  Provide  support  to  small  and  medium  producers  to  integrate  them  in  the  wine  chain.  The  aim  is  to 
upgrade  organisational,  technological  and  production  processes  through  investments  in  machinery, 
inputs  and  technical  assistance.  Within  this  plan,  an  agreement  with  the  InterAmerican  Development 
Bank was established to finance the integration of small and medium wine grapes producers. The bank 
provided $US 50 million to support the project (Gennari et al., 2010). 

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4.4  AUSTRALIA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION 

The  Australian  Wine  Export  Council  and  the  Grape  and  Wine  Research  and  Development  Corporation 
(GWRDC)  were  established  in  1991  in  support  to  the  wine  industry  expansion  at  that  time.  Through  the 
Federal  Department  of  Agriculture,  Fisheries  &  Forestry  (DAFF),  the  Australian  government,  collects 
national  grape  and  wine  levies  that  it  distributes  to  the  GWRDC  for  R&D  and  to  the  Wine  Australia 
Corporation for promotion. The DAFF collects three types of levies: a) A wine grapes levy from the wineries 
(AUD 5–9.20/tonne); b) a grape research levy charged to all producers; and c) a wine export charge equal to 
0.2% of wine export value (reduced rate for FOB sales over AUD 20m). The latter is entirely allocated to 
Wine Australia Corporation to promote Australian wines internationally. 

Wine  Australia  Corporation,  formerly  Australian  Wine  and  Brandy  Corporation  (AWBC)  (1980),  is  the 
government  authority  in  charge  of  ensuring  law  compliance  (i.e.  controlling  exports  of  Australian  wine, 
auditing  both  wine  producers  and  exporters),  and  promoting  Australian  wine  globally.  The  agency  is 
responsible  for  marketing,  market  development  and  for  information  and  regulatory  issues.  Its  leading  role 
includes  quality  and  integrity  (export  licenses  and  permits  on  the  basis  of  inspections);  knowledge  and 
information services, and market development (international visits program, generic promotion of Australian 
wine, country specific market programs, Wine Australia Export Partnership, etc.). The institution is financed 
by  a  statutory  levy  and  charges  fees  for  the  services  provided.  Wine  Australia  also  cooperates  with  other 
partners  including Tourism  Australia and  Austrade  for  implementing  programs  to  raise awareness  of  wine 
quality and diversity. 

At  the  international  level,  the  Australian  government  works  with  the  Australian  Trade  Commission 
(Austrade) to improve market access and trade conditions for Australian wine exporters. In December 2008, 
the  Australian  government  established  an  agreement  with  the  European  Union  on  wine  trade  regarding 
recognition of oenological practices, labeling requirements and protection of GIs. The agreement entered into 
force on 1st September 2010. 

Austrade's  Export  Market  Development  Grants  (EMDG)  scheme  supports  a  wide  range  of  Australian 
industry  sectors  including  the  wine  sector.  The  scheme  aims  at  encouraging  small  and  medium  sized 
Australian businesses to develop export markets through funding of up to 50% of eligible export promotion 
expenses (for the year 2013/2014 this is for expenses above AUD 5,000 provided that the total expenses are 
at  least  AUD15,000).  In  addition  to  the  export  scheme,  the  Australian  government  provides  a  number  of 
grants to growers and wine makers to help maintain a competitive edge in the expanding market. 

Some  governments  in  the  main  producing  regions  (Barossa  Valley,  Riverina/Hunter  Valley  in  New  South 
Wales)  established  partnerships  with  the  industry  in  order  the  reinforce  the  competitiveness  of  the  wine 
industry in the domestic and international markets. For example, recently the South Australian Government 
established  a  partnership  with  the  South  Australian  Wine  Industry  for  the  period  2010-2015  to  strengthen 
South  Australian  wines’  market  position.  The  partnership  entails  continuous  work  and  coordination  with 
Wine Australia to promote the region’s wines. 

4.4.1  Wine Australia: “Directions to 2025” 

In recognition that the factors driving expansion of Australian wine sales on foreign markets in the 1980s and 
1990s  (mostly  UK,  US  and  Canada)  were  no  longer  successful,  since  the  mid  1990s  the  governmental 
agency Wine Australia has been working consistently towards the identification of new sustainable market 
opportunities through assessment of the wine industry performance on export markets (and on the domestic 
market) and through market intelligence. 

“Strategy 2025” published in 1996 and the following “Directions to 2025” published in 2007 are Australia’s 
blueprints for improving the competitiveness of Australian wine on international markets in terms of sales 
growth  to  ensure  adequate  sustainable  returns  to  grape-growers  and  wine-makers.  “Directions  to  2025” 
focuses  in  particular  on  developing  strategies  to  upgrade  Australian  wines/brands  from  lower  to  higher 
price/quality segments on international markets through re-positioning “by raising awareness and expectation 
of  an  Australian  wine  story  founded  on  an  international  reputation  for  regionally  distinct  and  fine  wine 
production.”  “Directions  to  2025”  also  refocuses  efforts  on  the  domestic  market  “to  encourage  more 
Australians  to  drink  better  wine  more  frequently  while  still  observing  sensible  and  moderate  consumption 
patterns”.  

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4.5  NEW ZEALAND: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION 

The  success  of  New  Zealand  on  the  international  wine  market  is  relatively  recent.  The  wine  industry  has 
considerably  developed  over  the  last  few  years  with  a  strong  expansion  of  vine  plantings  and  exports. 
Exports  were  negligible  until  the  mid-1990s  and  in  1998  they  accounted  for  approximately  40%  of  wine 
consumption in the country. In 2004, for the first time the industry exported more wine than it imported. 

The  need  for  coordination and  planning  in the industry  gave  rise to the  Wine  Institute  of  New  Zealand in 
1976.  The  role  of  the  Wine  Institute,  a  self-regulated  body,  is  to  promote  and  represent  the  national  and 
international  interests  of  the  wine  industry.  In  1976,  the  government  established  a  funding  sheme  for  The 
Wine Institute through the Wine Makers Levy Act, which set a statutory basis for collection of levies from 
the  wine  industry.  The  purpose  of  the  funding  was  to  support  the  Institute to  promote  (export, trade  fairs, 
etc.), develop and improve grape growing and the winemaking industry. Every winemaker is required to pay 
a membership fee as well as an annual levy indexed to the quantity of wine sold each year.  

A second important national organization in the industry is the Grape Growers Council (GGC), established 
in 1968. The GGC is governed on a regional basis and not on an output basis like The Wine Institute. The 
organization is funded through a compulsory levy based on grape sales (Commodity Levies Act, 1990). In 
March  2002,  The  Wine  Institute  jointly  with  the  Grape  Growers  Council  created  a  unified  organisation  – 
New Zealand Winegrowers (NZW) - to address the collective issues facing the wine industry at the national 
and international level. The organisation is funded by contributions from both institutions. Currently, NZW 
ensures  the  management,  protection  and  generic  promotion  of  the  ‘New  Zealand  Wine’  brand.  NZW  is 
funded mainly through collection of compulsory levies under the Commodities Levy Act. The Act constrains 
the activities that may be funded by the levy – a key prohibition is on commercial activities (PwC, 2011). 

4.5.1 

International Wine Promotion 

Together  with  the  US,  New  Zealand  is  one  of  the  NWC  investing  the  most  in  collective  promotion  of  its 
wines  on  international  markets  (i.e.  in  €  per  case,  see  also  §5.5.4).  According  to  industry  sources, 
expenditure in collective promotion did not vary considerably over the last few years. Differently from most 
European countries, collective promotion of New Zealand wines is undertaken at the national level and not at 
the regional level. 

According  to  Brodie  et al.  (2008),  positioning  “under  the  generic ‘New  Zealand  Wine’  brand  has  allowed 
New Zealand wines to achieve average price premiums of 10-20%” in international markets when compared 
to other international competitors “and even higher (as much as 48% above the industry average) in the UK”. 

Activities have focused on public relations, promotion and fostering relationships with trade representatives, 
media,  and  consumers.  NZW  concentrates  its  international  market  development  efforts  on  China,  North 
America  and  some  countries  in  Continental  Europe.  In  2007,  NZW  re-launched  a  new  generic  branding 
strategy – “New Zealand Wines: Pure Discovery” - focusing on the commitment to quality and excitement 
found  in  New  Zealand  wines  and  promoting  as  well  the  new  industry  agenda  towards  innovation  and 
diversification (Brodie et al., 2008). 

To  sustain  export  expansion,  the  Wine  Institute  has  undertaken  coordination  activities  of  “generic  export 
promotions”.  Another  important  issue  on  the  agenda  of  the  Wine  Institute  is  the  introduction  of  more 
rigorous  production  and  labelling  standards  for  local  and  imported  products,  and  related  enforcement 
procedures. 

4.5.2  Suppressing barriers to international wine trade 

Another area of public intervention is the reduction of tariff and non-tariff barriers to international wine trade 
and improving access to foreign markets. To this extent, New Zealand Trade and Enterprise, the economic 
development  and  trade  promotion  agency,  has  recently  signed  free  trade  agreements  (FTAs)  with  China 
(1998) and Taiwan (2013). The FTA with Australia also plays an important role in fostering wine exports 
between the two countries. Under this FTA, any product containing more than 50 percent Australian content 
is eligible to enter New Zealand duty free (Kenny, 2009, p. 165). 

New Zealand Winegrowers also partnered with New Zealand Trade and Enterprise “to build and launch the 
New Zealand Wine brand in development markets” (NZWG, 2012). Both institutions “are in the process of 

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developing  and  delivering  an  integrated  marketing  and  communications  program  in  some  of  the  major 
growth markets – notably China, Germany, Netherlands, and Sweden” (NZWG, 2012).  

4.6  SOUTH AFRICA: PUBLIC INTERVENTION IN WINE EXPORTS AND PROMOTION 

The  South  African  wine  industry  has  faced  considerable  changes  over  the  last  few  years  going  from 
deregulation in the 1990s to integration in international value chains.  

The Wine & Spirits Board is a statutory body responsible to administer the Wine of Origin Scheme (1973) 
and  for  control  functions  regarding  cultivars,  vintages,  Estate  Brandy,  and  Integrated  Production  of  Wine 
Schemes (IPW). The Board is appointed by the Minister of Agriculture and funded by the industry. 

In 1999, the South African Wine Industry Trust (SAWIT) was established to promote the transformation of 
the South African wine industry and to boost wine exports. In order to fulfill its mission, SAWIT established 
the  following  three  bodies:  BUSCO  (wine  industry  Business  Support  Company),  DEVCO  (wine  industry 
Development Support Company focused on social transformation) and WIECO (Wine Education Fund). 

The main purpose of BUSCO is to transform the South African wine industry from a production-driven to a 
market-driven industry. BUSCO pursues four main objectives: development of capabilities in research and 
development  (R&D)  and  technological  transfer;  support  to  generic  export  promotion;  be  an  active 
stakeholder in the liquor industry task group; management of voluntary surplus removal.  

In 1999, WineTech developed “Vision 2020”, an essential strategic plan for the wine industry attempting to 
legitimize and explain how to build an innovative and market-driven industry. 

Wine  industry  statutory  measures  comply  with  the  terms  of  the  Marketing  of  Agricultural  Products  Act 
(1996).  SAWIT,  WineTech,  and  WoSA  are  responsible  for  the  implementation  of  the  statutory  measures. 
The  Marketing  Agricultural  Products  Act  stipulates  that  a  statutory  levy  may  not  exceed  5  percent  of  the 
price  realized  for  a  specific  agricultural  product  at  the  first  point  of  sale.  In  April  2013,  the  proposed 
statutory  levies  ranged  between  0.87%  for  grapes  and  3.36%  for  bulk  wine.  Generally,  measures  are 
implemented  for  a  four-year  term.  Promotion  on  export  markets  absorbes  the  largest  share  of  funds  from 
levies (in 2013, 38m Rands – about 51% of total levies). 

4.6.1  The promotion of South African wines and reduction of trade barriers 

Wines  of  South  Africa  (WoSA)  is  a  non-profit  non-governmental  agency.  The  agency  was  established  in 
1999 and is responsible for generic marketing, contributing to the development of ‘Brand South Africa’. It 
represents more than 500 South African wine exporters and promotes wines in the domestic and international 
markets  as  well  as  wine  tourism.  The  agency  is  recognised  by  the  South  African  government  as  Export 
Council and as such it participates in the dialogue between the wine industry and the government. WoSA is 
funded through a per litre levy on exported wine. 

The Department of Trade and Industry is responsible for the establishment of relevant free trade agreements 
with  key  partners  in  order to  improve  trade and investment  conditions.  According  to  industry  sources, the 
Department  spends  approximately  1  million  Rands  per  year  for  the  development  of  the  wine  industry.  In 
2002,  the  EU  and  South  Africa  signed  an  “Agreement  on  wines  and  spirits”,  as  part  of  a  broader  “Trade, 
Development and Cooperation Agreement”, under which the EU provided a duty-free quota for imports of 
South African wine that increases by 5% each year from 2002 until 2011. 

Recently,  the  South  African  government  opposed  the  increasing  claims  of  international  bulk  wine  buyers, 
asking  South  African  wine  exporters  to  shift  their  exports  from  packaged  to  bulk  wines.  The  government 
claims  that  this  strategy  would  lead  to  considerable  job  losses  in  the  industry  (domestic  bottlers,  glass 
makers, etc.) and could eventually damage the country’s image and ‘Brand South Africa’. According to the 
estimates of WoSA, for every 100 000 hl shifted from packaged to bulk wine exports the industry would lose 
107 jobs (WoSA, 2010). However, in 2012 South African exports of still wines in bulk accounted for 63% of 
total still wine exports (against 41% in 2010) (OIV, 2013).  

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5  THEME 1 – DEVELOPMENT OF THE COMPETITIVENESS OF EU WINES 

5.1  THE LEVELS OF ANALYSIS  

The analysis of the competitiveness of EU wines was conducted on two levels:  

1.  The first level aims to assess the overall competitive position of EU still wines compared to still wines of 
competitors (non-EU countries) over time, regardless of the factors determining it. In this context, a first 
examined  aspect  concerns  the  competitiveness  with  respect  to  international  trade.  The  analysis  aims  at 
evaluating the competitiveness of EU wines relative to demand for imported wine in the different country 
markets, regardless of which use is made of it and its destination (e.g. satisfaction of domestic demand, 
industrial blending / bottling and subsequent re-export, etc.)  

Therefore,  this  first  level  of  analysis  does  not  take  into  account  the  role  played  by  “local”  wine  in  the 
considered country markets, which is made either from locally grown grapes, or from wine imported in 
bulk and/or grape must and then "nationalised", or through a mix of the two. 

This analysis was carried out distinguishing between two business areas:  

  wine imported (exported) in containers <2lt already branded, destined to the consumer market (on-

trade, off-trade and online channels);  

  wine imported (exported) in bulk (containers >2lt), mostly destined (with some exceptions13) to the 
intermediate  market  (blenders,  bottlers).  Bulk  wine  imports  have  different  uses/destinations, 
depending on the market: 

-  wine shipped from the place of production to the place of consumption to be bottled and labeled 

with the producer's name/brand (for example, in the UK);  

-  wine shipped from the place of production to the place of consumption to be bottled and labeled 

with the name of the retailer (for example, in Germany and Denmark); 

-  wine shipped from the place of production to be blended with domestic wine and then sold to the 
consumer market of the same country, under the brand of the local producer (for example, this 
occurs in Russia, China and Japan); 

-  a mix of the first two cases (i.e. UK) or of all three cases above (i.e. USA). 

A further aspect of analysis at this first level concerns the competitiveness of EU wine compared to wines 
of  competitors in  the  context  of  domestic  consumption.  The  analysis  was  conducted  considering  wines 
packaged for the final consumer (on-trade and off-trade) in the case study countries14. Thus, this piece of 
analysis aims at evaluating the competitiveness of EU wine at the level of domestic final demand of the 
considered countries, taking into account also "locally produced” wines (where applicable). In this case, 
the analysis concerns domestic sales of bottled wines that bear a label indicating the origin. This includes 
wines  imported  in  bulk,  blended/bottled  locally  and  marketed  with  an  indication  of  the  origin,  but  it 
excludes imported bulk wine that is bottled without specifying the origin. 

This analysis presents some limitations, related to the data collection system. Specifically: 

  wines imported in bulk that are blended with wines made from locally grown grapes are included in 
“local”  wines.  Therefore,  the  role  of  imported  wine  consumption  in  the  countries  considered  is 
systematically underestimated (but it is not possible to determine the extent of underestimation). 

  Wine imported from country X is not necessarily actually produced in country X (in the sense that, it 

may have been bottled in country X, but imported in bulk from country Y). 

13  In actual facts, part of the wine imports under code NC 220429 is not wine in bulk, but wine packaged in containers >2 liters (Bag 
in box, large size bottles, etc..) at the origin. This inevitably leads to analytical inaccuracies that at present cannot be solved. In this 
regard, the recent decision of the World Customs Organization Sub-Committee for the revision of the Harmonized System (HS) 
seems appropriate, in that it has agreed to the OIV proposal whereby wine in containers between 2 and 10 litres will  no longer be 
considered as “bulk” in terms of customs nomenclature. This will prevent the current analytical errors. 

14 China/Hong Kong, Russia, USA, Japan, Denmark, Germany and United Kingdom. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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2.  At the second level, analysis aims to explore the factors (and their interactions) that potentially influence 
the  competitive  position  of  EU  wines  and,  in  particular,  those  factors  that  restrict  or  trigger  or  guide 
domestic demand and choice of wine origin.  

This  analysis  is  based  on  an  adaptation  of  the  analytical-interpretative  model  of  competitiveness 
suggested by M. Porter (Porter's Diamond) to the specific object of the study. 

5.2  GLOBAL  COMPETITIVENESS  OF  EU  STILL  WINES  WITH  RESPECT  TO 

INTERNATIONAL TRADE 

The analysis of the global competitiveness of the EU still wines with respect to international trade (first level 
of analysis) was carried out:  

  Worldwide  on  the  basis  of  EU  still  wine  exports  (in bottles  and  bulk)  to  the  world  market  (including 
transfers  within  the  EU,  to  take  into  account  also  the  competitiveness  of  EU  wine  on  the  internal 
market) and exports of competitors to the world market;  

  For the top 10 countries importing EU still wines (respectively, in bottles and bulk), namely: 

- For bottled wine: Australia, Brazil, Canada, China (including Hong Kong e Macao), Japan, Norway, 
Russia, Singapore, Switzerland and USA. These 10 countries account for 88.2% of total exports of 
EU bottled wine to third countries in value and 80.7% in volume (in 2012); 

- For bulk wine: Angola, Canada, China, Côte-d'Ivoire, Japan, Morocco, Norway, Russia,  Switzerland 
and USA.  These 10 countries represent 89.3% of total exports of EU bulk wine to third countries in 
value and 90.4% in volume (in 2012). 

For both bottled and bulk wine, the analysis also includes the three EU case study Member States markets 
(Denmark, Germany, United Kingdom).  

In order to put into context the analysis that follows, we first provide an overview of wine trade at world-
wide level to represent:  

 

 

the  position  of  the  different  country-systems  with  respect  to  world  total  exports  (including  intra-EU 
wine transfers). For the EU, the analysis considers individual exporting Member States (over total intra- 
and extra-EU markets, in volume and value15);  

the position of EU wines on the most important import markets (in terms of market share, volume and 
value).  

This analysis uses 2012 wine trade data (source: Comtrade). 

5.2.1  The position of country-systems on the world export market 

The maps of Fig. 3 show the position of the different country-systems (EU Member States and main non-EU 
competitors) in terms of export market share calculated on total world exports in value (on the x-axis) and 
volume (on the y-axis)16, respectively for the bottled wine market, for the wine market in bulk and for the 
total still wine market (bottled + bulk). 

15 Data in value, sourced from Comtrade, are espressed in USD. 
16  Comtrade data  for  Argentina relative to export volumes (litres) resulted to be incorrect. Therefore, they have been corrected by 

applying an average Kg/Lt conversion index to data in kilograms.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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Fig. 3: Export market shares of main wine exporting countries in value and volume, 2012 (% over world total export) 

Export market shares for bottled wine 

Export market shares for bulk wine  

Export market shares for total still wine 

Source: based on Comtrade data 

EU Member States hold the largest export market shares worldwide, specifically: 

  France is the world leader in value and Italy in volume on the export market for bottled wine;  

  Spain is the world leader (both in value and volume) on the export market for bulk wine; 

  Overall (bottled + bulk), France is the world leader in value and Spain in volume terms.  

Again  from  the  comparison  of  individual  country-systems,  the  main  non-EU  competitors  have  far  smaller 
market  shares  compared  to  the  three  main  producing  Member  States.  The  main  competitors  (Chile  and 
Australia), have an export market share equal to a quarter of that of France in value and to a third of that of 
Spain in volume. 

We observe that in terms of relationship between export values and volumes:  

  For  France,  New  Zealand,  Australia  (although  less)  and  the  US  value  market  shares  are  larger  than 
volume  market  shares  (therefore,  these  countries  achieve,  on  average,  a  higher  FOB  unit  value).  In 
particular, New Zealand and France seem to play their competitiveness on high quality wines, both in 
bottles and bulk;  

  Conversely,  Italy  and  Spain  have  lower  market  shares  in  value  than  in  volume  (and  thus  achieve,  on 
average,  a  lower  FOB  unit  value).  Spain,  in  particular,  seems  to  play  its  competitiveness  on  the  low 
range wines, both bottled and bulk. 

5.2.2 

Import market shares of EU wines on the most important world markets  

The  maps  in  Fig.  4  show the  position  of  EU  wines  compared  to  non-EU  wines  in  terms  of  import  market 
shares in the top ten markets of interest at world level, respectively for still wines imported in bottles and 
wines imported in bulk. Again, market shares are calculated on values and volumes. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 39 

FranceItalySpainAusChileUSAGerNew ZPortArgUKS AfricaOTH0,05,010,015,020,025,030,00,05,010,015,020,025,030,0Exoprt Market Share in VolumeExport Market Share in valueSpainItalyAusFranceChileS AfricaUSAArgNew ZGerPortUKOTH0,05,010,015,020,025,030,00,05,010,015,020,025,030,0Exoprt Market Share in VolumeExport Market Share in valueFranceItalySpainAusChileUSAGerNew ZArgPortS AfricaUKOTH0,05,010,015,020,025,030,00,05,010,015,020,025,030,0Exoprt Market Share in VolumeExport Market Share in value 
 
 
 
 
 
Fig. 4: Import market shares of EU still wines in value and volume in the most important EU export markets, 2012 (%) 

Import market shares for bottled wine 

Import market shares for bulk wine 

Source: based on Comtrade data 

In 2012, all EU wines considered together represented about 70% of the world import market in value and a 
little more in volume for bottled wines, and about 55% in value and 60% in volume for wine in bulk.  

Import  market  shares  of  EU  wines differ  widely  across  the top  10  import  markets plus  the  markets  of  the 
three case study Member States (UK, Germany and Denmark), ranging from:  

  a maximum of about 90% (Switzerland, Germany) to a minimum of 25% (Australia) for bottled wines; 

  a maximum of 100% (Morocco, Angola) to a minimum of 10-12% (United Kingdom) for bulk wine. 

In  order to  provide  an interpretation  of this  variability,  we  considered  the  EU wine importing  countries  in 
three groups (see maps above).  Based on country-market characteristics it is possible to make assumptions 
regarding some factors playing for or against the size of import market share of EU wines:  

On the positive side, the factors playing for a larger market share of EU wines are assumed to be:  

  The  market  proximity,  compared  to  EU  main  competitors:  Switzerland  and  Norway  (in  addition,  of 

course, to Germany and Denmark within the EU);  

  The historical relations of importing countries with some Member States (e.g. former colonies such as 

Angola and Côte-d'Ivoire);  

  The  existence  of  characteristics  of  (some)  wine  producing  Member  States  that have  an  impact  on the 
image of EU wines in import markets (symbolic aspects of the products: culture, history) or that play a 
carry-over effect (cuisines, etc.): Russia, Japan and China;  

On the negative side, the factors playing against a larger market share of EU wines are assumed to be:  

  The distance from markets relative to competitors: Australia, Brazil, Singapore;  

  The  existence  of  economic,  political  and  linguistic  ties  between  supplier  countries  and  consumer 

countries, very often through global wine companies17: UK, USA, Australia. 

5.2.3  Analytical  approach  to  analysis  of  global  competitiveness  of  EU  still  wines  with 

respect to international trade 

The first part of the analysis focuses on the evolution of the global competitiveness of EU wines compared to 
non-EU  wines  on  the  world  market  as  a  whole  and  in  the  10  most  important  wine  import  markets, 
distinguishing  between  still  wines  traded  already  packaged  (<2lt)  and  wines  traded  in  bulk  (>2lt).  With 
reference to the methodological approach previously illustrated (in §2.6.1.1), the analysis is based on:  

  Level and evolution of the value and volume of world exports and of imports by the 10 most important 

markets for EU wines compared to wines from third countries;  

17 Refer to §5.5.3.3 (market shares of global wine companies in the case study countries). 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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RusGer BraDenUKJapUSAAusNorCanChiSwiSingWorld20304050607080901002030405060708090100EU import Market Share in volumeEU import Market Share in valueMorAngRusGerCd'ICanUSAChiUKSwiJapDenNorWorld01020304050607080901000102030405060708090100EU import Market Share in volumeEU import Market Share in value 
 
 
 
                                                      
  Level and evolution of the market shares (in value and volume terms) of European wines compared to 

wines from third countries.  

The following methodology was applied to analyse wine export/import data:  

a)  To  make  the  data  comparable  across  different  countries,  at  worldwide  level  and  for  each  country 
market, total exports/imports of bottled and bulk wine (both in value and volume) were set equal to 100 
at  the  initial  year  (2000).  Exports/imports  from  EU  and  non-EU  countries  (which  make  up  total 
exports/imports)  were  calculated  in  proportion  to  their  weight  over  the  total.  In  addition,  each  year 
exports/imports from EU and non-EU countries (2001 through to 2012; 2013 for EU) were compared to 
total imports in 2000. 

b)  First, we calculated the difference (positive or negative) between EU and non-EU exports (or imports) 
in each year of the interval (2000-2012 for non EU countries; 2000-2013 for EU countries). Then, we 
calculated  the  variation  (positive  or  negative)  of  these  differences  in  each  year  tn  (Δ  Exports  (or 
Imports) (EU-Others)tn), ∀ n → 2001, ..., 2012) from the initial year t2000. Therefore, such variation, 
defined as Export (or Import) Variation can be calculated for each year as follows:  

Export Variationtn = (Δ Exports (EU-Others)tn) -  Δ Exports  (EU-Others)t2000,  

Import Variationtn = (Δ Imports (EU-Others)tn) -  Δ Imports  (EU-Others)t2000,  

where the Export Variation / Import Variation for 2000 = 0.  

c)  Similarly, we calculated the difference (positive or negative) between wine export (or import) market 
shares of EU and non-EU countries in each year of the interval (2000-2012 for non EU countries; 2000-
2013 for EU countries).  Then, we calculated the variation (positive or negative) of these differences in 
each  year  tn  (Δ  Market  Share  (EU  -Others)tn),  ∀  n  →  2001,  ...,2012)  from  the  initial  year  t2000. 
Therefore,  such  variation  (defined  as  Market  Share  Variation)  can  be  calculated  for  each  year  as 
follows: 

Market Share Variationtn = (Δ Market Share (EU-Others)tn) -  Δ Market Share (EU-Others)t2000), 

where the Market Share Variation for 2000 = 0. 

d)  Afterwards,  we  estimated  the  log-linear  regression  coefficient  for  export,  import  and  market  share 

Variations over the considered years 2000-2012 (2013 for EU countries).  

e)  Finally, for the world market and each import country market we constructed a map in which:  

- 

- 

the  x-axis  shows  the  slope  (positive  or  negative)  of  the  log-linear  regression  line  of  the  Export 
Variation ( or Import Variation);  
the y-axis shows the slope (positive or negative) of the log-linear regression line of the Market Share 
Variation. 

The combinations of Export - Market Share Variations and Import - Market Share Variations generate, for 
each piece of analysis, four quadrants:  

  In  the  first  quadrant  both  regression  coefficients  are  positive:  the  competitiveness  of  European  wines 

improves considerably over the considered years;  

  In the third quadrant both coefficients are negative: the competitiveness of European wine significantly 

decreases during the period;  

  In  the  second  quadrant  the  coefficient  for  exports/imports  is  positive,  whereas  the  market  share 
coefficient  is  negative:  the  competitiveness  of  European  wines  improves  only  slightly,  signalling  that 
risks are present for the future;  

  In  the  fourth  quadrant,  the  coefficient  for  exports/imports  is  negative,  whereas  the  market  share 
coefficient is positive: the competitiveness of European wine slightly decreases (however, the analysis 
shows that this does not occur in any of the considered cases). 

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5.2.4  Global competitiveness of EU still wines in the world market 

The analysis of the competitive position of EU still wines in the world market was carried out with respect to 
total  world  still  wine  exports,  including  also  intra-EU  trade  (i.e.  EU  wine  transfers  towards  each  Member 
State). This choice is motivated by the need to consider international trade (exports in this case) as a whole 
including also the EU market, for both EU Member States and third countries.  

The analysis was conducted for total still wines and separately for packaged and bulk wines. 

World  exports  of  still  wine  have  seen  remarkable  growth,  more  or  less  constant  throughout  the  examined 
time interval: +8.3% on average per year in value and +4.3% in volume. Within such overall evolution, the 
analysis of the competitive position of EU wines shows that:  

  The growth rate of total exports (value) from the EU is lower than the growth rate of exports from the 
rest  of  the  world  (+7.6%  on  average  per  year  and  +9.9%  per  year,  respectively).  However,  a  lower 
growth  rate  applied  to  a  much  higher  initial  value  leads  to  a  larger  growth  of  EU  exports’  value 
resulting, therefore, into a positive evolution of the Export Variation indicator;  

  On the other hand, the growth rate of EU export volumes (3.3% per year) compared to the growth rate 
of  exports  from  the  rest  of  the  world  (+6.5%  per  year)  leads  to  a  substantial  stability  of  the  Export 
Variation (slightly negative until 2010 and more stable afterwards);  

  Despite growth of the Export Variation in value terms, the market share of EU wines over total world 
exports has declined between 2000-2005 and stabilised afterwards. In spite of a decrease, the EU market 
share remains large (about 68% in 2012, compared with 74% in 2000). The substantial stability of the 
Export Variation in terms of volume has a somewhat  larger effect on the evolution of the EU market 
share (in volume): from 75.2% in 2000 to 65.9% in 2012 (in this case too, the market share decreases 
until  2007  and  subsequently  stabilises).  Therefore,  the  Market  Share  Variation  indicator  shows  a 
negative trend in both cases, less pronounced for export value and more evident for export volume (see 
Fig. 5). 

Fig. 5: World: Total still wine export value, volumes and market shares, 2000-2012 (World 2000= 100) 

Total wine: Export value 

Total wine: Export Value Market Share 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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Competitiveness in slight declineCompetitivenessin slight growthCompetitiveness in strong growthCompetitiveness in strong decline00>0>0<0Regr. coefficient ΔMarket ShareRegr. coefficient ΔImporty = 18,832ln(x) -12,019-50 -50 100 150 200 250 300 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSWorldy = -5,243ln(x) + 0,8617-20 -10 -10 20 30 40 50 60 70 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 27OTHERS 
 
 
 
 
Total wine: Export volume 

Total wine: Export Volume Market Share 

5.2.4.1  Global competitiveness of EU packaged still wines 

Source: based on Comtrade data 

World exports of still wine in bottles have grown by around 8% on average per year in value and by 3.2% in 
volume. In this context, the competitive position of EU wines is a little better than that observed for wines in 
total. In particular: 

  The growth rate of exports’ value of bottled wines from the EU is in this case lower than the growth rate 
of exports from the rest of the world (+7.6% and +8.9% on average per year, respectively). However, the 
lower growth rate applied to a much  higher initial value leads to larger growth in the value of exports 
from the EU and, therefore, to a positive evolution of the Export Variation; 

  The situation is different with respect to export volumes: the growth of EU exports (+3.1% on average 
per  year)  is  only  slightly  lower  than  the  growth  rate  of  exports  from  the  rest  of  the  world  (+3.3%). 
Furthermore,  two  sub-intervals  can  be  observed:  the  first,  from  2000  to  2006,  characterised  by  slow 
growth of EU exports and faster increase for exports of all competitors; from 2007 onwards, EU exports 
see an acceleration compared to a slight decrease of exports for the competitors. The resulting evolution 
of the Export Variation is from slightly negative until 2009 to positive in the following years; 

  Despite the growth of the Export Variation in value terms, the market share of EU bottled wine exports 
slightly  declines  between  2000  to  2005  and  essentially  stabilises  afterwards  (see  Fig.  6).  Similarly  to 
what observed for total wine exports, the EU market share remains rather high (just over 70% in the last 
years of the period, compared to 73% in 2000). On the other hand, the Export Variation in volumes has 
more  mixed  effects  on  the  evolution  of  EU  wines  market  share  (in  volume),  which  decreased  from 
71.7% to 62.5% until 2005, before gradually recovering in subsequent years to reach 70.9% in 2012 (i.e. 
only slightly less than the market share in 2000). In the face of these trends, the Market Share Variation 
presents (in both value and volume terms), a negative evolution in the early years of the period, but a 
recovery in subsequent years, more noticeable in the case of export volumes. 

Fig. 6: World: Bottled still wine export value, volumes and export market shares, 2000-2012 (World 2000= 100) 

Bottled wine: Export value 

Bottled wine: Export Value Market Share 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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y = -0,384ln(x) -4,9457-40 -20 -20 40 60 80 100 120 140 160 180 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSWorldy = -8,491ln(x) -0,633-40 -20 -20 40 60 80 100 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 27OTHERSy = 22,019ln(x) -14,101-50 -50 100 150 200 250 300 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSWorldy = -3,309ln(x) -0,36-20 -10 -10 20 30 40 50 60 70 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 27OTHERS 
 
 
 
 
 
 
 
 
 
 
 
Bottled wine: Export volume 

Bottled wine: Export Volume Market Share 

Source: based on Comtrade data 

The  following  underlying  trends  to  changes in the  global  competitiveness of  EU  bottled  still  wine exports 
can be observed:  

  The  recovery  of  competitiveness  of  EU  wine  exported  in  bottles  on  the  world  market  is  due  to  an 
improvement of the competitiveness of wines exported mainly from Italy and Spain (in volume), which 
however  appears  to  be  significantly  reduced  by  a  loss  of  competitiveness  of  exports  from  France  (not 
only in terms of volume, but also in value);  

 

It is worth observing that the growth of the export market share of Spanish wines (in volume), which is 
however  not  matched  by  an  equal  improvement  in  value  terms,  starts  in  2010,  following  the 
implementation of the CMO wine reform. Therefore, the increase in export volumes hides a significant 
decrease in the average price18.  

  As far as the EU competitors are concerned, the overall trend is the result of opposing developments (see 
Fig. 7). Growth is mainly due to exports of Chile that significantly increases its market share (especially 
in volume), whereas the turnaround in 2006-2007 is almost exclusively due to loss of market share by 
Australia and to a lesser extent by South Africa. 

Fig. 7: Bottled still wine export market shares of main competitors, 2000-2012 

Bottled still wine: value 

Bottled still wine: volume 

5.2.4.2  Global competitiveness of EU bulk still wines 

Source: based on Comtrade data 

A somewhat different situation arises in the case of still wines exported in bulk as shown in graphs of Fig 8 
below. 

World exports have witnessed very important growth: 10.6% on average per year and 6.1%, respectively in 
value and volume. Within this expansion, the analysis of the competitive position of EU wines shows some 
critical elements. In particular:  

18 Cf. §5.2.8 (price competitiveness) 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 44 

y = 4,3276ln(x) -8,3535-40 -20 -20 40 60 80 100 120 140 160 180 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSWorldy = -2,794ln(x) -5,3514-30 -20 -10 -10 20 30 40 50 60 70 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 27OTHERS-5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 2000200120022003200420052006200720082009201020112012FranceItalySpainArgentinaAustraliaChileNew ZealandSouth AfricaUSA-5,0 10,0 15,0 20,0 25,0 30,0 2000200120022003200420052006200720082009201020112012FranceItalySpainArgentinaAustraliaChileNew ZealandSouth AfricaUSA 
 
 
 
 
 
                                                      
  The growth rate of the value of exports from the EU is much lower than the growth rate of exports from 
the  rest  of  the  world  (+7.5%  on  average  per  year  and  +16.5%  per  year,  respectively).  In  this  case, 
however, despite a larger initial value for the EU, the growth differential between the EU and the rest of 
the world leads to a progressive negative evolution of the Export Variation.  

  A similar evolution is observed  for export volumes: the growth rate of EU exports (+3.4% on average 
per year) is much lower than the growth rate from the rest of the world (+12.4%). Again, the result is a 
progressive negative evolution of the Export Variation.  

  The decline of the Export Variation in value and in volume has remarkable effects on the market share 
of EU bulk wines, which plunges from 77.4% in 2000 to 53.2% in 2012 in value, and from 88.1% to 
58.5% in volume. Therefore, the Market Share Variation presents an evolution strongly negative in both 
cases over the entire time interval. 

Fig. 8: World: Bulk still wine export value, volumes and export market shares, 2000-2012 (World 2000= 100) 

Bulk wine: Export value 

Bulk wine: Export Value Market Share 

Bulk wine: Export volume 

Bulk wine: Export Volume Market Share 

Source: based on Comtrade data 

The following trends underlie the observed changes in the global competitiveness of EU exports of still wine 
in bulk (see Fig. 9):  

  The loss of competitiveness of EU wines is due in this case to the sharp drop in market share of wine 
exports from France (both value and volume). Italian and Spanish wines seem to perform a little better. 
In the case of Spanish wines, we observe an improvement in their market share.  

  However, the market share of Italian and Spanish wines shows extremely large fluctuations that mirror 
one another. One possible interpretation of this occurrence is that both these wines serve more or less 
the same usage function in the same markets (particularly the markets of EU Member States) with high 
degree  of  substitutability  between  the  two.  Fluctuations  are  an  effect  of  the  respective  market 
conditions.  

  With  regard  to  EU  competitors,  the  overall  trend  is  just  the  sum  of  individual  country  trends:  all 
countries have witnessed a market share increase, although more significant for Australia and Chile and 
less important for South Africa.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 45 

y = -6,726ln(x) + 4,6792-100 -50 -50 100 150 200 250 300 350 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSWorldy = -18,88ln(x) + 8,903-60 -40 -20 -20 40 60 80 100 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 27OTHERSy = -8,435ln(x) + 0,878-50 -50 100 150 200 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSWorldy = -18,26ln(x) + 8,3121-60 -40 -20 -20 40 60 80 100 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 27OTHERS 
 
 
 
 
 
 
 
 
Fig. 9: Bulk still wine export market shares of main competitors, 2000-2012 

Bulk still wine: value 

Bulk still wine:  volume 

Source: based on Comtrade data 

5.2.4.3  Global competitiveness of EU still wines in the world market: Synthesis of results 

The map of competitiveness of EU wines (Fig. 10) compared to exported wines of other origin shows that, 
overall, EU wines improve their competitiveness on the world market in value terms (they are positioned in 
the second quadrant of the map below), while maintaining their position in volume terms, despite the overall 
loss of market shares (in value and volume). However, this result is due to two opposite trends:  

  The relatively good performance of EU bottled wines (both volumes and values are positioned in the II 
quadrant),  with  a  slight  increase  of  competitiveness,  provides  some  assurance  about  the  likelihood  of 
maintaining their competitive position in the future, although some risks may be present for the future 
given the slight loss of market shares.  

  The decidedly negative performance of EU bulk wine exports (both values and volumes are shown in 
the third quadrant), with a significant decrease of competitiveness (in particular, market shares) raises 
doubts as to the possibility of future recovery of their competitive position. 

Fig. 10: Map of competitiveness of EU versus non-EU exported still wines in the world market 

Source: Cogea (based on Comtrade data) 

5.2.5  EU still wine exports: PDO and non-PDO wines 

In  this  further  analysis  we  have  disaggregated  EU  still  wine  export  data  (bottles  and  bulk)  into  the  PDO 
(v.q.p.r.d until 2009) and non-PDO (table wines until 2009) wine categories:  

  PDO and non-PDO for the whole interval;  

  PDO, PGI, wines without geographical indication (WGI) and varietal wines from 2010 onwards.  

For this analysis we have used Comext data as they allow for the required disaggregation (compared to the 
Comtrade database), albeit limited to EU exports towards the rest of the world. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 46 

-5,0 10,0 15,0 20,0 25,0 30,0 2000200120022003200420052006200720082009201020112012FranceItalySpainArgentinaAustraliaChileNew ZealandSouth AfricaUSA-5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0 2000200120022003200420052006200720082009201020112012FranceItalySpainArgentinaAustraliaChileSouth AfricaUSATotal VBottles VBulk VTotal QBottles QBulk Q-25-20-15-10-50510-10-50510152025Regr. Coeff. Market Share variationRegr. Coeff. Export variation 
 
 
 
 
 
 
The  graphs  in  Fig.  11  show  the  evolution  of  the  EU27  exports  towards  third  countries  (i.e.  intra-Union 
transfers are excluded from this analysis). 

Fig. 11: Evolution of EU still wine exports towards the rest of the world : PDO and non-PDO wines (PGI, WGI, Varietal 
wines), 2000-2013 

Bottled wine: Export value (1,000 Euros) 

Bottled wine: Volume (hl) 

Bulk wine: Export value (1,000 Euros) 

Bulk wine: Volume (hl) 

The following observations emerge from the analysis:  

Source: Comext data 

  With  regard  to  bottled  wine,  the  same  volumes  of  PDO  and  non-PDO  wines  are  exported  to  third 
countries, however we observe a striking difference (and with the gap widening over time) in terms of 
export values.  

Over the last four years of the considered interval (i.e. after the implementation of the 2008 wine CMO 
reform and the introduction of new wine categories: PGI, varietal wines) we observe that:  

-  PGI wines account for a very large proportion of non-PDO wines (approximately 70% in value and 

55% in volume on average between 2010-2013);  

-  Only a very small proportion of wines WGI is represented by varietal wines (about 19% of the total 

value and 9% of volume on average between 2010-2013). 

  Bulk export volumes of PDO wines represent a small part of total exports: about 33% in value over the 

entire period and 16% in volume (with a tendency to decrease).  

Over the last four years of the examined interval we observe that:  

-  Most non-PDO wines are wines WGI (about 79% in value and 89% in volume on average between 

2010-2013);  

-  Varietal wines represent only a limited share of wines WGI (about 17% of the total value and 9-

10% of volume on average between 2010-2013). 

Therefore, we can draw the following conclusions regarding the evolution over the last four years: 

  “Quality wines” represent approximately 92% (in value) and 77% (in volume) of exports of EU bottled 

wine towards third countries. This percentage is substantially stable over the considered years;  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 47 

0500.0001.000.0001.500.0002.000.0002.500.0003.000.0003.500.0004.000.0004.500.0005.000.00020002001200220032004200520062007200820092010201120122013PDO < 2lNot PDO < 2lPGI < 2lVarietals < 2lWGI < 2l01.000.0002.000.0003.000.0004.000.0005.000.0006.000.0007.000.0008.000.00020002001200220032004200520062007200820092010201120122013PDO < 2lNot PDO < 2lPGI < 2lVarietals < 2lWGI < 2l050.000100.000150.000200.000250.000300.00020002001200220032004200520062007200820092010201120122013PDO > 2lNot PDO > 2lPGI > 2lVarietals >2lWGI > 2l0500.0001.000.0001.500.0002.000.0002.500.0003.000.0003.500.0004.000.0004.500.0005.000.00020002001200220032004200520062007200820092010201120122013PDO > 2lNot PDO > 2lPGI > 2lVarietals >2lWGI > 2l 
 
 
 
 
 
  By  contrast,  “quality  wines”  only  represent  43%  (in  value)  and  22%  (in  volume)  of  exports  in  bulk 
(with a slight increase over the period). It is thus confirmed that EU exports of wine in bulk consisted 
mainly of wines intended for markets not very demanding in terms of quality;  

  Finally, the new category of varietal wines seems to arouse only little interest on the part of European 
producers19 and plays a very marginal role: only 1.4% of total exports of wine bottles in value and 2.1% 
in volume; 9.6% of total exports of wine in bulk in value and 7.1% in volume.  

China, USA and Canada are the main destination markets of the majority of varietal wine exports (42% 
of varietal wine in bottles and 75% in bulk).  

5.2.6  The export market for bottled vs. bulk wines: A change of strategy 

The different evolution of the competitive position of the EU in the two  business areas of bottled and bulk 
wine, together with what emerges from the analysis of export trends of different product types (PDO, PGI, 
etc.) calls for a more in-depth examination and leads, at the same time, to some further considerations.  

Fig. 12 and Fig. 13 show the cumulative size of export volumes of bottled and bulk wine, respectively from 
the European Union (intra + extra-EU) and from the group of NWC (the scales of the graphs are identical to 
ease comparison). 

Fig. 12: Cumulative exports of still wine in bottles and bulk, from EU28 (intra + extra EU) and NWC (hl), 2000-2012 

EU28 

NWC 

Source: based on Comtrade data 

Fig. 13: Bottled wine export /Bulk wine export 

EU28 and NWC 

Most important NWC 

The analysis leads to the following observations and considerations: 

Source: based on Comtrade data 

  As  previously  seen,  total  EU  exports  started  growing  (with  some  fluctuations)  from  2007  onwards. 

Conversely, after a rapid growth until 2007, NWC exports remain stable in the following years.  

  The composition of EU wine exports remained essentially constant throughout the period (the observed 

fluctuations around the flat trend of the bottled /bulk wine export ratio are quite small).  

19 This, despite being eligible for the “Promotion on third country markets” measure under current EU regulation. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 48 

-10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 2000200120022003200420052006200720082009201020112012BulkBottles-10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 2000200120022003200420052006200720082009201020112012BulkBottles0,000,501,001,502,002,503,003,504,004,502000200120022003200420052006200720082009201020112012EU 28NWC 80,01,02,03,04,05,06,07,08,02000200120022003200420052006200720082009201020112012AustraliaChileSouth AfricaUSA 
 
 
 
 
 
 
                                                      
  By contrast, the evolution of NWC exports shows a deterioration of the relationship between bottled and 
bulk exports, highlighting a change in business/logistics strategy around 2007, when the stability of total 
exports  results  from  growth  of  exports in  bulk  and  a  reversal  in  the  trend  of  bottled  wine  exports.  In 
other words, since 2007 a strategy of gradual substitution of bottled wine with bulk wine exports is in 
place. 

  The main actors of this change of strategy (also influenced by technological innovation - see box below) 
are  Australia,  the  United  States  and  South  Africa.  Chile,  on  the  other  hand,  seems  to  follow  a  more 
similar strategy to that adopted by the EU, keeping the bottled/bulk relationship more or less constant 
over time.  

  At  present,  a  possible  change  of  strategy  by  the  EU  (similar  to  what  observed  in  the  above  NWC 
countries)  does  not  seem  feasible,  since  the  majority  of  exports  consist  of  PDO  and  PGI  wines  to  be 
marketed  in  bottles  partly  because  of  constraints  posed  to  bottling  outside  the  production  area  in  the 
PDO/PGI production protocols by producers’ organisations (as well as in reason of the image of such 
products). Therefore, bulk exports are mainly wines WGI.  

  Given the cost advantages inherent in marketing/transporting wine in bulk rather than in bottles (see box 

below), EU quality wines suffer a competitive disadvantage. 

The role of technology in the bulk wine market 

Technological  development  has  completely  changed  the  competitive  structure  of  wine  trade.  In  particular,  the 
introduction of the Flexitank (big bag-in-box with a capacity of 16.000 to 24.000 litres) has replaced steel containers. 
The  result  is  that  quality  does  not  deteriorate  (i.e.  no  wine  oxidation,  better  preservation  of  organoleptic 
characteristics). In this way it is possible to transfer wine in flexitanks from the  areas of production and bottle it in 
the areas of consumption, with significant cut of freight costs. In this way, then, bulk wine is no longer only intended 
for mixing with local wines, but to be bottled at destination with a brand of origin. 

According to the literature, such change has both positive and negative effects. 

Positive effects:  

  Cost reduction: this system allows to transport wine in a standard 24,000 litres container, instead of 9,900 litres 
of bottled wine, for which shipping costs are $0.16/lt and $0.34/lt, respectively. This explains the decision of 
large wine businesses to bottle wines more cheaply at destination.  

  Reduction of environmental effects: glass represents most of the weight of a wine bottle. In a standard shipping, 
13,200  bottles  (9,900  litres)  weigh  as  much  as  25,000  litres  of  bulk  wine,  which  is  about  the  capacity  of  a 
flexitank. Therefore, the "carbon footprint" is reduced by about half for a litre of wine  in bulk compared to a 
litre of wine in the bottle. 

Negative effects:  

 

Increase  in  unemployment:  in  all  producing  countries  for  the  loss  of  activity  of  the  bottling  industry  (but, 
conversely, increase in consumer countries). In South Africa, the non-profit association Wines Of South Africa 
(WOSA)  has  estimated  a  loss  of  107  units  every  10  thousand  litres  of  wine  exported  in  bulk,  due  also  to 
reduction of bottling operations.  

  Consequences for the glass industry: in 2012, Owens-Illinois, the world's largest manufacturer of bottles, closed 
down 3 of their 12 kilns in Australia; again in 2012, Amcor of Melbourne has seen a 34% decline in orders and 
Penrice Soda Holdings stopped producing soda ash, which is necessary in glass production. 

5.2.7  Global  competitiveness  of  EU  still  wines  in  the  10  most  important  import  markets 

and in 3 EU markets (case study Member States) 

This chapter analyses EU still wines’ competitive position on the 10 most important third country markets in 
terms of imports of EU wines in bottles20 and in bulk21, respectively (i.e. two distinct groups of countries).  

20 The first ten importers of EU bottled wine are Australia, Brazil, Canada, China (including Hong Kong and Macao), Japan, Norway, 

Russia, Singapore, Switzerland and USA. 

21  The  first  ten  importers  of  EU  wine  in  bulk  are  Angola,  Canada,  China,  Côte-d'Ivoire,  Japan,  Morocco,  Norway,  Russia, 

Switzerland and USA. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 49 

 
 
 
                                                      
We consider the total of EU wine imports of all countries in each group (respectively importers of bottled 
and bulk wine) in relation to total wine imports in the same countries. In this case, the analysis has not been 
conducted  at  the  level  of  total  still  wines  (bulk  +  bottled),  since  the  two  groups  do  not  include  the  same 
countries.  

However,  the  maps  showing  the  synthesis  of  the  results,  also  report  results  for  individual  importing 
countries, as well as for the three case study Member States (Denmark, Germany22 and the United Kingdom).  

5.2.7.1  Global competitiveness of EU packaged still wines in the most important import markets 

For  the  group  of  ten  most  important  importing  countries  of  EU  bottled  wines,  total  imports  of  still  wines 
have increased by 9.9% on average per year in value and 5.4% in volume (Fig. 14). In both cases, growth is 
much faster than growth of total world exports of bottled wine. In this scenario we observe that:  

  The growth rate of the value of imports from the EU is lower than that of imports from the rest of the 
world  (9.3%  and  11.2%  on  average  per  year,  respectively).  However,  the  slower  growth  applied  to  a 
higher initial value (about 2.4 times), leads to larger growth in the value of imports from the EU and, 
therefore, to a positive evolution of the Import Variation.  

  Furthermore, the growth rate of imports from the EU in volume (+5.1% annual average) is only slightly 
lower than that of imports from the rest of the world (+5.9% on average per year). However, we observe 
two sub-intervals for imports from the rest of the world: the first, from 2000 to 2005, characterised by 
very rapid growth, followed by a major downturn23 and then, by a subsequent recovery at a slower speed 
than that of EU imports. This results in the Import Variation indicator turning from negative to slightly 
positive towards the end of the period. 

  Despite  the  growth  of  the  Import  Variation  (import  value),  the  market  share  of  EU  wines  over  total 
imports of the top 10 partners shows a slight decline between 2000 and 2005, followed by recovery in 
2006 and substantial stability thereafter. However, the market share of the EU remains large (over 66% 
in the last years of the period, compared to 71% in 2000).  

  By  contrast,  the  evolution  of  the  Import  Variation  in  volume  leads  to  more  mixed  effects  on  the 
evolution of EU market share: drop from 67% to 48.8% between 2000 and 2005, then gradual recovery 
in subsequent years to reach 60.3% in 2012. Within these trends, both in value and volume terms, the 
Market Share Variation presents a downward trend in the early years of the interval, but with a recovery 
in subsequent years (stronger in the case of import volumes). 

Fig. 14: Top 10 third-countries importers of EU bottled still wine:  import values, volumes and market shares, 2000-2012 

Bottled wine: import value 

Bottled wine: Value Market Share 

22 In the case of Germany, the only analysed Member State that is also a wine producer, domestic wines (that are EU wines) are not 

considered in this part of the analysis, which only examines imported wines. 

23  This  was  mainly  due  to  the  fall  in  wine  imports  from  other  former  USSR  countries  as  a  result  of  the  embargo  imposed  by  the 

Russian government to Moldova and then Georgia.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 50 

y = 22,196ln(x) -16,03-50 0 50 100 150 200 250 300 350 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSTOT. IMPy = -4,921ln(x) -0,2295-20 -10 0 10 20 30 40 50 60 70 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERS 
 
 
 
 
 
 
 
 
 
 
 
                                                      
Bottled wine: import volume 

Bottled wine: Volume Market Share 

Source: based on Comtrade data 

The following underlying trends to changes in the global  competitiveness of EU bottled still wine imports 
can be observed (see Fig. 15):  

  Growth of imports from the EU in value was mainly due to wines from France and secondarily, from 

Italy, with a more modest role played by Spain;  

  A similar pattern is observed for import volumes, with Italy this time playing a more important role than 
France,  although  imports  from  France increase  more vigorously  over  the last  years  of  the  interval.  In 
volume  terms,  Spanish  wines  see  considerable  expansion  (again  from  2010  onwards,  after 
implementation  of  the  CMO  reform),  not  matched  by  an  equal  expansion  of  import  values  (resulting 
thus into a significant decrease of the average unit value);  

  As for all other competitors, the overall trend appears negatively affected by the downturn of Australian 
wine imports in 2007 and the collapse of Russian imports from the former Soviet republics (especially 
in  volume).  By  contrast,  Chilean  and  Argentinean  wines  enjoy  the  largest  growth  (especially  in 
volume). 

Fig. 15: Bottled still wine imports from main competitors, 2000-2012 

Imports in value 

Imports in volume 

Source: based on Comtrade data 

5.2.7.2  Global competitiveness of EU still wines in bulk in the most important import markets 

A somewhat different situation arises in the case of still wines imported in bulk (see Fig. 16). Across all ten 
most important import markets for EU wines, total still wine imports have witnessed significant growth: by 
12.3% per year in value and 10.9% in volume.  

Within this overall trend, the results of the analysis show that:  

  The growth rate of the value of EU exports is much lower than the growth rate of exports from the rest 
of  the  world  (respectively,  8.4%  and  17.3%  on  average  per  year).  This  growth  differential,  although 
applied to a larger initial value for the EU (about 2.1 times), leads to a gradually negative evolution of 
the Import Variation, with a dramatic low point in the last considered year.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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y = 0,9766ln(x) -15,444-50,0 0,0 50,0 100,0 150,0 200,0 250,0 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSTOT. IMPy = -5,269ln(x) -10,346-60 -40 -20 0 20 40 60 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERS-20 40 60 80 100 120 2000200120022003200420052006200720082009201020112012FranceItalySpainArgentinaAustraliaChileNew ZealandUSAOthers Ex USSR-5 10 15 20 25 30 35 40 45 50 2000200120022003200420052006200720082009201020112012FranceItalySpainArgentinaAustraliaChileNew ZealandUSAOthers Ex USSR 
 
 
 
 
 
  A similar pattern is observed for export volumes: growth of EU exports (7.2% on average per year) is 
again  much  slower  than  growth  of  exports  from  the  rest  of  the  world  (+15.2%  per  year).  Again,  the 
result is a downward evolution of the Import Variation.  

  The decrease of the Import Variation in value and volume has an extreme effect on the market share of 
EU wines, which plunges from 67.7% in 2000 to 39.5% in 2012 in value and from 67.6% to 39.4% in 
volume.  EU  competitors reach  50% of the  market  share (critical  threshold) in  2007  in  volume  and in 
2009  in  value.  Therefore,  the  Market  Share  Variation  presents  a  dramatic  decrease  over  the  whole 
period. 

Fig. 16: Top 10 third-countries importers of EU still wine in bulk: import values, volumes and market shares, 2000-2012 

Bulk wine: Import value 

Bulk wine: Value Market Share 

Bulk wine: Import volume 

Bulk wine: Volume Market Share 

Source: based on Comtrade data 

The following trends underlying the changes in the global competitiveness of bulk wine imports from the EU 
can be observed (Fig. 17):  

  The evolution of imports from the EU in value is due to exponential growth of still wine imports from 
Spain (albeit with a collapse in 2012, which generates an overall fall in imports from the EU in the same 
year), and more modest import increases from Italy and Portugal24. On the other hand, imports in bulk 
from France fluctuate around an average value only slightly increasing25.  

  The same pattern is more or less reproduced for imports in volume, with an even greater role played by 
Spain (who  became  a  leader  in  all  10 examined  country  markets  in  2010)  and a  reversal  of  positions 
between France and Italy starting in 2009.  

  With  regard  to  the  other  competitors,  all  major  producing  countries  have  contributed  to  the  overall 
growth of the group26. However, the most important contribution is given by the tremendous growth of 
imports  from  Chile  and  Australia  (in  volume  terms,  but  especially  in  value  terms).  In  2012  Chile 
became the absolute leader for all 10 countries with respect to value of imports. In addition, we observe 
a remarkable growth of wines imported from Argentina starting from 2009-2010. 

24 Portugal accounts for the near totality of Angola’s wine imports. 
25 Spain and Portugal are the only Member States increasing their market share, whereas Italy and, in particular, France  witness a 

dramatic reduction of their market share.  

26 All main competitors increase their market share, with the only ecception of the USA. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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y = -23,25ln(x) + 20,168-200 -100 0 100 200 300 400 500 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSTOT. IMPy = -19,3ln(x) + 14,431-60 -40 -20 0 20 40 60 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSy = -25,9ln(x) + 12,146-150,0 -100,0 -50,0 0,0 50,0 100,0 150,0 200,0 250,0 300,0 350,0 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERSTOT. IMPy = -20,51ln(x) + 7,1911-80 -60 -40 -20 0 20 40 60 80 2000200120022003200420052006200720082009201020112012Δ(EU-Oth)tn -Δ(EU-Oth)t0EU 28OTHERS 
 
 
 
 
 
                                                      
Fig. 17: Bulk still wine imports from main competitors, 2000-2012 

Imports in value 

Imports in volume 

Source: based on Comtrade data 

5.2.7.3  Global competitiveness of EU still wines in the most important import markets: Synthesis of 

results 

The maps of competitiveness of European wines, bottled and in bulk (respectively, in value and volume) on 
the most important import markets worldwide are presented in Fig. 18 and Fig. 19.  

As  well  as  the  overall  competitive  position  of  EU  wines  in  the  top  10  markets  (considered  together),  the 
maps  also  show  the  competitive  position  of  EU  wines  in  individual  country  markets,  including  the  three 
Member States examined as case studies (Denmark, Germany, United Kingdom).  

With regard to the overall competitive position of EU wines (i.e. considering the top 10 country markets as 
an aggregate), the results are very similar to those obtained in the analysis of the competitive position of the 
EU in global exports (Cf. §5.2.4): 

  EU  wines  slightly  improved  their  position  in  the  market  for  bottled  wine,  both  in  value  and  volume, 
compared to the group of competitors (both are positioned in the second quadrant, but very close to the 
line between second and third quadrant), despite the overall loss of market shares;  

  The competitive position of EU wines on the bulk wine market significantly deteriorated, both in value 
and volume (positioned in the third quadrant in both cases, however not very far from the line between 
second and third quadrant) and very severely in what concerns market shares.  

In  both  cases,  the  overall  result  is  the  consequence  of  very  heterogeneous  individual  situations  (i.e.  each 
country of the two groups of top 10 trade partners respectively for bottled and bulk wine). This heterogeneity 
is further confirmed by the results of analysis carried out on the three MS markets (Germany, Denmark and 
UK).  

With  respect  to  bottled  wines  (Fig.  18),  the  analysis  of  the  competitive  position  of  the  EU  on  individual 
markets shows that: 

  EU wines greatly improved their competitive position (both in value and volume) on the import markets 
of  Russia  and  China,  but  also  Switzerland  and  Norway  and,  among  the  EU  markets,  the  United 
Kingdom (i.e. first quadrant of the map);  

  EU bottled wines also improved their competitive position on the import markets of the US (in terms of 
value and volume), and Japan and Singapore albeit to a lesser extent (only in value terms in these two 
markets, whereas EU wines position slightly deteriorates with respect to volumes), although some risks 
may be present for the future in these markets;  

  A marked deterioration of EU wines position occurs in the import markets of Australia and Brazil (lying 
in the third quadrant, both values and volumes). This raises  questions about the realistic possibility of 
future recovery in these markets;  

  A slight decline was also recorded on the import markets of Canada and Denmark (but only in volume, 
whereas EU wines appear to maintain their position in value terms). For these two countries, the future 
recovery of competitiveness is potentially feasible.  

  The competitive position of EU bottled wines on the German market is substantially preserved (both in 

value and volume). 

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-10 20 30 40 50 60 70 80 2000200120022003200420052006200720082009201020112012FranceItalyPortugalSpainArgentinaAustraliaChileNew ZealandSouth AfricaUSAOthers Ex USSR-10 20 30 40 50 60 70 80 90 100 2000200120022003200420052006200720082009201020112012FranceItalyPortugalSpainArgentinaAustraliaChileSouth AfricaUSAOthers Ex USSR 
 
 
 
Fig. 18: Maps of competitiveness of EU versus non-EU bottled still wines in the top 10 third-country markets and in the 3 
Member State markets 

Bottled still wine in value 

Bottled still wine in volume 

Source: Cogea (based on Comtrade data for third countries and Comext data for EU countries) 

However,  some  aspects  contribute  to  mitigate  this  scenario,  in  particular  a  more  reasoned  analysis  of  the 
evolution of the Import Variation and the Market Share Variation indicators. We refer, in particular to:  

 

the Russian import market (in volume), where the important increase of both indicators is the effect of a 
structural  break  coinciding  with  the  embargo  imposed  between  2005  and  2006  to  products  from 
Moldova  (main  trade  partner  of  Russia  before  that  date).  In  fact,  after  the  sudden  growth  of  wine 
imports  from  the  EU  in  2006  (i.e.  substitution  effect),  Russian  imported  volumes  largely  stabilised, 
including imports from the EU. Therefore, Russia's position on the map should be reconsidered;  

 

imports of the United States, where "average" results mask a significant upturn in the last years of the 
interval (both in value and volume), which have contributed to moving the position of EU wines on the 
second quadrant, very close to the first quadrant. 

The analysis of the competitive position of the EU bulk wine (Fig. 19) on individual markets shows that: 

  EU wines greatly improved their competitive position (both in value and volume) on the import markets 
of Russia and Norway (lying in the first quadrant), and to a lesser extent Angola, Germany, and Côte-
d'Ivoire (as shown by positioning in the second quadrant).  

  A marked deterioration is observed on the import market of the United States, but also in China and the 
United Kingdom (all in the third quadrant). A deterioration, although to a lesser extent, is also recorded 
on the Danish and Japanese markets.  

  In other countries (Canada and Switzerland) the competitive position of EU wines has only very slightly 

worsened. 

Fig. 19: Maps of competitiveness of EU versus non-EU bulk still wines in the top 10 third-country markets and in the 3 
Member State markets 

Bulk still wine in value 

Bulk still wine in volume 

Source: Cogea (based on Comtrade data for third countries and Comext data for EU Member States) 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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First 10AusBraCanNorSingSwiUSJapRusChiGerDenUK-40-30-20-100102030405060-400-2000200400600800Regr. Coeff. Market Share variationRegr. coeff. Import variationFirst 10AusBraCanNorSingSwiUSJapRusChiGerDenUK-60-40-20020406080-200-1000100200300Regr. coeff. Market Share variationCoeff. regr. Import variationFirst 10 CanCd'INorSwiAngUSJapRusChiGerDenUK-50-40-30-20-10010203040-400-300-200-1000100200Regr. coeff. Market Share variationRegr. coeff. Import variationFirst 10 CanCd'INorSwiAngUSJapRusChiGerDenUK-50-40-30-20-1001020304050-600-400-2000200Regr. coeff. Market Share variationCoeff. regr. Import variation 
 
 
 
 
 
 
In this case too, certain factors contribute to mitigating the observed competitive scenario. In particular:  

  In Denmark, the competitive position of EU wines stabilises after deteriorating between 2000 and 2005. 

Accordingly, the position moves closer to the origin of the axes;  

  In  Canada  (after  2010)  and  China  (after  2009),  the  competitive  position  of  EU  wines  shows  an 
improvement, particularly in China. For both countries, therefore, the position has shifted towards the 
second quadrant of the map in the last years of the examined period.  

  One  particular  factor  concerns  Russia,  where  the  improvement  of  both  Import  and  Market  Share 
Variation  indicators  actually  conceals  a  phenomenon  of  substitution  between  imports  (also  from 
Europe) of bulk wine and grape must (see box below), both serving the same function in this country 
(i.e.  blending  with  local  wines).  Therefore,  the  magnitude  of  the  improvement  of  the  competitive 
position of EU wines must be reconsidered. 

Substitution between imports of bulk wine and grape must 

Among the examined countries, the phenomenon occurs only in Russia and (to a lesser extent) in Japan (see Fig. 20). 
For all other major importers of EU wine in bulk, grape must imports are marginal. 

Fig. 20: Evolution of bulk wine and grape must imports (hl) 

Russia 

Japan 

Source: based on Comtrade data 

In  the  light  of  the  results  presented  so  far,  it  must  be  stressed  that  the  overall  improvement  in  the 
competitiveness of EU bottled wines, as well as the overall deterioration of the competitive position of EU 
wines exported in bulk, occurred in a context of clearly unfavourable evolution of exchange rates (for better 
detail, please refer to §5.5.6). In fact, the gradual devaluation of the EU main competitors’ currencies relative 
to  the  Euro  has  effectively  reduced  the  economic  and  financial  competitiveness  of  EU  wines.  Only  the 
evolution of the New Zealand and the Australian dollar exchange rates has been favourable to the Euro.  

Indeed, the deterioration of the global competitiveness is due to bulk wine, for which price (and, therefore, 
the cost structure) represents the most critical factor. It is in this market that changes in currency exchange 
rates have the largest effects. 

5.2.8  Price competitiveness 

This  part  of  the  analysis  focuses  on  the  price  competitiveness  of  EU  wines  relative  to  competitors  in 
international  trade  (CIF  or  FOB).  These  prices  are  calculated  as  the  ratio  between  value  and  volume  of 
imported (CIF) or exported (FOB) goods. Therefore, they are "implicit prices" and their reliability depends 
on the reliability of the value of the goods declared at customs, either at the place of departure or arrival27.  

In  spite  of  this  limit,  CIF  /  FOB  prices  are  the  closest  to  the  real  "unit  value"  of  goods  (i.e.  the  value  of 
production per unit at the origin), because they are not burdened by taxes, excise duties, sales margins, etc. 
However,  these  prices  (expressed  in  USD  or  Euro  depending  on  the  source  (Comtrade  or  Comext)  are 
influenced by exchange rates. 

27 The issue of reliability of the declared value of goods is especially important in countries where import duties or other taxes are 
applied to wine ad valorem (e.g. China). In these cases, the real value of goods may be underestimated and, with it, the CIF price.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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0500.0001.000.0001.500.0002.000.0002.500.0003.000.0003.500.0004.000.0004.500.0002000200120022003200420052006200720082009201020112012MustBulk W0100.000200.000300.000400.000500.000600.0002000200120022003200420052006200720082009201020112012MustBulk W 
 
 
 
 
                                                      
5.2.8.1  Evolution of FOB prices 

Graphs  in  Fig.  21  show  the  evolution  of  average  FOB  prices  of  EU  wines  and  wines  from  the  group  of 
NWC, in bottles and in bulk. In order to appreciate the role played by exchange rates, prices are expressed in 
USD and in Euro.  

Fig. 22 shows the evolution of the relationship between EU and NWC wine FOB prices. 

Fig. 21: Evolution of the FOB unit value of EU and NWC wines in bottles and bulk (USD/lt and Euro/lt), 2000-2012 

USD/lt 

Euro/lt 

Source: Comtrade for third countries; Comext for EU Member States 

Fig. 22: EU/NWC FOB unit values 

Source: Comtrade for third countries; Comext for EU Member States 

Examination  of  the  evolution  of  prices  and  their  relationship  shows  that  the  ratio  between  EU  and  NWC 
prices is always greater than 1 for bottled wines (except for the last year of the interval), and less than 1 for 
bulk wine in almost all years, with the exception of 2003, 2007 and 2009.  

If  we  want  to  hypothesise  a  relationship  between  price  and  quality,  we  must  therefore  conclude  that,  on 
average, EU wines traded in bottles should be of higher quality compared to NWC wines (although NWC 
caught up, evening out the average price towards the end of the period), whereas EU wines traded in bulk 
should be (again on average) of lower quality. 

In addition, the analysis of price trends highlights the presence of two sub-periods:  

  The first, from 2000 to 2009, shows widening of the gap between EU and NWC prices. This results in 
an  increase  (on  average)  in  the  price  ratio,  which appears  to  be  more  stable for  bottled  wine  than  for 
bulk wine; 

  The  second,  from  2009  to  2012  shows  a  sharp  reversal  of  the  previous  trend,  which  is  particularly 

evident for bottled wines (but also for wines in bulk, albeit in a less pronounced manner). 

The  turnaround  observed  in  the  last  four  years  appears  to  be  strongly  related  to  the  change  in  business 
strategy implemented by some NWC companies (i.e. gradual replacement of wine exported in bottles with 
wine exported in bulk - see §5.2.6). The effect of this strategy change on average FOB prices is twofold:  

  Increase  in  the  average  price  of  bottled  wines:  part  of  average  quality  wine  (and  average  price) 
previously exported in bottles is exported in bulk, while the wines of better quality and stronger image 
(and hence higher price) continue to be exported in bottles. This results in an increase of the average 
FOB price of wine (of better quality) in bottles;  

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 56 

-0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 2000200120022003200420052006200720082009201020112012EU bottledNWC BottledEU BulkNWC Bulk-0,5 1,0 1,5 2,0 2,5 3,0 3,5 2000200120022003200420052006200720082009201020112012EU bottledNWC bottledEU bulkNWC bulk0,000,200,400,600,801,001,201,402000200120022003200420052006200720082009201020112012Total wineBottlesBulk 
 
 
 
 
  Increase  in  the  average  price  of  wines  in  bulk:  part  of  the  average  quality  wine  (and  average  price), 
previously  exported  in  bottles,  is  added  to  the  wine  of  lesser  quality  (and  lower  price)  previously 
exported  in  bulk.  The  result  is  an  improvement  in  the  average  quality  and,  therefore,  in  the  average 
price. 

These  two  effects  become  even  more  obvious  moving  from  the  aggregate  level  of  analysis  to  individual 
countries.  

Fig.  23  illustrates  the  changes  in  FOB  prices  (in  Euros),  respectively  for  the  main  EU  and  NWC  wine 
exporters (the same price scale is used for the two groups of countries in order to facilitate comparison). 

Fig. 23: Evolution of FOB Unit Values of still wines exported by EU Members States and main EU competitors (EUR/lt) 

Bottled EU 

Bottled NWC 

Bulk EU 

Bulk NWC 

Source: Comtrade for third countries; Comext for EU Member States 

With  regard  to  NWC,  a  trend  reversal  for  bottled  wine  is  evident  in  the  countries  that  have  progressively 
substituted bottled wine with bulk exports (Australia, USA, New Zealand and South Africa). By contrast, the 
evolution of FOB prices for countries that have not adopted the same strategy (e.g. Chile), does not present 
discontinuities. 

Observation of the graphs in Fig. 23 provides some further insights, in particular:  

  In  both  markets  (bottled  and  bulk  wine),  New  Zealand  wines  achieve  the  highest  (on  average)  FOB 
prices  in  absolute  terms,  although  they  are  affected  by  wide  fluctuations  (which  testify  to  the 
responsiveness  of  price  to  changes  in  production28).  French  wines  consistently  achieve  the  second 
highest prices, and constantly increasing (increase that, among other possible causes, may well be due to 
decreasing market shares of French exports on total exports - see §5.2.4.2).  

  FOB prices of Spanish bulk wine, and more so  of bottled wine, are the lowest ever (in the last years, 
even  lower  than  Argentine  wine  prices).  Moreover,  in  sharp  contrast  to  FOB  prices  of  all  other 
examined  countries  (EU  and  NWC),  the  price  of  Spanish  bottled  wines  shows  a  sharp  decline 

28   For  example,  in  2008-2009  the  price  decrease  is  due  to  excess  supply  (see  §5.5.1.1  on  evolution  of  vineyard  areas  and 

production). 

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1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 2000200120022003200420052006200720082009201020112012FranceItalySpain1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 2000200120022003200420052006200720082009201020112012ArgentinaAustraliaChileNew ZealandSouth AfricaUSA-0,5 1,0 1,5 2,0 2,5 3,0 3,5 2000200120022003200420052006200720082009201020112012FranceItalyPortugalSpain-0,5 1,0 1,5 2,0 2,5 3,0 3,5 2000200120022003200420052006200720082009201020112012ArgentinaAustraliaChileNew ZealandSouth AfricaUSA 
 
 
 
 
 
                                                      
coinciding  with  a  remarkable  growth  of  export  volumes  (see  §5.2.4.2)  commenced  after  the 
implementation of the wine CMO reform29.  

  Therefore, we find two completely opposite competitive positioning strategies within the EU: the first, 
practiced by France, towards the highest price/quality positioning and the second, practiced by Spain, 
towards a lower price/quality positioning on the market.  

  In between these extremes, we find all other competitors, EU and NWC alike, with the only exception 

of New Zealand that exports only relatively small wine volumes. 

5.2.8.2  Evolution of CIF prices 

The  analysis  of  the  evolution  of  CIF  prices  focuses  on  the  top  10  countries  importers  of  EU  wines,  both 
bottled and in bulk, plus the three case study Member States (Denmark, Germany and the UK).  

For each of these countries, we have calculated (only for 2012) the weighted average CIF price of imported 
still  wines  (from  all  origins)  and  we  have  then  grouped  the  countries  by  price  range,  in  order  to  identify 
country markets more prone (on average) to import high price rather than low price wines. All CIF prices 
calculated from the Comtrade database (originally in USD) have been converted into Euros. 

5.2.8.2.1  CIF prices of bottled wines  

Countries  importing  bottled  wines  can  be  sub-divided  into  four  groups:  importers  of  wine  priced  above  6 
Euro/lt  (i.e.  the  most  demanding  in  terms  of  price/quality);  priced  between  5-6  €/lt;  importers  of  wine 
ranging between 3-5 €/lt and countries (classified as the least demanding in terms of price/quality) importing 
wines priced at 3 €/lt or less.  

Fig. 24 shows the output of the analysis. 

Fig. 24: Average CIF price of still wine in bottles imported in the most important markets for the EU, 2012 (EUR/lt) 

Source: based on Comtrade data 

The range of average CIF prices is quite wide, from a minimum of 2.20 €/lt in Russia to a maximum of 9.80 
€/lt in Singapore (ratio 4.4:1).  

It is clear that the average price depends on the composition of imports according to origin. For example, as 
it can be seen in Tab. 1 (showing, for each country market in each group, the average CIF price of wine from 
the main countries of origin), the highest average prices observed in the first group (Singapore, Switzerland 
and China) can be explained by strong weight of imported wines from France (at higher prices on average, as 
previously seen).  

However, this can only partly explain these differences. In fact, even prices of wines from the same origin 
are, on average, strongly differentiated. Again with reference to French wines for example, prices range from 

29   Specifically,  following  the  introduction  of  the  Single  Payment  (SP)  together  with  the  abolition  of  distillation  aid.  To  better 
understand, we report here the conclusions of the “Evaluation of CAP measures applied of the wine sector” (COGEA - October 
2012):  “For  growers  who  used  to  produce  wine  for  potable  alcohol  distillation  and  decided  to  orientate  production  towards 
wines without GI (and therefore receive the market price for this wine), the Single Payment generates an income surplus relative 
to producers who have historically produced for the wine market and are, therefore, not entitled to the SP. The resulting income 
difference leads to a distortion of competition between the growers themselves. Those who are beneficiaries of the SP may decide 
to lower their selling price while maintaining the same or higher income level of growers who do not receive the SP. This helps 
explain the decrease in production of potable alcohol in Spain, as well as the growth of wine exports of wine without GI and the 
decrease of export unit values.” 

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 58 

0,001,002,003,004,005,006,007,008,009,0010,00RussiaGermany BrazilDenmarkUKJapanUSAAustraliaNorwayCanadaChina+ HK + M SwitzerlandSingapore< 3€/lt3 -5 €/lt5 -6 €/lt> 6 €/lt 
 
  
                                                      
a maximum of 16.37 €/lt in Singapore to a minimum of 2.75 €/ lt in Russia. Clearly, the price difference can 
not  be  explained  only  by  the  different  distance  of  the  two  countries  from  France  (which  still  affects  the 
formation  of  the  CIF  price  in terms  of  transport  costs),  but  by  a different  price/quality  composition  of the 
range of wines exported. Therefore, classification of markets in terms of demand (i.e. higher or lower wine 
quality) helps to better explain the differences. 

Tab. 1:  Average CIF price of still wine in bottles imported in the most important markets for the EU, by country of origin, 
2012 (€/lt) 

Source: based on Comtrade data 

5.2.8.2.2  CIF prices of bulk wines  

Similarly to bottled wines, we have identified three groups of countries importers of bulk wines: those who 
import wines priced above 1 €/litre; priced between 0.70-1 €/litre and those priced below 0.70 €/lt (see Fig. 
25).  

However,  imports  in  bulk  can  contain  different  types  of  wine.  In  fact,  as  previously  mentioned,  the  HS 
category NC 220429 (wines in containers >2 lt) includes not only wines sold in large containers intended for 
intermediate  consumption,  but  also  wines  packaged  in  containers  other  than  bottles  (Bag-in-Box,  brick, 
bottles,  etc.)  intended  for  final  consumption.  This  is  the  case  for  a  significant  proportion  (but  not 
quantifiable) of wine imported "in bulk" into Norway, Switzerland, Denmark and Germany.  

In addition, the usage function of imported bulk wine can differ across markets: used for blending with local 
wines /(Russia, China, Japan and, partly, the United States) or packed as it is and labelled under the original 
producer brand (United Kingdom, partly in the US, Canada, and also Germany). Clearly, the average price 
also reflects this diversity. 

However, it is interesting to observe that the average CIF price of bulk wine imported into Germany is lower 
than in Côte-d'Ivoire, and the price in China is (surprisingly) higher than in the US. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 59 

France16.37France12.76France6.73New Zealand8.51USA7.36Australia5.29Australia8.01Germany7.16Italy3.88Italy7.78Italy6.03Chile3.42USA6.68Spain5.38Spain2.42Chile3.38Argentina4.13Chile4.05Portugal3.86First groupSingaporeSwitzerlandChina+ HK + M USA6.15France6.30France5.80France5.94Italy5.61New Zealand5.48Australia5.09Spain4.73Italy4.02Italy4.89Germany4.65Spain3.97Spain4.84Chile2.93Argentina3.94Chile3.72Second groupCanadaNorwayAustraliaFrance8.30France6.74France6.59France4.77New Zealand6.37USA5.94New Zealand5.82Italy4.09Italy4.26Australia4.20Australia3.61Chile2.91Spain4.17Italy3.68Argentina3.25Germany2.28Germany4.08Chile2.52Germany2.75Spain1.80Argentina4.00Spain2.14Chile2.64Chile3.15South Africa2.57Australia3.09United States2.51Spain2.40Italy2.24Third groupUSAJapanUKDenmarkFrance5.44France3.06Italy2.94Spain3.63Italy2.37France2.75Argentina2.99Spain2.29Chile2.34Italy2.51Spain1.67Chile2.42Germany1.47Bulgaria1.01Fourth groupBrazilGermany Russia 
 
 
 
 
 
 
 
 
Fig. 25: Average CIF price of still wine in bulk imported in the most important markets for the EU, 2012 (EUR/lt) 

Source: based on Comtrade data 

In  this  case too,  average  CIF  prices  reflect the  origin  of imported  wines.  New Zealand  and  France  are  (in 
general) at the top of the price range, whereas wines in bulk from Spain are positioned at the lower end of the 
price range (Tab. 2). 

Tab. 2: Average CIF price of still wine in bulk imported in the most important markets for the EU, bycountry of origin, 2012 
(€/lt) 

Source: based on Comtrade data 

The results show a certain degree of consistency as to the level of quality demanded by markets where both 
bulk  and  bottled  wine  imports  are  present:  for  example,  both  bulk  and  bottled  wines  imported  into 
Switzerland  are  positioned  at  the  high  end  of  the  price/quality  range;  Germany  and  Russia  consistently 
import both types of wine at the lower price/quality end; the USA occupy an intermediate position. 

5.3  GLOBAL COMPETITIVENESS OF EU STILL WINES WITH RESPECT TO DOMESTIC 

CONSUMPTION  

As already mentioned in §5.1, this section of the study also examines the competitiveness of European wines 
in the case study countries with respect to domestic consumption (quantity), including (if applicable) “local” 
wine production.  

Our scope here is thus limited to the domestic markets for packaged wine sold to the final consumer. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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0,000,200,400,600,801,001,201,401,601,802,002,20MoroccoAngolaRussiaGermany Cote d'IvoireCanadaUSAChina+ HK + M UKSwitzerlandJapanDenmarkNorway> 1€/lt0.7-1 €/lt < 0.7 €/ltGermany2.63France1.63Chile1.14France1.35New Zealand1.98France2.37Italy1.33USA1.03Italy1.14France1.51Italy2.26South Africa1.24Spain0.98Spain0.57Italy1.09Spain1.65Chile1.20United States1.03Australia1.05Chile1.01United States0.97Australia0.98South Africa0.93Spain0.84First groupNorwayDenmarkJapanSwitzerlandUKFrance1.33New Zealand2.53United States1.23Spain0.72Chile1.18Chile0.92France0.97Spain0.56Australia0.84Italy0.91Argentina0.82Australia0.81Spain0.75South Africa0.51Spain0.51Second groupChina+ HK + M USACanadaCote d'IvoireChile0.96France0.71Portugal0.59Spain0.45Australia0.85Italy0.66Spain0.45France0.77South Africa0.61South Africa0.67Rep. of Mold.0.59Italy0.53Ukraine0.52Spain0.42Spain0.52Uruguay0.52Argentina0.51Germany RussiaAngolaMoroccoThird group 
 
 
 
 
 
 
The analysis in this part of the study is based on IWSR data relative to consumption of packaged wines by 
country of origin and “domestic” wine in the case study country markets (China+Hong Kong, Russia, Japan, 
United  States  among  non-EU  countries;  Denmark,  Germany  and  United  Kingdom  among  EU  Member 
States).  

IWSR data refer solely to consumption in terms of volume (data on value are not available). 

Once  again,  it  is  necessary  to  stress  that  “domestic”  wine  is  not  necessarily  made  with  local  grapes. 
Production is often the result of blending wines made from local grapes and wines imported in bulk (thus, 
also imported from other EU countries), or wines that are imported in bulk, then bottled locally and marketed 
under the bottler’s or distributor’s name (e.g. large-scale retail chains) without indication of the wine origin.  

Therefore, the importance of European wines (but also wines of other origin) in the domestic consumption of 
the examined countries is systematically underestimated. 

With regard to Germany and the UK, data on consumption of “local” wine have been  considered together 
with “EU import” data (as these too are EU wines). 

5.3.1  Domestic consumption of still wine in the case study markets 

Before illustrating the results of the analysis, and with a view to put the results into context, it is necessary to 
show  domestic  consumption  trends  in  the  analysed  countries  (Fig.  26).  For  all  countries,  the  consumption 
level for the year 2000 was set at 100.  

Fig. 26: Packaged still wines consumption trends in the case study markets, 2000=100 

Domestic consumption trends show: 

Source: IWSR 

  remarkable  growth  in  wine  consumption  in  China  (and  Hong  Kong),  mostly  satisfied  by  an  equally 

remarkable growth of Chinese “domestic” production;  
large growth of consumption in Russia between 2005 and 2007-08, followed by substantial stability;  

 
  steady growth of consumption in the United States;  
  substantially stable consumption in Germany and Denmark; 
  decline in consumption in the UK since 2008 and recovery of consumption in Japan, after a period of 

decline, again since 2008.  

5.3.2  Consumption market shares of EU wines in the case study markets 

The  map  in  Fig.  27  shows  the  market  shares  of  EU wines in  2000  and 2013 (including  wines of  all  price 
ranges and all packaging types).  

Country markets position above the diagonal indicates an increase in the market share between the two years, 
and vice versa, positioning below the diagonal indicates a loss of market share in 2013 compared to 2000.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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5010015020025030035040045050020002001200220032004200520062007200820092010201120122013Hong KongChina507510012515017520020002001200220032004200520062007200820092010201120122013USAUKRussiaJapanGermanyDenmark 
 
 
 
 
 
 
 
Fig. 27: EU wine market shares, 2000 and 2013 (% on total still wine consumption) 

The map shows three groups of countries: 

Source: Cogea (based on IWSR data) 

  In  the  lower  part  of  the  map  a  group  of  countries  (China,  Russia  and  United  States)  where  domestic 
consumption is mostly met by “local” wine production, and the part of consumption satisfied by imports 
(including EU imports) is generally modest. In greater detail, “local” production satisfies: 

-  99.1% of domestic consumption in 2000, down to 81.2% in 2013, in China;  
-  75.6% in 2000, down to 57% in 2013, in Russia; 
-  80.1% in 2000, down to 74.7% in 2013, in the US. 

  At the other extreme we find Germany, where (partly due to consumption of domestic wines) EU wines 

satisfy the near totality of domestic demand (93.2% in 2000, down to 89.2% in 2013). 

  In the centre we find the group of countries that produce little or no wine at all. 

Between 2000 and 2013 there was a rise in the market share of EU wines for domestic consumption in China 
and Russia, with an equivalent fall in Hong Kong, UK and, most of all, Denmark. 

In  the  other  countries  (USA,  Japan  and  Germany),  the  situation  remained  more  stable  (very  slight 
improvement or deterioration). 

5.3.3  Global  EU wine  competitiveness with respect  to domestic  consumption  in the  case 

study markets 

To assess the competitiveness of EU wines in the consumer markets of the case study countries, we applied 
the  same  methodology  used  to  analyse  competitiveness  in  export  and  import  markets.  In  this  case,  the 
indicators (calculated in  the  same  way)  are  defined  as  “EU  consumption  variation”  and  “EU  consumption 
market share variation”. 

The  presence  of  “local”  production  in  some  of  the  examined  country  markets  required  to  modify  the 
approach.  Specifically,  in  addition  to  consumption  of  wines  imported  from  the  EU  and  from  the  other 
international  competitors,  the  graphs  in  Fig.  28  also  include  consumption  of  domestic  wine.  The  “EU 
consumption  variation”  and  “EU  consumption  market  share  variation”  indicators  were  obtained  by 
comparing EU wines with all other wines (local + imported from non-EU countries). 

The two graphs in Fig. 28 show the aggregate result for all case study markets considered together. 

Total  consumption  of  still  wines  grew  on  average  by  +3.1%  per  year  in  volume.  Within  this  growth,  we 
observe that:  

  The rate of growth in consumption of wines imported from the EU (1.1% per year on average) is lower 
than  that  of  wine  imported  from  the  rest  of  the  world  (4.9%  per  year  on  average)  and  lower  than 
consumption  of  “local”  wines  (4.7%).  These  growth  rate  differences,  applied  to  very  similar  initial 
consumption volumes (EU wines on the one hand and local + imports from non-EU countries, on the 
other) lead to a gradual decrease in Consumption Variation.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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ChiUSRusJapUKHKDenGerTotal01020304050607080901000102030405060708090100EU consimption market share 2013 (%)EU consumption market share 2000 (%) 
 
 
  However, this decrease is mostly caused by growth in the volume of “local” wines, accelerating since 

200530, while a less important role was played by non-EU imported wines. 

  This is shown by the evoloution of market shares. Generally speaking, the market share of EU wines has 
fallen  from  50.3%  to  39.1%  (-11.2  percentage  points).  On  the  other  hand,  the  market  share  of  other 
imported  wines  has  risen  over  the  entire  period  from  12.5%  to  17.3%  (+4.6  percentage  points),  but 
actually  diminished  from  2009  to  2013  (from  19.9%  to  17.3%).  Domestic  wines  have  become  more 
competitive,  growing  from  an  initial  37.2%  share  of  the  market  to  43.7%  in  2013  (+6.5  percentage 
points). 

Fig. 28: All Case Study countries: still wine consumption by origin and evolution of market shares, 2000-2013 

Total consumption 2000 = 100 

Consumption market share  

Source: Cogea (based on IWSR data) 

The changes in the competitiveness of European wines in the group of analysed country markets are, in any 
case,  heavily  influenced  by  production  and  consumption  of  local  wines.  In  some  cases  (United  States, 
Germany),  the  total  consumption  of  wines  produced  in  these  countries  is  the  sum  of  domestic  wine 
consumption plus wines exported to other markets of the group (for China, Japan and Russia, only domestic 
consumption  is  considered,  as  these  countries  do  not  export  to  other  countries  in  the  group).  It  is  not 
surprising, therefore, as shown in Fig. 29, that in such a context, US wines are the most consumed, with a 
growth (+2.8% per year on average) that is exceeded only by consumption of  Chinese wines (+12.2% per 
year on average).  

In contrast, consumption of German wines (local consumption +  exports to the other countries) is in slight 
decline (-0.7% per year on average). 

The competitive performance of European wines is related to growth in consumption of Spanish (+6.9% per 
year on average) and Italian wines (+2.6% per year on average), accompanied by a slight decrease of French 
wines (-0.3% per year on average). 

Finally,  the  competitive  performance  of  the  EU  main  competitors  is  due  to  growth  in  consumption  of  all 
wines31, with the exception of Australian wines, for which consumption shows a trend reversal (already seen 
in previous chapters) around 2007: growth by 14.7% per year on average between 2000 and 2007, followed 
by a -3.4% decline (per year on average) between 2007 and 2013)32. 

30 The acceleration (considering all countries together) is mainly due to growth in consumption of local wines in China. Nevertheless, 
growth of domestic wine consumption in the US and in Russia also played a role, whereas consumption of local wines in Japan 
and Germany was basically stable.  

31 In particular, Chilean (+5.9%); South African (+6.6%); New Zealand (+15.6%) and Argentinean wines (+11.4%) 
32 Nevertheless, with regard to Australian wines (whose consumption decreases in the United Kingdom and USA markets), it seems 
that the observed trends do not take into account the change in export strategy at the time of the decline (from bottled imports to 
bulk). An unproven hypothesis is that this trend is the result of changes of ownership and acquisitions of Constellation Brands and 
Accolade during that period (basically, a portion of Australian wine may be sold as wine of the bottler/distributor of the country 
where the wine is consumed). 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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y = -13,6ln(x) + 7,5056-40-2002040608010012014016020002001200220032004200520062007200820092010201120122013Δ(EU-Oth)tn -Δ(EU-Oth)t0EU ImpOthers Imp.LocalConsumptiony = -9,44ln(x) + 4,1023-30,00-20,00-10,000,0010,0020,0030,0040,0050,0060,0070,0080,0090,00100,0020002001200220032004200520062007200820092010201120122013Δ(EU-Oth)tn -Δ(EU-Oth)t0EU ImpOthers Imp.Local 
 
 
 
 
 
 
 
 
                                                      
Fig. 29: Consumption of still wines from main EU competitors in the group of case study country markets, 2000-2013 (hl) 

Wine consumption of case study countries that are wine 
producers 

Wine consumption of main EU Member States  

Consumption of wines from countries that are main EU competitors 

5.3.3.1  Synthesis of the results  

Source: IWSR 

Fig. 30 shows the competitive position of European wines in the case study consumer markets, overall and 
by individual market.  

The results show that, over the considered years, EU wines find themselves in a rather critical situation with 
competitiveness  having  decreased  significantly.  With  the  exception  of  Russia  (where  the  wine  embargo 
imposed  to  Moldova  between  2005  and  2007  generated  a  sizeable  advantage  for  EU  wines),  in  all  other 
countries the competitive position of EU wines worsened, only slightly in China, USA, Germany and Japan 
(the first two with slightly positive developments in market share) and more significantly in Denmark, Hong 
Kong and the UK.  

Fig. 30: Map of competitiveness of EU versus non-EU still wines with respect to consumption in the case study markets 

Source: Cogea (based on IWSR data) 

Nevertheless,  in  this  case  too  some  aspects  tend  to  mitigate  this  scenario.    A  more  detailed  analysis  of 
Consumption variation and Market Share variation trends shows indeed that: 

  with regard to Russia (as already reported in §5.2.7.3) the big improvement in the competitive position 
of EU wines was obtained between 2005 and 2007 and stability afterwards. Therefore, in the last years 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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05000010000015000020000025000030000020002001200220032004200520062007200820092010201120122013USChineseRussianGermanJapanese05000010000015000020000025000030000020002001200220032004200520062007200820092010201120122013FrenchItalianSpanish05000010000015000020000025000030000020002001200220032004200520062007200820092010201120122013ArgentinianAustralianChileanNew ZealandSouth AfricanChiDenGerHKJapRusUKUSTotal-40,00-30,00-20,00-10,000,0010,0020,0030,00-120-100-80-60-40-20020Regr. Coeff. Market Share variationRegr. coeff. consumption variation 
 
 
 
 
 
of the interval, the position of EU wines on the map with respect to the Russian market ought to move 
towards the origin of the axes (i.e. indicating reached stability). 

  With regard to Denmark, Hong Kong and the United Kingdom, the loss of competitiveness of European 
wines  occurred  quite  quickly  between  2000  and  2008-2009.  Subsequently,  the  competitiveness 
improved  substantially  in  all  three  countries  in  a  similar  way.  Therefore,  in  the  last  years  of  the 
considered interval, the position of EU wines in these three countries ought to move towards the origin 
of the axes. 

5.3.4  Price/quality  competitive  positioning  of  EU  wines  compared  to  competitors  in  the 

consumer markets 

This  section  of  the  study  aims  to  assess  the  competitiveness  of  price/quality  positioning  of  EU  wines  in 
comparison with wines of all other competitors (local and non-EU countries) in the same consumer markets 
(i.e. case study countries). The analysis is based on IWSR consumer price data (see survey method in the box 
below). 

IWSR methodology for price data collection 

Price  data  are  collected  through  store  checks  conducted  in  each  of  the  countries  surveyed  by  the  IWSR.  Prices  are 
usually collected in the largest supermarkets. In big consumer countries, they are collected in 3 to 5 stores, mostly from 
super- or hyper-markets, and if  need be, from specialist stores. In smaller consumer countries, prices are likely to be 
collected in 1 or 2 stores. 

The IWSR tries to visit the same stores each year to provide some degree of consistency. The provided prices reflect the 
lowest non-promotional price found for a brand. No pricing information is available for the on-trade sector - due to the 
very wide range of prices, as well as the problems of collecting them. 

Prices are published in local currencies and for the typical wine bottle size used in the country of interest. In all cases, 
unless otherwise specified, this is 75cl.  

It should be noted that consumer prices are subject to significant differences depending on fiscal policy and 
taxation applied by different country markets (see §5.5.6). These differences have been highlighted through 
specific price analysis for the same brands in the different country markets. The results of this preliminary 
analysis help the interpretation of results of subsequent analysis; therefore, they are shown first.  

The analysis is carried out in subsequent steps: 

a.  Prices recorded for each country (and in total) were grouped into five ranges for bottled wine (0.75lt) 

and four ranges for wines sold in other containers (large bottles, bag-in-box, bricks).  

b.  The distribution of products across the price ranges was examined.  

c.  Finally, the frequency of wine products from different countries of origin within each price range was 

calculated.  

With  regard  to  the  number  of  products,  we  considered  all  brands  present  in  the  country  markets  between 
2010 and 2013, in order to have a broader database than that available for one year only. We calculated the 
average price for brands appearing in two or more years in the same country market.  

The database was thus constructed as shown in Tab. 3: 

Tab. 3: Number of products per country market, total and by type of packaging  

Source: IWSR 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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TotalBottles 0,75 ltOthers packagesChina5925893Denmark43137754Germany88580184Hong Kong3563515Japan29327815Russia71363182United Kingdom65963029United States1,6131,472141Total5,5425,129413 
 
 
5.3.4.1  Brand prices in the case study markets  

From the IWSR database we identified the same brands and types of wine present in all case study markets 
and sold through retail channels. Consumer prices vary greatly from country to country, in general ranging 
from the highest prices in China to the lowest in Germany.  

The price hierarchy is not always the same, though (Fig. 31). It is evident that price variation depends to a 
large  extent  on  the  application  of  taxes  and  duties  (high  in  China,  only  VAT  in  Germany),  but  also  on 
different  pricing  choices  of  importers/distributors  in  different  countries  (choices  influenced  by  numerous 
factors – see in following §6.2.5). 

Accordingly,  segmentation  by  price  range  is  only  possible  for  individual  countries  (price  ranges  are  not 
comparable across markets) and it is not appropriate to aggregate results at “total average” level. 

Fig. 31: Prices of selected brands in the case study markets (EUR/lt) 

Source: based on IWSR data 

5.3.4.2  Price segmentation of wine products  

As previously mentioned, the first part of the analysis consisted in calculating product frequencies by price 
range. All prices were converted into Euro/litre.  

With regard to 0.75 lt bottles, we considered the following price ranges: 

With regard to wines sold in other larger containers (from 1.5lt to 5lt) the following ranges were considered: 

The  graphs  below  show  the  distribution  of  products  (of  all  origins)  by  price  range  for  still  wines  sold  in 
0.75lt bottles (Fig. 32) and in other types of container (Fig. 33), by country/market. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 66 

0,010,020,030,040,050,060,070,080,0ChiUSAJapDenUKGerChiJapRusDenUKGerChiH-KUSARusDenUKGerChiUSARusDenGerChiH-KUSAJapRusDenUKGerCloudy BayConcha y Toro SunriseFaustino VIIFrascatiYellowtailComm. PremiumSuper PremiumUltra Premium≤ 4.99 €/lt5.00 - 9.99 €/lt10.00 - 14.99 €/lt15.00-49.99 €/lt50.00 €/lt and moreEntry Level Medium RangeTop Rangeless than 3 €/ltfrom 3 to 4.9 € /lt from 5 to 9.9 €/lt10 €/lt and more 
 
 
 
 
 
 
 
 
 
 
Fig. 32: Percentage distribution of wines in 0.75 lt bottles by price range in the case study markets 

Fig. 33: Percentage distribution of wines packaged in large size bottles, brick and Bag-in-box by price range in the case study 
markets  

Source: based on IWSR data 

Source: based on IWSR data 

Bearing  in  mind  the  existence  of  different  taxation  systems  in  the  examined  countries,  observation  of  the 
distribution of products by price range leads to the following remarks: 

  With regard to packaging type, price differences are considerable. For 0.75 lt bottles, 93% of wines are 
priced  above  5  €/lt,  while  for  other  types  of  packaging,  over  60%  of  products  are  positioned  in  the 
ranges  below  5  Euro/lt  (with  30%  below  3  Euro/litre).  No  product  packaged  in  large  size  container 
exceeds  15  Euro/litre.  This  provides  confirmation,  therefore,  that  packaging  types  other  than  0.75  lt 
bottles play a role in differentiating wines positioning according to price/quality. 

  With  regard  to  differences  between  country  markets  in  the  price  positioning  of  bottled  wines,  two 
extremes can be observed: on the one end we find China, where over 70% of products are positioned in 
the higher price ranges (Ultra Premium + Top Range); on the other end is Germany, where the largest 
number  of  products  are  positioned  in  the  lower  price  ranges  (65%  at  Entry  level  +  Commercial 
Premium; over 26% in the Entry level range alone).  

  With  regard  to  differences  between  country  markets  in  the  price  positioning  of  wines  in  larger  size 
containers, we find the United Kingdom on one extreme, with 93% of products positioned in the ranges 
above 5 Euro/lt and again Germany on the other end, where over 96% of products are positioned below 
5 Euro/litre33.  

33 In Germany about 60% of wines are purchased in Hard Discount stores. In addition to very low taxation, this helps explain such 

low consumer price of wines in this country.  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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0102030405060708090100ChinaHong KongRussiaJapanUnited StatesDenmarkGermanyUnited KingdomEntry Level Comm. PremiumSuper PremiumUltra PremiumTop Range0102030405060708090100DenmarkGermanyJapanRussiaUnited KingdomUnited Statesless than 3 €/ltfrom 3 to 4.9 €/lt from 5 to 9.9 €/lt10  €/lt and more 
 
 
 
                                                      
5.3.4.3  Brand  distribution  of  wines  in  0.75lt  bottles  in  the  case  study  markets  according  to  price 

range and origin 

For  each  of  the  examined  case  study  country  market,  we  derived  the  distribution  of  0.75lt  bottled  wine 
brands within the various price ranges by area of origin. Again taking into account the country differences in 
the  level  of  taxation,  Tab.  4  provides  a  summary  of  distribution,  in  which  countries  of  origin  have  been 
grouped into four areas: EU, NWC, Wines of local origin and Other countries of origin. With regard to the 
United States, brands of USA origin are not included in the NWC area (being considered as local). On the 
other hand, for EU member States (DK, UK and DE) brands of local origin have been included in the EU 
area. 

Segmentation  by  price  range  of  wines  sold  in  large  size  bottles  in  the  United  States,  and  in  bag-in-box  + 
brick  in  Denmark,  Germany  and  Russia  (i.e.  countries  where  the  number  of  brands  makes  this  analysis 
possible)34 was also carried out. 

Tab. 4: Brands positioning according to price (0.75lt bottles) by market and area of origin (% over total number of brands) 

In red when % is greater than average. 

Source: based on IWSR data 

The results obtained visibly vary from country to country. Nevertheless, some aspects appear to be common 
to most countries. In particular: 

34  This  analysis  is,  however,  not  very  reliable  as  a  sizeable  percentage  of  these  wines  are  sold  under  the  retailer’s  name  (usually 

supermarket chains) without any indication of the origin. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 68 

Comm. PremiumSuper PremiumUltra PremiumChinaEU0.04.715.170.110.1100278NWC0.38.422.762.26.3100286LOCAL34.826.18.717.413.010023Others0.00.050.050.00.01002Total1.57.318.764.28.3100589Hong KongEU2.28.620.158.310.8100139NWC2.417.526.552.11.4100211Others0.0100.00.00.00.01001Total2.314.223.954.45.1100351RussiaEU7.521.518.338.414.2100372NWC1.823.913.547.213.5100163LOCAL71.425.03.60.00.010028Others22.138.226.513.20.010068Total10.524.117.336.311.9100631JapanEU1.810.835.549.42.4100166NWC2.017.030.050.01.0100100LOCAL18.236.49.136.40.010011Others0.00.00.0100.00.01001Total2.514.032.449.31.8100278United StatesEU0.327.528.236.97.1100309NWC1.429.030.534.34.8100210LOCAL1.726.324.643.14.4100952Others0.00.0100.00.00.01001Total1.426.926.240.55.01001,472DenmarkEU1.835.041.820.01.4100220NWC0.637.834.026.31.3100156Others0.00.0100.00.00.01001Total1.336.138.722.51.3100377GermanyEU26.539.822.611.00.2100593NWC25.634.219.118.62.5100199Others50.033.38.38.30.010012Total26.538.321.612.90.7100801United KingdomEU2.940.133.023.70.3100312NWC0.330.051.118.60.0100317Others0.00.0100.00.00.01002Total1.634.942.221.10.2100630Total%Total n.Entry Level Top RangeMediun Range 
 
 
                                                      
  In  wine  producer  countries,  “domestic”  wines  mainly  occupy  the  first  or  first  two  market  segments: 
Entry  Level  and  Commercial  premium  (China,  Russia, Japan).  The  US  are  an  exception, as  domestic 
wine brands are more concentrated in the Ultra Premium class. 

  European wines are more frequently positioned in the higher price segments (Ultra Premium and Top 
Range)  in  non-EU  markets  (with  the  exception  of  the  US,  where  brands  are  more  frequently  found 
within  the  Medium  Range).  EU  brands  distribution  differs  across  EU  markets  (within  the  Medium 
Range in UK and Denmark and in the lower price ranges in Germany).  

  Positioning of  NWC wines  is similar to European wines, but with a greater frequency in the Medium 
Range (in particular, Super Premium and Ultra Premium). An exception is Russia, where NWC wines 
are positioned more towards the higher price ranges (Ultra Premium and Top Range).  

  Wines from other origins (i.e. Others) cannot be analysed due to the small numbers available, with the 

exception of Russia, where they are positioned in the lower price ranges. 

A more detailed analysis was conducted for each country market, in order to identify different positioning 
strategies  for  wines  of  different  origins.  For  this  purpose,  the  analysis  considers  individual  countries  of 
origin. 

The charts in Fig. 34 show the percentage distribution of wine brands of different countries of origin by price 
range. The analysis only considers 0.75lt bottles. 

Fig. 34: Price positioning of brands (0.75lt bottles) by market and country of origin (% over total number of brands for each 
country of origin) 

China 

Hong Kong 

Japan 

Russia 

United States 

Denmark 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 69 

0,00,00,00,00,00,01,40,00,00,034,80,01,89,61,87,73,75,613,00,014,812,126,10,08,818,116,130,844,412,133,30,037,021,28,720,078,863,967,957,748,175,746,490,048,157,617,460,010,68,414,33,83,76,55,810,00,09,113,020,00,010,020,030,040,050,060,070,080,090,0100,0FrenchItalianSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSChineseOthersTop RangeP. UltraP.SuperP. Comm.Entry level0,00,05,80,05,00,00,00,03,39,49,80,09,627,340,014,330,20,013,315,622,025,719,20,015,034,730,213,933,325,056,154,359,672,730,051,039,586,150,050,012,220,05,80,010,00,00,00,00,00,00,010,020,030,040,050,060,070,080,090,0100,0FrenchItalianSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSTop RangeP. UltraP.SuperP. CommercialEntry level0,00,00,06,30,00,00,00,00,00,08,718,27,318,210,612,520,07,719,027,60,025,08,736,440,036,429,835,440,038,519,037,933,350,017,49,152,745,555,341,740,053,857,134,566,725,065,236,40,00,04,34,20,04,80,00,00,00,00,00,010,020,030,040,050,060,070,080,090,0100,0FrenchGermanItalianSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSJapaneseTop RangeP. UltraP.SuperP. Comm.Entry level5,130,43,65,027,38,30,01,50,00,00,05,636,871,40,025,052,215,315,022,741,77,926,20,035,322,238,939,525,033,322,18,717,116,318,28,310,516,90,029,40,055,613,23,625,035,38,746,843,827,341,755,341,5100,023,566,70,010,50,041,712,50,017,120,04,50,026,313,80,011,811,10,00,00,00,00,010,020,030,040,050,060,070,080,090,0100,0FrenchGermanItalianSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSCaucasusEx USSRRussianOthersTop RangeP. UltraP.SuperP. Comm.Entry level1,20,00,00,00,00,00,01,62,00,04,81,714,631,831,464,725,923,120,852,518,010,033,326,328,045,525,629,427,823,133,323,028,040,038,124,645,118,234,75,944,446,241,719,740,050,023,843,111,04,58,30,01,97,74,23,312,00,00,04,40,010,020,030,040,050,060,070,080,090,0100,0FrenchGermanItalianPortugueseSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSTop RangeP. UltraP.SuperP. Comm.Entry level0,021,40,01,90,00,03,60,00,00,00,024,221,442,331,563,251,942,939,50,033,328,646,850,035,246,331,629,617,932,633,341,750,027,47,122,516,75,318,535,725,666,720,821,41,60,00,03,70,00,00,02,30,04,20,00,010,020,030,040,050,060,070,080,090,0100,0FrenchGermanItalianSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSTop RangeP. UltraP.SuperP. Comm.Entry level 
 
 
 
 
 
 
 
 
 
 
 
 
 
Germany 

United Kingdom 

The analysis leads the following remarks: 

Source: based on IWSR data 

China: the Ultra Premium is the most crowded price range. Most brands from New Zealand, Australia and 
France (and to a lesser extent Italy and Spain) are positioned in this price segment, where all competitors are 
present.  On  the  other  hand,  Chilean,  South  African  and  Argentinian  brands  adopt  a  much  less  focused 
positioning  strategy,  favouring  instead  a  balanced  presence  in  all  price  ranges  (therefore,  aiming  at 
practically all consumer targets). European brands, together with New Zealand and Chinese brands, are more 
frequently positioned in the Top Range segment.  

Hong Kong: in this market too the Ultra Premium is the most crowded segment, where European and New 
Zealand  wines  are  mainly positioned. The  other NWC countries prefer to adopt a  less focused positioning 
strategy by being present (to varying extents) in all price ranges, but in particular in the three Medium Range 
segments. Again, only European wines, and Argentinian, are positioned in the Top Range segment. 

Japan: most foreign suppliers appear to focus their positioning in two medium-high price ranges, the Super 
and the Ultra Premium, with the exception of Spain and Chile that supply wines across all price ranges. On 
the  other  hand,  “domestic”  wines  are  mainly  found  in  the  lower  price  segments  (with  some  presence, 
however, in the two medium-high price ranges). Once again, New Zealand brands tend to be positioned at 
the Ultra Premium level.  

Russia:  the  Russian  market  appears  to  be  the  most  differentiated  market  as  to  positioning  strategies.  In 
synthesis, we observe that:  

 

 “local” wines, wines from the former USSR countries, as well as German wines and  other EU wines 
(except for French, Italian and Spanish) are positioned at the lower end of the market (Entry Level and 
Commercial Premium).  

  Australian, American and New Zealand wines are mainly positioned  in the higher price ranges (Ultra 

Premium and Top Range). All New Zealand brands are positioned in the Ultra Premium segment.  

  Italian,  Spanish  and  Chilean  wines  are  positioned  across  all  price  segments,  but  primarily  in  the 

medium-high and high ranges.  

  South  African,  Argentinian  and  French  wines  are  also  positioned  across  all  segments,  but  more 

concentrated in the medium-low price ranges. 

United  States:  price  distribution  is  quite  even  for  wines  of  different  origin  (including  domestic  wines), 
although in general the highest frequencies are in the Super and Ultra Premium classes. Wines from France 
and New Zealand are mostly positioned in these price segments. The only exceptions to this general rule are 
Portuguese and Australian wines, mostly positioned in the Commercial Premium range. 

Denmark:  most  brands  are  positioned  in  the  medium  or  medium-low  segments  (Super  and  Commercial 
Premium),  albeit  with  some  differences.  Exceptions  to  this  are  New  Zealand  wines,  all  positioned  in  the 
Super and Ultra Premium, and German wines quite present at Entry level.  

Germany: as already noted elsewhere in this report, and over and beyond the effects of very low taxation, the 
German  market is not very demanding: the average consumer is more  sensitive to price than to quality.  It 
should come as no surprise, therefore, that all competitors (with the exception of New Zealand) position their 
brands,  to  a  greater  (Greece,  other  EU)  or  lesser  degree  (Argentina,  Austria),  in  the  Entry  Level  and 
Commercial Premium price segments. All countries are present in the Super and Ultra Premium segments, 
but with a relatively small number of brands (with the exception, however, of Argentina, Austria, Spain and 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 70 

10,027,027,253,826,811,116,580,04,528,924,30,031,436,444,435,049,437,038,536,366,744,75,045,528,948,618,229,430,333,330,015,721,07,729,216,724,310,031,817,816,218,215,721,211,125,07,914,87,75,613,65,018,217,810,863,623,56,111,10,00,00,00,00,01,00,00,06,70,00,00,06,10,00,010,020,030,040,050,060,070,080,090,0100,0AustrianFrenchGermanGreekItalianPortugueseSpanishOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSOthersTop RangeP. UltraP.SuperP. Comm.Entry level1,610,01,56,75,00,00,00,01,10,00,00,00,039,375,036,853,333,30,064,356,018,139,16,528,352,832,05,036,840,035,063,628,624,055,354,358,756,641,526,210,025,00,026,736,47,120,025,56,534,815,15,70,80,00,00,00,00,00,00,00,00,00,00,00,00,010,020,030,040,050,060,070,080,090,0100,0FrenchGermanItalianPortugueseSpanishUKOthers EUArgentinianAustralianChileanNew ZealandSouth AfricanUSTop RangeP. UltraP.SuperP. Comm.Entry level 
 
 
 
Italy). Finally, the Top Range segment counts a negligible number of wines, exclusively from Australia and 
the US. 

United  Kingdom:  wine  brands  from  Germany,  Portugal,  Argentina  and  United  States  (and  from  other 
European  countries  excluding  France,  Italy  and  Spain)  are  positioned  in  the  medium-low  (Commercial 
Premium) and/or low (Entry Level) segments. On the other hand, wines from New Zealand, Australia and 
South Africa are positioned in the medium-high market segments (Super and Ultra Premium). The brands of 
the main European wine producers (France, Italy and Spain) have adopted a more balanced strategy, being 
mainly present in the medium range segments. Finally, the Top Range segment is basically absent in the UK 
market (only one French brand).  

To conclude, it appears appropriate to mention two significant cases: 

  The  first  is  that  of  French  wines:  it  appears  that  the  positioning  strategy  for  these  wines  varies 
significantly  from  market  to  market  (positioning  in  the  high  price  ranges  in  China  and  Hong  Kong, 
medium or medium-low ranges in Russia, Denmark and Germany).  

  The second relates to New Zealand wines: in all cases these wines are positioned in the Super and Ultra 
Premium segments, with the only exception of Germany, where they are in the Commercial Premium.  

5.3.5  Competitiveness of EU still wines in the online retail channel 

This part of the analysis is based on wine market data collected through a survey of online retailers in the 
case study countries (Web checks – see §2.5.4) 

To  evaluate  the  results  of  this  survey,  we  have  to  take  into  account  that  product  assortments  vary  quite 
significantly across the examined online stores: from a minimum of 225 still wines in the Chinese Everwines 
store, to a maximum of  over 3,700 wines in the case of the American Wine.com. The  range  width affects 
brand positioning in the market: more orientated to a specific consumer target in the first case (Everwines) 
and more "generalist" in the second case (Wine.com).  

However,  the  online  sales  channel  generally  is  orientated  to  a  target  of  consumers  in  the  middle/middle-
upper socio-economic classes, relatively demanding in terms of quality and more likely to seek "cultural” or 
"symbolic” values associated with the product.  

It is not surprising, therefore, that the survey results present important differences, compared to the results 
obtained from other data sources, in particular the IWSR.  

However, although web check results are not statistically representative, they do represent the orientation of 
market players operating in a relatively innovative distribution channel, which is growing in most case study 
countries according to what indicated by the interviews35. 

5.3.5.1  Still wine assortment by country of origin in the online stores  

Notwithstanding the differences in the size of product assortment across the surveyed online retailers, Fig. 35 
shows  the  composition  of  the  assortment  according  to  wine  origin,  from  the  EU  and  from  the  rest  of  the 
world.  

In all cases, European wines exceed 50% of the product assortment, with the only obvious exceptions of the 
American  and  the  British  Web-stores.  In  the  Japanese  Enoteca,  the  Russian  Wine  Butik  and  the  German 
Edeka, European wines represents over 80% of the assortment.  

35 See case study monographs. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 71 

 
 
 
 
 
 
 
 
 
                                                      
Fig. 35: Percentage of EU and non-EU still wines in the product assortment of online retailers 

Further detail is provided in the following table. 

Source: Web check 

Tab. 5: Composition of wine assortment by country of origin in the online stores 

In red shares >10% 

Source: Web-checks 

The results presented in Tab. 5 show that:  

  In terms of wine assortment by country of origin, the Danish Salling offers the smallest (wine from 9 
countries,  of  which  3  are  European),  while  the  Russian  Wine  Butik  sells  wines  from  23  countries 
altogether, 9 of which are European);  

  French and Italian wines are those most represented, in all cases exceeding 10% of the total assortment:  

62% of wines sold by Enoteca are French, and 30% of wines sold by Wine Butik are Italian;  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 72 

0%10%20%30%40%50%60%70%80%90%100%Edeka (DE)Tesco(UK)Everwines (CN)Salling  (DK)Enoteca(JP)Wine Butik(RU)Wine.com(USA)EU TotalNon EU TotalUnknownEdeka (DE)Tesco(UK)Everwines (CN)Salling  (DK)Enoteca(JP)Wine Butik(RU)Wine.com(USA)EUAustria2.73.50.1Bulgaria0.2CroatiaFrance10.817.420.436.862.934.519.3Germany41.32.31.21.00.80.7Greece0.20.20.1Hungary0.30.40.30.0Italy13.312.216.521.217.530.912.7Portugal0.61.10.41.50.3Romania0.1Spain11.78.513.79.92.29.96.1United Kingdom1.5EU Total80.443.652.567.883.781.739.4Non EUArgentina2.12.62.40.21.72.04.0Australia3.920.318.010.71.62.86.7Canada0.1Caucasus0.0Chile4.28.07.15.14.44.44.8China4.7Israel0.20.50.2Japan1.00.2Lebanon0.1Mexico0.5New Zealand1.23.91.26.11.71.51.8Russia0.3South Africa3.99.43.55.00.52.61.5Switzerland0.60.1United States3.610.18.65.05.52.542.2Uruguay2.0West Balkans0.3Non EU Total19.654.547.532.216.318.260.6Unknown2.0Total %100.0100.0100.0100.0100.0100.0100.0Total N. 3326152254571,8761,7943,764 
 
 
 
  Australian  wines  account  for  over  10%  of  the  assortment  in  three  stores  only  (Tesco,  Everwines  and 
Salling),  while  American wines are  (obviously)  better represented  in  the  US  online  store  (over  42%), 
but also in Tesco (10%). 

5.3.5.2  Price segmentation in the online wine stores 

Bottled wine prices collected through Web checks were transformed into Euro/litre and grouped by segment, 
using the same criteria adopted in §5.3.4.2.  

Table 6 shows the results of the analysis. 

Tab. 6: Still wines distribution by price segment and country of origin in online stores 

In red shares> 40% 

Source: Web-checks 

The analysis of the results, keeping in mind that prices are affected by the tax regimes applied in different 
countries, shows that:  

  The distribution of wines by price segment is completely different from the distribution of market prices 
sourced from IWSR. This confirms what was said previously about online stores being more up-market;   

  There is a substantial difference between the the German and British retail chains online stores (Tesco 

and Edeka) and the other Web stores that only specialise in online sales.  

Wines sold online by Tesco and Edeka are mostly positioned in the lower price ranges (from Entry level 
to  Super  premium,  in  a  way  quite  similar  to  what  found  for  the  UK  and  Germany  in  the  analysis  of 
IWSR data). Wines sold by the more wine-specialised online stores are mostly positioned at the higher 
price ranges (Ultra Premium and Top Range).  

Therefore,  online  stores  that  are  unrelated  to  the  major  retail  chains  are  more  likely  to  target  higher 
socio-economic classes. The Chinese Everwines represents an extreme case in this sense, with virtually 
no wine positioned at the low and medium price ranges (but also with the smallest product assortment).  

  In all cases, European wines are the most represented in the Top Range, with a maximum of 65% in the 
case of Enoteca. Again Tesco and Edeka are exceptions, as they have virtually no wines positioned in 
the Top range segment;  

  In all cases, wines from the rest of the world are the most represented in the Super Premium and Ultra 

Premium ranges. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 73 

OriginEntry levelCommercial PremiumSuper premiumUltra premiumTop RangeTotal n. EU 1.2%31.7%40.9%26.2%0.0%252Non EU 0.0%26.0%46.3%27.6%0.0%315Unknown 0.0%45.5%45.5%9.1%0.0%11Total n.31672541540.0%578EU 4.9%71.2%16.5%6.4%1.1%267Non EU 16.9%40.1%30.8%12.3%0.0%65Total n.2421664253332EU 0.0%0.0%0.7%50.7%48.5%134Non EU 0.0%0.8%5.8%51.2%42.1%121Total n.018130116255EU0.0%0.1%1.7%32.8%65.4%1570Non EU 0.0%0.0%6.9%65.4%27.8%306Total024771511121876EU0.0%1.6%11.0%50.6%36.8%310Non EU 0.0%2.7%21.8%57.1%18.4%147Total0966241141457EU 0.0%2.2%13.6%50.1%34.0%1482Non EU 0.0%2.7%18.3%57.7%21.3%2282Total09462020609903764EU 0.1%0.3%2.3%39.4%58.0%1565Non EU 0.3%0.9%7.4%60.7%30.8%351Total276282910161916Wine.com(USA)Wine Butik(Russia)Tesco(UK)Edeka(Germany)Everwines (China)Enoteca(Japan)Salling  (Denmark) 
 
 
5.3.5.3  Other information provided by online wine stores  

The web checks have allowed us to identify the additional communication / information elements provided 
by online wine stores to the consumer. In particular:  

 

 

 

the mention of grape variety on the label;  

information about grape variety/ies provided in the information sheet of the seller; 

information  about  geographical  identification  (in  particular,  PDO  and  PGI  wines)  in  the  information 
sheet of the seller36. 

Tab.  7  shows  the  percentage  of  wines  (EU  and  non-EU)  carrying  these  mentions,  out  of  the  total  product 
assortment of each online store.  

In all online stores, the percentage of wines with GI is extremely limited, which is also explained by the fact 
that only European wines use this type of quality labelling.  

However, we only report about wines with GI for which the seller provides this specific information in the 
product information sheet. Obviously, the percentage of European wines carrying GI on the label is larger. 
However, in most online stores, this information is not explicitly used for communication purposes. Only the 
Danish Salling and the Russian Wine Butik provide it to a greater extent (information about GI is given for, 
respectively, 15% and 17% of the wines on sale). In the case of the US store, the percentage falls down to 
0.3%.  

It  is  clear,  therefore,  that  online  wine  stores  do  not  give  importance  to  this  indication  of  quality.  In  other 
words, Geographical Indication is not considered as a criterion for choosing the product to be offered to the 
consumer. 

Tab. 7: Geografical indication and mention of variety (% over total still wines assortment) in online stores 

Source: Web-checks 

A different picture emerges with regard to the mention of grape variety. In this case, all Web stores provide 
clear  information  about  varietals  (i.e.  clearly  visible  to  the  consumer).  The  indication  of  the  variety, 
therefore, is considered as a criterion for choosing the product to be offered to the consumer.  

The biggest difference here is that the percentage of wines with mention of the variety is, in general, lower 
for EU wines than for non-EU wines. However, this does not depend on the online store, but it is due to the 
lower detail of information provided by European producers compared to third country producers. 

5.4  SYNTHESIS OF RESULTS OF ANALYSIS OF THE GLOBAL COMPETITIVENESS OF 

EU STILL WINES  

This section brings together the main findings of the different parts of analysis of the overall competitiveness 
of EU still wines relative to competitors in an attempt to provide a synthesis of key results. We recall that the 
analysis involved the following elements:  

  global competitiveness of European wines with respect to international trade, on the world market as a 
whole  as  well  as  on  the  most  important  individual  country-markets  (separately  for  bottled  and  bulk 
wine) based on trade statistics (Comext and Comtrade);  

  global  competitiveness  of  EU  wines  with  respect  to  domestic  consumption  based  on  consumption 

volumes data (bottled wine) in the case study countries provided by the IWSR; 

36 It was not possible to collect data about mention of GI on the label. In most cases, the quality of the image of the bottle/label on the 

Web site would not allow to detect it. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 74 

Edeka (DE)Tesco(UK)Everwines (CN)Salling  (DK)Enoteca(JP)Wine Butik(RU)Wine.com(USA)GI6.73.47.515.53.317.10.3Variety on the label70.435.820.917.77.121.118.4Variety indicated by retailer25.5729797.10051.5GI0000000Variety on the label92.358.582.696.680.770.982.5Variety indicated by retailer43.183.996.790.30081.6EU winesnon EU wines 
 
 
                                                      
  price competitiveness (FOB and CIF implicit prices based on trade values and volumes)  as well as the 
price/quality positioning of EU wines compared to main competitors (based on IWSR store-check data 
relative to price of wines sold by retail chains); 

  competitiveness of European wines in the online retail channel based on Web check data. 

Table 8 below provides a synthetic judgment for each examined dimension of competitiveness.  

Tab. 8: Synthesis of results of analysis of the overall competitiveness of EU still wines relative to competitors 

“+” means competitive advantage for EU wines; “-“ means competitive disadvantage for EU wines 

Source: Cogea 

Global competitiveness of EU still wines with respect to international trade 
Between 2000 and 2012/2013 EU wines improved their overall competitive position in the world market in 
value  terms,  while  maintaining  it  in  volume  terms,  despite  an  overall  loss  of  market  shares  (in  value  and 
volume). This result is, however, generated by opposite trends: enhanced competitive performance of bottled 
wines  (both  in  value  and  volume  terms)  versus  worsened  performance  of  bulk  wine  exports.  Such  trends 
occurred in a context of unfavourable exchange rates for Europe: gradual devaluation of main competitors’ 
currencies relative to the Euro. As  price is  a crucial factor for bulk wine trade, exchange rates have  had a 
relatively larger impact on the competitive performance of bulk wines compared to bottled wines. 

EU  still  wines  mostly  lost  market  share  to  main  competitors  on  the  world  market  between  2000-2005/06. 
Afterwards, the EU market share stabilised around 68% in value and 65% in volume. From 2007  EU total 
wine  exports  increased,  whereas  NWC  exports  grew  until  2007  and  stabilised  in  subsequent  years.  The 
analysis  shows that  from  2007  onwards,  a  strategy  change  takes  place  with  gradual substitution  of  bottled 
wine with bulk wine exports by some NWC: Australia, USA, South Africa and New Zealand. 

Global competitiveness of EU still wines with respect to domestic consumption 
The results of this part of the analysis suggest that the competitive position of EU still wines worsened in all 
considered  countries,  except  Russia37.  The  deterioration  of  the  EU  competitive  position  relative  to 
competitors  is  only  slight  in  China,  the  US,  Germany  and  Japan,  and  more  significant  in  Denmark,  Hong 
Kong and the UK. However, in the latter markets, the competitive position of EU wines improves again after 
2008/09. 

The  apparent  contradiction  with  the  results  of  the  previous  analysis  is  caused  by  use  of  different  types  of 
data: in the first case, trade statistics for bottled and bulk wine; in the second case, market data relative to 
consumed volumes of bottled wine, which, however, include “local” wines that may contain wine imported 
in bulk from other countries. 

Price/quality competitive positioning of EU still wines 
EU price/NWC price is >1 for bottled wine and <1 for bulk wine in nearly all considered years (2000-2012), 
suggesting that EU bottled wines are better quality than the competitors’ (but with NWC almost evening out 
towards the end of the period) and, vice versa, wines exported in bulk are of lower quality.  

New Zealand and France record the highest prices (both bottled and bulk); Spain records one of the lowest 
price,  remarkably  decreasing  in  the  case  of  bottled  wine  exports  in  the  years  following  the  wine  CMO 
reform. Thus, within the EU different price/quality positioning strategies are implemented. 

37 We recall, however, that in this market EU wines gained competitive advantage between 2005 and 2007 in reason of the embargo 

imposed by Russia on Moldova. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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BottlesBulkGlobal competitiveness of EU wines in the world market+-Global competitiveness in the 10 most important import markets+-Price/quality competitive position of EU wines+-Global competitiveness of EU wines with respect to domestic consumption-n.a.Competitiveness of EU wines in the online retail channel+n.a. 
 
 
                                                      
European wines are more frequently positioned in the higher price segments (Ultra Premium and Top Range) 
in  third-country  markets,  whereas  positioning  differs  in  EU  markets  (lower  price  ranges  in  Germany  and 
within Medium Range in Denmark and UK).  

Competitiveness of EU still wines in the online retail channel 
French  and  Italian  wines  are  most  represented  across  all  seven  markets,  always  exceeding  10%  of  total 
product  assortment.  Amongst  NWC,  only  Australian  and  US  wines  reach  or  exceed  10%  in  few 
countries/retailers. In all cases, European wines are those most represented in the Top Range, non-EU wines 
are most present in the Super and Ultra Premium ranges. 

5.5 

INFLUENCES  ON  THE  COMPETITIVENESS  OF  EU  WINES  AND  THIRD  COUNTRY 
WINES: THE PORTER’S DIAMOND  

This  part  of  the  study  aims  to  explore  the  factors  (and  their  interactions)  that  potentially  affect  the 
competitive position of EU wines and wines of the EU main competitors at international level. In particular, 
it seeks to identify the context variables that can contribute to generate the competitive advantage of country 
systems. 

The  method  used  is  based  on  an  adaptation  of  the  analytical-interpretative  model  of  competitiveness 
proposed by M. Porter, the Porter's Diamond. The factors that compose the Diamond system are  mutually 
reinforcing and competitive advantage is achieved as a result of their interactions.  

The general theoretical framework of the model is shown in Fig. 36 below. 

Fig. 36: Porter’s Diamond: Variables (and their interactions) that restrict / facilitate / orientate domestic demand and wine 
origin (EU/non EU)  

Source: M. Porter, 1990. 

Compared to the Porter's Diamond general model (which remains unchanged in its structure), the adaptation 
consists in taking  into account  variables  both  related  to  wine  producing  countries (i.e.  competitors)  and to 
consumer countries (i.e. the markets where international competition is played).  

The analysis focuses on the relevant variables in each group of influencing factors of the scheme. 

5.5.1  Factor conditions in producer countries 

Factor  conditions  comprise  variables  relating  to  production  structure  and  evolution,  as  well  as  variables 
expressing strategic orientation to export.  

5.5.1.1  Evolution of planted areas and wine production in producer countries  

The  comparison  between  the  EU  and  third  countries  in  terms  of  evolution  of  vineyard  areas  and  wine 
production is shown in Fig. 37 (Index: 2000=100). For the EU, the examined time interval was appropriately 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 76 

 
 
 
divided  into  sub-periods  to  show  the  successive  enlargements  of  the  EU  (to  25  and  then  to  27  Member 
States). The analysis also considers China and Brazil among wine producers. 

Fig. 37: Evolution of vineyard areas and total wine production, 2000-2012/13 (2000 = 100) 

Evolution of vineyard areas in 9 third countries 

Evolution of wine production in 9 third countries 

Evolution of vineyard areas in the EU and 9 third countries 

Evolution of wine production in the EU and 9 third 
countries 

Sources : national statistics, FAO, Communications of Members states  and DG Agri C.3 for EU 

The following considerations emerge from analysis of the trends: 

  Despite  enlargement  to  new  wine  producing  MS,  both  planted  area  and  wine  production  of  the  EU 
decrease.  From  2006  onwards  (EU  27)  planted  area  decreases  at  a  rate  of  -2.1%  on  average  per  year 
(from 3.64 to 3.21 million ha) and production by -1.4% (from179 to 171 million hl). The less important 
decrease  in  wine  production  compared  to  vineyard  areas  is  due  to  exceptional  production  in  201338). 
The  reduction  of  planted  areas  is  also  strongly  affected  by  the  implementation  of  the  grubbing-up 
scheme  (between  2008  and  2011,  about  73%  of  the  decrease  in  the  EU  planted  area  is  due  to  the 
implementation of this measure)39; 

  In the group of 9 main competitors considered together (Argentina, New Zealand, Canada, Chile, USA, 
South Africa, Australia, China, Brazil), vineyard area and wine production have been steadily growing 
at a rate of, respectively, 2.34% (from 1.51 to 1.71 million ha) and 3.07% (from 77.7 to 92.8 million hl) 
since 2006; 

  Therefore, the gap existing between the EU and the 9 competitors (both planted areas and production) at 

the beginning of the period has progressively reduced over time; 

  Among EU competitors, New Zealand and China are the most dynamic (New Zealand has more than 

tripled areas and quadrupled production); 

  Chile  appears  less  dynamic  in  terms  of  surface  growth,  but  more  in  terms  of  wine  production  (i.e. 

considerable growth of yields per hectare); 

38 In 2013, the remarkable growth of the EU wine production is mainly due to Spain (from 34 to 50 million hl between 2012 and 
2013), also as a result of the restructuring of vineyards (irrigation, transformation of planting systems) implemented thanks to the 
wine CMO funds.  

39 About 160,000 ha over a total decrease of 219,000 ha (see the “Evaluation of Common Agricultural Policy measures applied to the 

wine sector” – COGEA, October 2012). 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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501001502002503003504002000200120022003200420052006200720082009201020112012ArgentinaNew ZealandCanadaChileUnited StatesSouth AfricaAustraliaChinaBrazil0,050,0100,0150,0200,0250,0300,0350,0400,0450,020002001200220032004200520062007200820092010201120122013ArgentinaNew ZealandCanadaChileUnited States South AfricaAustraliaChinaBrazil90,095,0100,0105,0110,0115,0120,0125,0130,0135,0140,02000200120022003200420052006200720082009201020112012Tot 9 competitorsEUEU 27EU 25EU 1580,090,0100,0110,0120,0130,0140,0150,020002001200220032004200520062007200820092010201120122013Tot 9 competitorsEU 
 
 
 
 
 
                                                      
  In  contrast,  the  United  States  maintains  virtually  unchanged  the  planted  area  existing  in  2000,  while 

increasing production by about 20% (2013). 

In  order  to  assess  the  relative  position  of  individual  EU  competitors  and  of  the  EU27  (thus  including 
Romania  and  Bulgaria,  considerable  wine  producers),  we  compared  (Fig.  38)  the  average  annual  rates  of 
change  of  planted  areas  and  production  since  2006  (2006-2012  for  planted  areas,  2006-2013  for  wine 
production). 

Fig. 38: Average annual rate of change of planted areas and wine production in the EU and in competing countries (2006-
2012/13) 

Sources: National statistics, FAO, Communications of Members States and DG Agri C.3 for EU 

The results on the map above show that:  

  Only the EU 27 and Australia witness a reduction in both planted area and production,  however, to a 
much lesser extent in Australia and almost exclusively due to adverse climate conditions, while in the 
EU as a result of policy changes (i.e. wine CMO reform: grubbing-up and vineyard restructuring);  

  South Africa decreases planted areas, but increases production (strong increase in yields). Conversely, 

in Argentina the planted surface increases, but production decreases;  

  All other countries witness an increase of both areas and production, more (China, New Zealand) or less 
(USA, Brazil) importantly. In general, the rise in production is higher than the increase of planted areas 
(showing growth of productivity). This occurs, in particular, in China and in Chile (not in Brazil though, 
where production of the new vineyards is probably not yet fully operational) 40. 

On the basis of these results, the following considerations can be made for the future:  

  From a structural and production perspective, it is likely that in the near future the EU will face pressure 
from  its  competitors  considered  altogether.  The  growth  rates  of  planted  areas,  yields  per  hectare  and 
thus wine production are likely to lead to better satisfaction of domestic demand (China, Brazil) and/or 
to further erosion of EU market shares (New Zealand, Chile and South Africa);  

  Assuming that current trends are maintained, in the future the EU may face less competitive pressure 
from Argentina41 and Australia42. However, in the case of Argentina, the decline in yields per hectare 
could be a sign of quality improvement. If this were the case, the competitiveness of Argentinean wines 
could shift more towards Medium and Top Range wine segments. 

40 However, part of wine production in China and (to a lesser extent) in the U.S. is obtained from wine imported in bulk and blended 

with wine made from local grapes.  

41 This occurs in spite of favourable exchange rates (see §5.5.6). 
42 Accentuated by possible persistence of unfavourable exchange rates. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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ArgentinaNew ZealandCanadaChileUSASouth AfricaAustraliaChinaBrazilTot 9 compEU 27-4-20246810121416-4-202468Volume of production: AAGR  20016-13Vineyard area: AAGR 2006-12  
 
 
                                                      
5.5.1.2 

Index of export propensity 

This  indicator  highlights  the  existence  of  an  export-oriented  production  strategy  (high  value  of  the  index) 
rather  than  a  strategy  aimed  primarily  (or  exclusively)  to  service  the  domestic  market  (low  value  of  the 
index), for which exports represent a marginal activity. Typically, high and increasing propensity to export is 
associated with aggressive market penetration (and therefore strong competitive power).  

The  index  of  propensity  to  export  is  calculated  as  the  percentage  ratio  between  total  exports  of  wine  in 
volume (CN code 2204) in year t and total wine production in year t-1. 

IPExp = (Expt /Prodt-1 ) * 100 

Fig. 39 shows the values of the index calculated as two-year averages for 2001-02 e 2011-12 (average over 
two years was used to eliminate fluctuations). 

Fig. 39: Index of export propensity of the EU and its main competitors (average 2001-02 and 2011-12) 

Sources: National statistics, DG Agri C.3 for EU, Comtrade, Comext 

The obtained results allow the following observations:  

  New  Zealand,  Chile,  Australia  and,  to  a  lesser  extent,  South  Africa43  have  a  very  high  propensity  to 
export,  which  grew  significantly  over  the  considered  time  period.  In  these  countries,  therefore,  the 
growth of production is not geared to satisfy domestic demand, but almost exclusively geared to export;  

  China and Brazil lie at the other extreme, where almost all production is aimed at satisfying domestic 

demand;  

  The  European  Union  and  the  United  States  find  their  position  in  between  these  two  extremes:  i.e. 
production is largely aimed for the domestic market and exports basically are a residual. For these areas, 
therefore, the international market, although important, is not vital to the survival of the wine industry, 
and the propensity to export is linked to the evolution of domestic demand. In addition, for these two 
competitors, growth of export propensity is absolutely modest (and taking into account, for the EU, the 
enlargement from 15 to 27 Member States). 

On the basis of these results, the following considerations can be made for the future:  

  New Zealand, Chile, and South Africa (although the latter to a lesser extent) appear to have developed 
an aggressive competitive strategy, with increase in export propensity linked to growth of planted areas 
and, even more so, of production. In essence, for these countries, the international market has strategic 
(or  vital)  value  and  therefore  all  possible  competitive  levers  are  put  into  action.  It  is  likely  that  the 
propensity to export of these countries (and thus their aggressive strategies) will grow further;  

  Australia appears to be less aggressive, as the high export propensity may decrease in the future due to 
reduction of planted areas (and production), as well as the persistence of unfavourable exchange rates;  

  The EU and the US are the least aggressive in their export strategies, as the export market for these wine 
producers is important, but not vital. However, there are differences between the two: while in the US 
domestic consumption is still growing (and therefore, exports are likely to remain less important), in the 
EU domestic consumption (as well as production) is in decline despite the enlargement.  

43  In  South  Africa,  however,  a  dramatic  increase  in  the  propensity  to  export  between  2000  and  2007  (from  24%  to  70%)  was 

subsequently followed by gradual reduction (from 70% to 49%).  

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

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0,010,020,030,040,050,060,070,080,090,0ChinaBrazilEU 15-27USAArgentinaSouth AfricaCanadaAustraliaChileNew ZealandAver. 2011-12Aver. 2001-02 
 
 
                                                      
  Under these conditions, the EU seems to be suffering the effects of a competitive game that is mainly 

stimulated by the export-oriented countries. 

5.5.1.3 

Index of bilateral wine trade intensity 

This  part  of  the  analysis  aims  to  assess  the  importance  of  different  consumer  markets  for  wine  exporting 
countries. In essence, it seeks to identify the country markets that are "vital" or at least "important" for each 
producer/exporter  country,  where,  presumably,  the  latter  focus  their  competitive  strategies  designed  to 
preserve the position of relative advantage achieved.  

The analysis of the importance of different country markets for the different producer/exporter countries is 
carried out using the Index of Bilateral Wine Trade Intensity (IBWTI). 

The index is calculated in volume or value terms as the share of country i’s wine exports towards country j 
[xij/xi] divided by the share of country j’s imports (mj) in world wine imports (mw) net of country i’s imports 
(mi):  

IBWTI = [xij/xi]/[mj/(mw - mi)]  

The  index  was  calculated  for  each  of the  major  exporting  countries  belonging  to  the  EU and to the  NWC 
group. It has also been calculated for Western Balkans, Caucasus and former USSR country groups.  

The  analysis  considers  the  10  most  important  importers  of  EU  bottled  wine  and  the  10  most  important 
importers  of  EU  wine  in  bulk  (see  §5.2.7).  In  addition,  we  considered  the  markets of  the  three  case  study 
Member States (UK, Germany and Denmark).  

The Index of Bilateral Wine Trade Intensity was calculated for the years 2004, 2008  and 2012. Tab. 9 (for 
bottled wine) and Tab. 10 (for bulk wine) present the results based on 2012 volumes.  

Tab. 9: IBWTI for bottled wine in volume (2012) 

Cells in red highlight IBWTI >1 

Source: based on Comtrade data 

The results for bottled wine (in volume) suggest the following observations:  

  Few  markets  appear  to  be  absolutely  vital  (i.e.  particularly  high  value  of  the  Index):  the  Australian 
market for New Zealand, the Brazilian market for Argentina and Chile; the Chinese market for France; 
the US market and Singapore for Australia; the German market for Italy.  

  The important markets (i.e. IBWTI >1) are many and geographically dispersed.  

However, there are some common factors that can be correlated to the importance of a certain market for a 
certain exporter. In particular: 

  The importance is related to the physical proximity between exporting and importing countries (which 

in turn is related to transaction costs). For example: 

  The Australian and Singapore markets for New Zealand; 

  Singapore and China for Australia; 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 80 

 Australia  Brazil  Canada  CHINA  Japan  Norway  Singapore  Switzerland  Russian Federation  USA  Denmark  Germany  United Kingdom  World France0.71       0.23      1.12      4.22      2.48      1.49      1.59      1.13      1.35      0.68      1.07      1.32      1.21      1.00     Germany0.26       0.03      0.35      0.30      0.40      1.88      0.63      0.65      1.49      0.73      2.04      -       1.38      1.00     Italy0.39       0.64      1.17      0.32      1.02      2.08      0.38      2.84      0.91      2.29      1.61      3.52      1.62      1.00     Portugal0.33       4.82      1.02      0.45      0.22      1.63      0.30      1.94      0.20      0.62      0.79      0.62      0.73      1.00     Spain0.26       0.29      0.38      0.82      1.26      1.17      0.33      1.85      1.30      0.55      1.45      1.35      1.07      1.00     United Kingdom0.10       0.00      0.04      0.48      0.00      0.46      1.05      0.43      -       0.01      4.92      0.00      -       1.00     Others EU0.22       0.05      0.25      0.40      0.10      0.55      0.21      0.79      0.46      0.41      0.52      2.33      0.71      1.00     Argentina0.23       6.38      2.03      0.40      0.46      0.78      0.87      0.82      0.34      2.43      0.73      0.10      0.41      1.00     Australia0.10      2.27      2.39      0.65      0.80      5.95      0.30      0.10      3.26      0.50      0.27      1.06      1.00     Chile0.39       8.09      0.90      0.96      2.36      0.65      1.36      0.27      0.68      1.08      1.23      0.26      1.30      1.00     New Zealand85.37     0.05      1.29      0.54      0.28      0.29      2.88      0.12      0.06      1.68      0.22      0.09      1.80      1.00     South Africa0.62       0.30      0.99      0.56      0.41      0.40      0.80      0.33      0.23      0.40      1.05      0.96      1.01      1.00     USA0.15       0.14      5.35      1.60      1.64      0.27      2.02      0.71      0.33      -       0.61      0.99      1.37      1.00     0.10       -       0.07      0.16      -       0.02      -       0.19      3.14      0.04      0.03      0.10      0.00      1.00     0.01       -       0.08      0.42      0.08      0.00      0.00      0.01      10.21    0.07      -       0.06      0.01      1.00     0.00       -       0.01      0.32      0.01      0.02      0.03      0.00      14.74    0.09      0.00      0.08      0.01      1.00     1.00      1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00    EU 28NWCWestern BalkansOthers Ex USSRWorldCaucasusToFrom 
 
 
  The Brazilian market for Chile and Argentina (but also USA and Canada); 

  The Canadian market for the US; 

  The Member States markets for the EU; 

  The Russian market for West Balkans, Ex USSR e Caucasus wine producers. 

  The importance is related to cultural proximity between exporting and importing countries (which is in 

turn related to language, traditions and history). For example: 

  The Brazilian market for Portugal; 

  The Russian market for West Balkans, Ex-USSR e Caucasus; 

  The US, Canada and the UK for Australia and New Zealand; 

  Canada and the UK for the US. 

In  this  context  it  is  significant  the  position  of  some  countries,  the  first  of  which  is  France,  where  most 
country markets are important (IBWTI >1). 

Tab. 10: IBWTI for bulk wine in volume (2012) 

Cells in red highlight IBWTI >1 

Source: based on Comtrade data 

The results for wine exported in bulk (again in volume) roughly show the same patterns illustrated above for 
bottled wine (i.e. geographic and/or cultural proximity).  

In  particular,  the  three  African  markets  (Angola,  Côte-d'Ivoire  and  Morocco)  are  vital  for  Portugal  and 
Spain; the Japanese market is vital for the US and the Russian market for the former USSR countries.  

Moreover,  the  UK  market  is  important  for  Australia  and  the  US;  the  US  market  for  Argentina  and  Chile; 
Asian  markets  (China  and  Japan)  for  Chile;  the  German  market  for  Italy  and  the  Norwegian  market  for 
Germany.  

It should also be noted that the importance achieved by some exporting countries in certain markets is also 
related to other variables of the Porter's' Diamond. In particular:  

 

the development of bilateral trade agreements (i.e., Chile with the US, China and Japan) (see §5.5.5.2);  

  The favourable evolution of exchange rates (e.g., ARS/USD for Argentina-US) (see §5.5.6); 

  Dominant presence of global wine companies in certain markets (e.g., US and Australian companies in 

the UK market). 

5.5.2  Demand conditions in consumer countries  

Developments in the demand conditions of consumer countries can represent an opportunity, particularly for 
producing countries that have achieved relative competitive advantage (with respect to the Factor conditions 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 81 

 Angola  Canada  CHINA  Côte d'Ivoire  Japan  Morocco  Norway  Switzerland  Russian Federation  USA  Denmark  Germany  United Kingdom  World France0.00       1.50      1.12      0.10      0.68      0.74      2.15      5.39      0.66      0.35      1.20      1.96      0.39      1.00     Germany-        0.61      0.05      -       0.12      -       7.01      0.39      0.05      0.20      2.35      -       1.18      1.00     Italy-        1.04      0.77      0.03      0.29      0.00      3.19      3.42      0.57      0.24      0.67      4.14      0.32      1.00     Portugal71.28     0.15      0.83      0.01      0.12      -       1.33      2.14      0.00      0.07      0.07      0.46      0.01      1.00     Spain3.03       1.30      2.29      31.91    0.47      67.28    0.48      0.94      1.11      0.23      0.87      1.24      0.07      1.00     United Kingdom-        0.14      0.01      -       -       -       14.77    0.00      -       0.01      11.69    0.00      -       1.00     Others EU0.00       1.89      0.02      -       1.38      -       0.49      0.03      2.77      9.07      0.69      0.09      0.17      1.00     Argentina0.00       1.89      0.02      -       1.38      -       0.49      0.03      2.77      9.07      0.69      0.09      0.17      1.00     Australia-        1.75      0.69      -       0.33      -       0.42      0.22      0.00      2.61      1.84      0.43      8.07      1.00     Chile0.00       0.55      5.64      -       5.09      -       1.02      0.24      0.05      4.03      1.75      0.42      0.60      1.00     New Zealand-        0.19      0.00      -       -       -       0.09      0.00      -       2.71      0.36      0.17      3.85      1.00     South Africa0.07       1.96      0.04      0.01      0.42      -       0.46      0.91      2.75      0.52      2.67      1.11      2.53      1.00     USA0.00       2.16      0.57      0.00      9.64      -       0.99      0.71      0.05      -       1.43      0.72      3.86      1.00     -        0.68      0.55      -       1.06      -       -       0.00      0.30      -       0.00      2.84      0.00      1.00     -        -       -       -       -       -       -       -       0.18      -       -       0.00      -       1.00     -        -       0.16      -       -       -       0.00      0.00      12.13    -       -       0.00      -       1.00     1.00      1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00     1.00    CaucasusOthers Ex USSRWorldEU 28NWCWestern BalkansToFrom 
 
 
previously  analysed:  evolution  of  production,  position  reached  within  target  markets,  the  level  of  market 
importance). 

5.5.2.1  Population size and growth rate  

The  size  of  the  population  and  its  evolution  are  obviously  the  basis  for  the  potential  development  of  the 
consumption market, assuming that current levels of market penetration are maintained.  

Fig. 40 shows the most important country markets for EU wines (both in bottles and in bulk), according to 
the size of the population in 2000 and its average annual growth rate between 2000 and 2011 (the map does 
not  show  China,  due  to  its  non-comparable  size  with  the  other  countries).  In  any  case,  China  had  1,262 
million inhabitants, growing at an AAGR equal to 0.57%. 

Fig. 40: Most important country markets for EU wines in bottles and bulk:  Population size in 2000 and growth rate 2000-
2011 (million, %) 

Source: World Bank 
The only country markets with negative evolution of the population are Russia and Germany, whereas Japan 
and Hong Kong show demographic growth very close to zero.  

Besides China, where the population increased by about 81.5 million people (basically, the size of the entire 
population of Germany) between 2000 and 2011, the markets that offer the greatest opportunities seem to be 
the US and Brazil (between 2000 and 2009, respectively +29 million and +22 million). However, they also 
are important wine producers (USA) or they may soon become such (Brazil).  

Other  markets,  albeit  with  high  population  growth  rates,  seem  to  be  less  interesting,  or  they  may  become 
such  in  the  long-term  (Angola,  Côte-d'Ivoire,  Singapore).  In  these  markets,  EU  wines  (respectively 
Portuguese, Spanish and French) are still holding a competitive position. 

5.5.2.2  Per capita GDP level and growth rate 

According  to  the  literature,  consumption  of  countries  that  are  not  important  wine  producers  is  positively 
correlated with average per capita GDP and its growth rate. The level of GDP per capita becomes even more 
important, the higher the average  market price is. Therefore, this is related to the fiscal policy adopted by 
consumer  countries  (see  §5.5.5.1).  Furthermore,  the  level  of  per  capita  GDP  can  be  considered  (with  due 
caution) as a proxy of the quality level demanded by a market.  

The  map  in  Fig.  41  shows  the  country  markets  of  interest  for  EU  wines  (both  in  bottles  and  in  bulk), 
according to the level of GDP per capita in 2000 and the average annual growth rate between 2000 and 2011. 
GDP per capita is expressed in PPP (Purchasing Power Parities) US dollars, at current values. 

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USABraRusJapGerUKCanMorAusCd'IAngSwitzDenNorSingH K-0,500,000,501,001,502,002,503,003,50050100150200250300Growth rate 2000-2011 (%)Population 2000 (Millions)  
 
 
 
 
 
 
 
 
Fig. 41: Most important country markets for EU wines in bottles and bulk:  GDP per capita (in PPP)  in 2000 and GDP 
average annual growth rate 2000-2011 (USD, %) 

Source: International Monetary Fund 

The group of developed economies (group on the right in  Fig. 41) appears quite homogeneous in terms of 
GDP growth rate, albeit less in terms of GDP per capita. It is possible that in these countries the levels of 
wine consumption are not particularly related to these two income parameters, but other factors may play a 
more important role. Singapore and Hong Kong (expanding economies) are exceptions in this group, as their 
per  capita  consumption  is  still  at  low  levels  (and  therefore  with  growth  potential  as  a  function  of  the  two 
macroeconomic parameters).  

With less than $10,000 per capita GDP (in PPP), Russia, Angola and China in particular, are placed at the 
top  of  the  group  of  growing  economies.  As  far  as  Russia  is  concerned,  the  most  credible  hypothesis  (as 
detailed in the Case Study monograph) is growth in consumption of wines of higher quality (more expensive 
imported wines, linked to income and its average growth rate), even in areas other than those which currently 
focuses on consumption (Regions of Moscow and St. Petersburg), and substituting other alcoholic beverages. 
As for China, it is worth going into further detail (see following section).     

5.5.2.3 

The ten most important Chinese regions (per capita GDP>10,000USD in PPP, 2010)  

China is a particular country market, therefore, it seems appropriate to observe market demand conditions in 
more detail at regional level.  

As previously mentioned, China had a population of 1,262 million inhabitants in 2000 with 0.57% average 
annual growth rate between 2000 and 2011.  

The largest Chinese regions (by population) are real “states within in the state”: the first three biggest regions 
have  a  population  larger  than  Germany.  Furthermore,  as  shown  in  Fig.  42,  some  of  the  most  densely 
populated regions  also  recorded impressive  per  capita  GDP  growth  rates  (i.e. the  region  of  Shandong,  but 
also  the  region  of  Guangdong,  the  two  most  populated).  Notwithstanding,  it  is  the  regions  with  lower 
population (which of course also depends on their physical size and location) that record the highest GDP per 
capita (it is the case of city-regions such as Beijing and Shanghai) in which the growth rate of GDP has now 
slowed down.  

In general, China's demand for imported (bottled) wine is concentrated in regions where per capita income is 
high and distribution networks are better developed. In particular, the largest wine markets are found in the 
Eastern regions (Jiangsu, Shanghai, Zhejiang and Fujian) concentrating about 50% of total wine sales, in the 
South-eastern  province  of  Guangdong  (bordering  Hong  Kong)  and  in  the  North-eastern  provinces  of 
Liaoning, Hebei and Shandong, and in Beijing. Consumption of imported wines in these regions appear to be 
highly concentrated in large metropolitan areas (first-tier cities), but with potential for growth in second-tier 
urban centres (see the China and Hong Kong Case Study monograph). 

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ChiRusSingJapBraCanNorSwitzDenGerUKUSAAngCd'IMorH KAus0,002,004,006,008,0010,0012,0014,0001000020000300004000050000Growth rate 2000-2010 (%)GDP per capita (PPP) -USD 
 
 
 
 
 
Fig. 42: China – Population and GDP by province 

Population of China by region (2010) 

China provinces: per capita GDP and GDP growth rate 
2000-2010 

In blue the regions with average per capita GDP >10,000 USD (in PPP) in 2010 

Source: IMF - International Monetary Fund 

In terms of future prospects, the remarkable growth of GDP per capita allows to hypothesise further growth 
in wine consumption (already occurred at impressive speed in past years), but also a gradual expansion of 
consumption  of  better  quality  wines  (imported,  but  also  domestic)  at  the  expenses  of  wines  for  the  mass-
market  (i.e.  only  “domestic”  products).  Interviews  with  key  market  actors  in  China  confirm  that,  with  a 
growing Chinese middle class, the largest expansion in consumption will probably mostly take place within 
the Medium Range wine segment in the future, as consumers increasingly specialise and upgrade their wine 
preferences.  In  both  on-  and  off-trade,  the  medium  quality  segment  is  expected  to  grow  significantly  in 
volume, with price being an important factor to be considered by existing and new foreign wine suppliers. 

5.5.3  Firm strategies (structure and rivalry) 

The analysis of the group of variables related to “firm strategies” aims to identify the degree of competitive 
power of wine businesses belonging to different wine producing country-systems in the case study markets, 
as well as their role in influencing the structure of the market in these countries. 

In principle, the competitive power of wineries (and thus the competitiveness of the products they sell) is the 
result  of  the  implementation  of  their  strategies  (behaviour)  within  the  competitive  system  they  belong  to 
(rivalry). 

In turn, firms' behaviour influences the structure of the market (level of concentration of supply, generation 
of  barriers  to  entry,  etc.)  and,  therefore,  the  competitive  performance  of  firms  (level  of  profitability, 
efficiency, etc.). 

The analysis is based on 2013 IWSR market data. 

5.5.3.1  Number of brands for still wines in consumer markets 

The first indicator we present is the number of brands (still wines) sold in the various analysed markets. The 
number  of  brands,  competing  with  one  another  in  a  given  market,  provides  an  idea  of  the  extent  of  the 
overall offer on which consumers can make their choices.  

The IWSR database provides an overview of the surveyed number of wine brands available to consumers in 
the case study country markets, distributed according to origin44.   

It  should  immediately  be  said  that  the  results  give  rise  to  some  concerns,  since  the  composition  of  the 
number of brands by country does not reflect the distribution of wine consumption according to wine origin 
(see §5.3.3). It is true, however, that we do not necessarily expect a correspondence between the two (i.e. a 
large  number  of  brands  could  attain  very  low  sales  volumes).  However,  the  IWSR  survey  approach  may 

44 Obviously, a certain number of brands is found in all case study countries, thus the total number of brands contains repetitions. 

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020406080100120GuangdongShandongHenanSichuanJiangsuHebeiHunanAnhuiHubeiZhejiangGuangxiYunnanJiangxiLiaoningHeilongjiangShaanxiFujianShanxiGansuChongqingJilinGuizhouInner MongoliaShanghaiXinjiangBeijingTianjinHainanNingxiaQinghaiTibetMainland ChinaShanghaiBeijingTianjinJiangsuZhejiangInner MongoliaGuangdongLiaoningShandongFujianJilinHebei7,09,011,013,015,017,019,021,002.0004.0006.0008.00010.000Growt rate 2000-2010 (%)GDP per Capita (PPP) -USD (2000) 
 
 
 
                                                      
produce distortions in the sample relative to the reference population45. Given the concerns, we believe that 
the results of the analysis should be taken with due caution.  

Tab. 11 shows the percentage of wine brands in each case study market over the total number of brands, by 
country  of  origin.  All  countries  of  origin  are  grouped  according  to  three  three areas:  EU,  NWC  and  other 
countries. 

Tab. 11: Number of wine brands in the case study country markets by country of origin, 2013 (% over total brands) 

From the observation of Tab. 11 the following considerations emerge:  

Source: IWSR 

  In  all  case  study  countries,  with  the  sole  exception  of  Japan,  the  percentage  of  NWC  wine  brands  is 
higher  (and in some  cases,  much  higher) than  that of  EU  wines.  As  mentioned,  this  first  result raises  
concerns about the IWSR survey system;  

  South  American  wines  from  Chile  and  Argentina  play  a  decisive  role  (large  number  of  wine  brands 
from these two countries). The role played by other NWC brands is more limited, with the (obvious) 
exception of American wine brands on the US market;  

  Chilean  wine  brands  are  relatively  more  numerous  in  absolute  terms  in  five  of  the  eight  considered 
markets (China, Denmark, Germany, Hong Kong and Russia). Regardless of their market share, then, 

45  The  percentage  of  NWC  wine  brands  over  the  total  per  country  appears  to  be  very  high,  especially  in  countries  where  NWC’s 

market share is minimal (e.g. Germany).   

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ChinaDenmarkGermanyHong KongJapanRussiaUKUSATotalAustrian0.00.00.90.00.40.00.50.00.3Bulgarian0.30.51.30.00.00.50.30.00.3Cypriot0.00.00.00.00.00.00.20.00.0French17.67.710.714.922.911.012.75.413.5German1.51.66.31.14.50.01.92.12.5Greek0.30.53.60.00.20.00.50.60.6Hungarian0.00.01.30.00.20.01.20.00.4Italian5.96.011.26.714.24.814.510.310.3Portuguese0.92.70.90.42.61.42.61.71.8Romanian0.30.01.30.00.00.00.30.40.3Spanish6.510.98.96.313.84.811.13.88.6Slovenian0.00.00.00.00.00.00.00.20.0Argentinian18.218.013.415.77.913.48.011.512.1Australian11.49.31.311.96.78.110.65.48.2Canadian0.30.00.00.00.00.00.30.40.2Chilean22.624.621.922.812.323.912.28.416.3New Zealand3.81.61.37.82.27.25.12.93.9South African5.08.79.85.24.76.79.85.26.7US4.17.73.66.35.98.16.641.212.1Brazilian0.00.00.00.00.00.00.20.00.0Chinese1.20.00.00.70.00.00.00.00.2Georgian0.00.00.00.00.01.00.20.00.1International0.00.01.30.00.00.00.30.00.2Israel0.00.00.00.00.01.40.00.00.1Indian0.00.00.00.00.20.00.20.00.1Japanese0.00.00.00.01.20.00.00.00.2Lebanese0.00.00.40.00.00.00.30.40.2Mexican0.00.00.00.00.40.00.00.00.1Moldovan0.00.00.00.00.01.00.20.00.1Montenegrin0.30.00.40.00.00.50.20.00.1Moroccan0.00.00.00.00.00.00.20.00.0Russian0.00.00.00.00.03.80.00.00.3Serbian0.00.00.40.00.00.00.00.00.0Swiss0.00.00.00.00.20.00.00.00.0Thai0.00.00.00.00.00.00.20.00.0Tunisian0.00.00.40.00.00.00.00.00.0Ukrainian0.00.00.00.00.02.40.00.00.2Total EU33.130.146.429.558.722.546.024.538.6Total NWC65.469.951.369.839.767.552.675.159.6Total Others1.50.02.20.71.610.01.40.41.8TOTAL %100.0100.0100.0100.0100.0100.0100.0100.0100.0TOTAL n.3411832262684962095774782778 
 
 
                                                      
and considering the available information as reliable, Chilean wines appear to have an important brand 
presence in most markets, potentially capable of influencing consumer preferences;  

  With  regard  to  EU  wines,  the  number  of  brands  is  higher  for  France  and  Italy,  one  or  the  other 
depending on the country market (French brands in China, Hong Kong, Japan and Russia; Italian brands 
in Germany, UK and USA). French brands are more numerous in Japan, while Italian brands on the UK 
market. Finally, again among European brands, Spanish wine brands are relatively  more numerous in 
Denmark;  

  Wine brands of other countries represent a very marginal percentage, with a sole exception for Russia 
where domestic and Ukranian wine brands are not negligible. We also note the low number of Chinese 
brands on the Chinese market, in spite of the fact that most wine consumed in this country is "local." 

5.5.3.2  Concentration of wine companies in the case study consumer markets 

IWSR  data  report  total  sales  of  still  wines  for  each  wine  company  (as  the  sum  of  sales  volume  of  each 
controlled brand). This allows to calculate the market share of each wine-company and then the degree of 
concentration expressed by the C4 indicator (i.e. market share of the top four companies).  

Tab. 12 shows the C4 value for each case study market in 2013. The market share of each of the top four 
wine companies is also reported, as well as the country where they are based. 

Tab. 12: Market shares of bottled still wines in volume in the case study markets (C4), by wine company and country, 2013 
(%) 

The results of the analysis highlight:  

Source: based on IWSR data 

  The existence of two extreme situations: Russia on the one hand, with the lowest concentration (C4 = 

5.3%); and the US on the other, with the highest C4 (49.2%);  

  In  three  countries  (China,  Germany,  USA),  the  first  four  leading  companies  are  domestic  wine 

companies;  

  In all case study countries that are wine producers (China, Germany, Japan, Russia, USA), the market 

leader is a local wine company (but not necessarily producing all wine from local grapes);  

  In  six  countries,  at  least  one  company  among  the  top  four  is  a  global  wine  market  player  (Denmark, 
Hong Kong, Japan; Russia, United Kingdom and USA). Moreover, it is interesting to note that in Hong 
Kong all top four leading companies are “big players”, while in China none is;  

  Among “big players”, the Chilean Concha y Toro appears with greatest frequency among the top four 

wine companies (in Denmark, Japan, Russia and the United Kingdom);  

  With  the  exception  of  Germany,  EU  wine  businesses  (i.e.  French)  appear  among  the  top  four  in  two 

countries only (Denmark and Hong Kong).  

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LeadersMSOriginLeadersMSOriginChangyu8.83ChinaKirin10.64Japan/internationalHebei Winery8.20ChinaBeam Suntory7.20Japan/internationalDynasty1.77ChinaConcha y Toro3.26Chile/ InternationalDragon Seal Wine Co1.70ChinaThe Wine Group2.97USAC420.51C424.07Concha y Toro3.07Chile/ InternationalMMVZ2.05RussiaWinecorp2.92South AfricaConcha y Toro1.17Chile/ InternationalAccolade2.76Australia/ InternationalInkerman1.06UkrainaVal D'Orbieu1.78FranceMagnit1.05RussiaC410.53C45.32Peter Mertes3.97Germany/ InternationalAccolade6.37Australia/ InternationalRheinberg2.35GermanyConstellation5.21USA/internationalZGM2.17GermanyConcha y Toro4.80Chile/ InternationalAndreas Oster1.74GermanyDiageo4.33USA/internationalC410.23C420.71Treasury6.19AustraliaE & J Gallo19.08USA/internationalE & J Gallo4.41USA/internationalThe Wine Group13.76USAConstellation3.14USA/internationalConstellation11.62USA/internationalBaron de Rothschild1.61France/ InternationalTrinchero4.73USAC415.34C449.19ChinaDenmarkGermanyHong KongJapanRussiaUKUSA 
 
 
Overall, EU wine companies appear to have limited total market power. 

Contrary to  what  might  be  expected, there is not an inverse relationship between the level of C4 and the number of 
brands. The most significant case is observed for the US (Fig. 43).  

An explanation of this phenomenon is that (as  it will be discussed later), the major companies have a (more or less) 
wide brand portfolio. 

Fig. 43: C4 of wine companies and number of brands in the examined country markets 

Source: analysis of IWSR data 

5.5.3.3  Market shares of the “big players” in consumer countries 

Beyond  the  four  market  leaders  (C4),  it  is  useful  to  broaden  the  analysis  to  the  market  power  of  all  big 
players in order to interpret the competition dynamics in each examined market. In particular, it is interesting 
to examine the strategic orientation of such players across the different country markets. 

Tab. 13 shows the market share of the major global players, of  which six European and six non-European 
companies, in the case study countries. 

Tab. 13: Market shares of the major global wine companies in the case study countries (bottled wine volume; %), 2013 

In red market shares >2% 
In the UK, the market share of Pernod Ricard is prevalently from Australian wines (Jakob's Creek)  and New Zealand wines. 
The market share of Diageo is prevalently accounted for by California wines (Blossom Hill). 

The following observations are based on the obtained results:  

Source: based on IWSR data 

  The  United  States,  United  Kingdom  and  Hong  Kong  are  the  markets  in  which  the  presence  of  wines 
produced and / or marketed by global companies, especially American and Australian, is stronger. In the 
US,  the  market  share  of  such  big  companies  exceeds  50%,  followed  at  a  distance  by  Japan  and 
Denmark.  

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ChinaDenmarkGermanyHong KongJapanRussiaUK USA0,010,020,030,040,050,060,00100200300400500600700C4 (%)n. brandsChinaDenmarkGermanyHong KongJapanRussiaUK USACostellation(USA)0.030.850.063.140.300.415.2111.62E&J Gallo(USA)0.470.230.404.412.760.273.0219.08Treasury Wine Estates(Australia)0.131.550.026.190.330.014.123.86The Wine Group(USA)1.602.970.070.1513.76Accolade(Australia)0.092.760.030.900.590.046.370.23Concha y Toro(Chile)0.293.070.131.553.261.174.801.66Pernod Ricard(France)0.130.520.051.230.260.062.360.55Diageo(UK)0.010.000.010.150.004.331.15LVMH(France)0.010.000.570.100.000.040.10Torres(Spain)0.030.600.080.150.150.000.290.03Baron de Rothschild(France)0.160.290.171.610.420.150.150.10Freixenet Group(Spain)0.060.000.371.410.050.071.359.870.9521.3511.282.1830.8352.13Tot 12 
 
 
 
 
 
  By contrast, in Germany, China and Russia the market share of global players is almost insignificant.  

  European wine companies hold marginal market shares in all markets, the only exception being Diageo 
and  Pernod  Ricard  in  the  UK  market.  However,  the  significant  shares  of  this  market  are  due  to  new 
world wines. 

Therefore, as already outlined in §5.2.2 (Theme 1), the markets studied seem to belong to two quite distinct 
groups.  The  first  group  concentrates  presence  and  market  power  of  the  big  players.  The  markets  of  the 
"Anglosphere"46, where supplier-market relationships are favoured by the existence of established economic, 
cultural and linguistic ties, belong in this group. The United Kingdom is, of course, the main target market of 
this group.  

The  second  group  represents  the  rest  of  the  world,  where  such  relationships  do  not  exist,  or  exist  only 
indirectly (e.g. Denmark47).  

All this has an impact in terms of international competition: being an enterprise of and/or marketing wines 
from  one  of  the  "Anglosphere"  countries  may  represent  a  competitive  advantage  in  accessing  certain 
markets. 

5.5.3.4  Product portfolio strategies of global wine players 

The  fact  that,  as  seen  in  the  previous  chapter,  global  players  control  large  market  shares  in  some  markets 
does  not  mean  that  these  are  solely  derived  from  sale  of  wines  from  the  same  country  of  origin  of  the 
company.  

Tab. 14 shows the total number of brands and origin of the wines controlled by the same companies already 
examined in the previous chapter. 

Tab. 14: Number of brands by company: total and by wine origin, 2014 

1)  In April 2011, 99% of Fosters Group shareholders agreed to split Fosters Group business into separate brewing 
and wine companies. The scheme of arrangement for the demerger of Treasury Wine Estates from Foster's Group 
was implemented 20 May 2011. 

2)  In  January  2011  Constellation  Brands  Inc  divested  80%  of  Constellation  Wines  Australia  along  with  its  sister 
company, Constellation Europe, to the Australian private equity company, CHAMP. On June 2011 Constellation 
Wines Australia and Constellation Europe were jointly renamed Accolade Wines. 

Fonte:  Companies Web Sites 

46 The Merriam-Webster dictionary defines the Anglosphere as "the countries of the world in which the English language and cultural 

values predominate". 

47 The IBWTI (see §5.5.1.3), shows that the Danish market is key for UK wine exports. As the UK is not a wine producer country, 
these clearly are re-exports, most probably including wines/brands from the product portfolios of the big players operating in this 
country. 

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USACanadaAustraliaNew ZeelandSouth AfricaSouth AmericaChinaIndiaEuropeOthersTOTAL% EU/TotCostellation(USA)2859311471126.3E&J Gallo(USA)384214105916.9Treasury Wine Estates (1)(Australia)1222523.8The Wine Group (USA)12221175.9Accolade (2)(Australia)71167312375.4Concha y Toro(Chile)110110.09860423002202887.6Pernod -Ricard(France)12416622227.3Diageo(UK)1111137.7LVMH(France)22141192045.0Torres(Spain)111263868.4Baron de Rothschild(France)1471258.3Freixenet Group(Spain)1121712181.0170552271166312652.4TOTAL115606501188341421.33686Total non EU big playersTotal EU big players81 
 
 
 
 
                                                      
As shown in Tab. 14:  

  All  companies  (European  and  non-European)  have  European  brands  in  their  portfolios,  with  the  only 

exception of the Chilean Concha y Toro;  

  Overall, the percentage of European brands on the total number of brands is just over 21%;  

  European  brands  account  for  almost  8%  of  the  total  number  of  brands  of  the  six  non-European  wine 
companies. However, about 17% of the brands controlled by the American E&J Gallo are European; 

  European  brands  represent  only  about  52%  of  the  total  number  of  brands  of  the  six  European  wine 

companies, down to 8% for the British Diageo. 

The results, therefore, show that all the major global wine companies develop a portfolio that includes brands 
from  all  main  production  areas  of  the  world,  although  the  incidence  of  an  area  rather  than  another  is  a 
function  of  the  company’s  headquarters  (greater  relative  weight  of  US  wine  brands  for  US  companies, 
greater relative weight of Australian wine brands for Australian companies, etc.)  
This strategy allows the big players (non-European and European) to facilitate their access to distribution48, 
and  cater,  to  various  extents,  to  the  different  target  markets.  The  consequence  is  that  the  composition  of 
consumption  of  wines  by  country  of  origin  in  the  various  markets  is  also  the  result  of  this  strategy.  In 
principle, the impact is more significant where the share of the market controlled by the big players is large.  

However, most companies do not exploit the power generated by the width of their product portfolios in the 
same way everywhere. It seems that, depending on the market, they adopt different strategies for selection of 
brands to be offered to the consumer, most likely in agreement with importers / distributors49.  
Next,  we  extracted  from  the  IWSR  database50  the  number  of  brands  (different  countries  of  origin)  of  the 
product portfolios of the big players in the various markets (see Tab. 15).  

48 As it will be pointed out later in §6.2.1, the width of the range on offer is one of the key factors of competitiveness for wine firms. 
49  It  will  be  shown  later  in  the  analysis  of  Theme  2  (§6.2.3  -  MicMac)  that  ability  to  closely  interact  with  importers/distributors 

represents a key factor of competitiveness for wine firms. 

50 Once again, keeping in mind the concerns expressed with regard to the IWSR survey approach (§5.5.3.1). 

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Tab. 15: Number of wine brands by country of origin marketed by the major global wine companies in the case study 
markets - 2013 

EU wines in red 

We observe that:  

Source: based on IWSR data 

  With  regard  to  non-EU  wine  companies,  American  and  Australian  companies  offer  a  wider  range  of 
brands in the US and UK markets than in the other markets. The Chilean Concha y Toro is present on 
all markets with wines from the same countries of origin, but again with a larger number of brands in 
the UK and the US markets;  

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OriginN. brOriginN. brOriginN. brOriginN. brOriginN. brOriginN. brOriginN. brOriginN. brAccoladeAus8Aus2Aus2Aus2Aus6Aus1Aus7Aus4(Australia)US1Int1US1US1SAfr2US2NZee1SAfr1Chile1NZee1Int1Total310122323381151226ConstellationUS4US3US3US4US10US3US10US40(USA)NZee1Ita1Ita1Ita1Ita1Ita1Ita1Ita1Ita1NZee2NZee1NZee3NZee2NZee1NZee6NZee4Can1SAfr1SAfr1SAfr1SAfr1SAfr1Can2Can2Ger1Arg1Fra1Total4747354941446520750E & J GalloUS4US2US1US3US10US2US4US24(USA)Ita3Fra1Aus1SAfr1NZee1Total141211131101214631TreasuryUS1US1US1US2US2US1US1US6(Australia)Aus7Aus4Aus4Aus8Aus10Aus5Aus11Aus8NZee1NZee1NZee3NZee1NZee1SAfr2Ita1Ita1Total39252531131526516416The Wine GroupUS1US2US1US3US10(USA)Arg1Aus1Aus1SAfr1Fra1Total11000012002224413Concha y ToroUS1US1US1US1US1US1US4US8(Chile)Chile5Chile5Chile6Chile5Chile4Chile4Chile8Chile5Arg2Arg1Arg1Arg2Arg2Arg1Arg3Arg2Total383738383736315315Pernod RicardNZee1NZee2Spa1NZee1NZee2NZee1NZee5NZee2(France)Spa2Spa2Aus2Aus2Spa2Spa1Spa9Spa2Aus2Aus1SAfr1Aus2Aus1Aus2Aus2Arg1Arg2Arg2Arg3Arg2Chile1US1SAfr1SAfr1SAfr1SAfr1Bulg1Hung1US2Fra1Ita1Total3557233471167722611DiageoUS2Turk1US1US3Arg2US3US8(UK)Fra1Por1Fra1Arg2Fra1Nzea1Ita1Total23001111351224412LVMHAus2NZee1Aus2Aus2NZee1Aus1Aus2(France)NZee1Arg1NZee1NZee1Arg1NZee1NZee1US1US1US1Arg1US2Arg1Spa1Arg1Arg1Arg1Total4500225645223346TorresChile1Chile1Chile1Chile1Chile2Chile1Chile1Chile1(Spain)Spa1Spa1Spa1Spa1Spa1Spa1Spa1Spa1Total2222222223222222Baron de RothshildChi2Chi1Chi2Chi3Chi2Chi2Chi1Chi2(France)Arg1Fra2Fra2Fra3Fra2Fra1Fra2Fra2Fra2Arg1Total3523243724232324Freixenet GroupAus2Spa1Spa2Fra4Spa2Arg1(Spain)Spa3Fra1Spa8Fra1Aus1Fra2Aus2US1Arg1US1Spa3Arg2Total48221200517002346UKUSAChinaDenmarkGermanyHong KongJapanRussia 
 
 
  Among  European  wine  businesses,  Pernod-Ricard  supplies  a  very  wide  variety  of  brands  in  terms  of 
country of origin in most consumer markets, with the largest number of brands in the UK market. Other 
companies  such  as  Torres  and  Baron  de  Rotschilds  are  present  in  practically  the  same  way  in  all  (or 
most) examined markets. 

Finally, it is important to note that the strategy of expansion of product portfolio composition is no longer a 
prerogative of big players alone, but it is now implemented by smaller size wine companies.  

Overall, IWSR data show that, in 2013, 37 companies (out of a total of 879, including the big players) has a 
product portfolio comprising wines from both EU and non-EU countries (Tab. 16). 

Tab. 16: Wine companies marketing EU and non-EU wines, 2013 

5.5.4  Related and supporting industries 

Source: IWSR 

With  regard  to  this  group  of  factors,  we  adapted  the  Porter's  Diamond  framework  to  focus  on  public  co-
financing programmes for promotional activities. This aspect is obviously inter-related to the "Government" 
group  of  influencing  factors  (see  next  section).  However,  we  have  placed  them  in  this  particular  group  of 
influences since it is financial support to businesses at variable rates of public/private co-financing. 

This  part  of  the  analysis  also  considers  the  effects  of  recent  technological  developments  in  wine  bulk 
packaging and transportation on supporting industries, in wine producer as well as in consumer countries. 

5.5.4.1  Co-financing  programmes  for  wine  companies  in  producer  countries  for  promotion  on 

consumer markets   

The analysis aims to verify the existence and extent of co-financed programmes for promotional activities in 
the EU and its main competitors.  

In the EU these activities are funded under the "Promotion on third-country markets" measure witin the wine 
CMO reformed in 2008, and the co-financing rate is 50%. Tab. 17 shows the budget used for this measure 
for  the  2009-2013  period  and  the  budget  planned  for  2014-2018.  In  addition,  for  the  years  2009-2013  we 
have estimated the average budget for a 12-bottle case (9 litres) of exported wine. 

Tab. 17: European Commission financial support for the wine promotion measure (Financial execution 2009-2013; Financial 
table 2014-2018, million Euro) 

With regard to the EU main competitors, Tab. 18 summarises the financing of promotional activities in 2009, 
including the rate of co-financing, where applicable. 

Source: EC-DG Agri, Comext 

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AccoladeLangguthAltiaLVMHBaron de RothschildMichel RollandBeam SuntoryOff-Piste WinesBibendum WinesPernod RicardBinderer St. UrsulaPeter MertesBoissetPLBBoutinotRackeCastelRemy CointreauCodorniuRidge WineryConstellationSograpeDiageoThe Wine GroupE & J GalloThierry'sFranco EspanolasTorresFreixenetTreasuryGrands Chais De FranceUnited WineriesItoyokaidoWaverley Wines & SpiritsJebsen10 InternationalKirin2009201020112012201320142015201620172018Total budget35.1887.2111.65142.52145.43227.22231.72232.72234.59234.59Euro/ Case (estimate)0.200.390.460.590.66n.a.n.a.n.a.n.a.n.a. 
 
 
 
 
Tab. 18: Financing of promotional initiatives by national or regional organisations in NWCs 

Source: Vinos de Chile. 2010 based on information from Meininger's WBI, 02/09 

Finally,  Tab.  19  summarises  the  evolution  of  the  budget  made  available  to  Chilean  wineries  within  the 
Strategic Plan 2020 and estimated average expenditure for a 12 bottle case of wine under this plan. 

Tab. 19: Strategic plan 2020 of Chile: Projected investment in Marketing and promotion - wineries 

Source: Wines of Chile strategic plan 2020 

The observation of Tab. 18 and Tab. 19 shows that, overall, the EU measure for promotion on third country 
markets entails a significantly larger average expenditure per 12 bottle case than that of each competitor.  

Therefore,  from  the  point  of  view  of  marketing  support  to  businesses,  the  EU  has  a  potential  competitive 
advantage that acts directly in consumer markets, both in terms of rivalry between businesses and in terms of 
orientation of market demand. For the latter, the role played by promotional activities is closely linked with 
one of the key factors of competitiveness identified, as it will be seen in subsequent analysis of Theme 2.  

5.5.4.2  Technological innovation in bulk wine packaging and transportation 

Technology improvement in wine packaging, namely the introduction of the Flexitank for transportation of 
wine in bulk (replacing steel containers), has had key consequences for international wine trade (previously 
illustrated in  §5.2.6).  In  particular, it  has  contributed,  starting  in  2007,  to  a  gradual  substitution  of  bottled 
wine with bulk wine exports for some of the major wine exporting countries such as Australia, the US and 
South Africa.  

The  use  of  flexitanks  has  two  important  positive  effects:  the  flexitank  preserves  wine  quality  and  lowers 
costs. For some countries of destination, cost reduction concerns transportation, in addition to a decrease in 
bottling  costs.  In  other  countries,  bottling  at  destination  increases  costs,  however  the  reduction  in 
transportation costs compensates for such an increase. An important consequence of cost reduction for bulk 
wine exporters is not so much a reduction in the price to the final consumer, but rather an increase of profit 
margins for importers-distributors, who are key for gaining access to any market. This may well provide a 
competitive advantage to bulk exporters.  

In  addition,  use  of  flexitanks  can  broaden  the  spectrum  of  target  markets  for  exporters and  help  eliminate 
constraints of “market proximity”.   

A  further  consideration  must  be  made  concerning  the  possible  impact  of  technological  innovation  on 
supporting industries of wine producing countries. As discussed in §5.2.6, increased exports of bulk wine in 
flexitank  entails  a  transfer of  bottling  operations  from  wine  producer  to  consumer  countries  with  negative 
effects  on  the  glass  and  bottling/packaging  industries  in  the  former  countries  and  corresponding  positive 
effects on the latter countries. 

5.5.5 

 Government (Central policies of producer and consumer countries) 

Under this group of influence factors, we analyse three aspects that are particularly significant with regard to 
wines competitiveness on the international arena.  

A first aspect concerns the policies of taxation of alcoholic beverages in consumer countries, notably for still 
wines. A second aspect concerns bilateral trade agreements between producing and consuming countries to 
facilitate  market  access.  Finally,  a  third  aspect  concerns  the  strategic  plans  of  governments  (or  other 

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Wine AustraliaWine Institute of CaliforniaWines of ArgentinaWines of ChileWines of South AfricaNZWG New ZealandOwn offices881322Countries Represented>25176564FinancingTax on grapes and export (53%)User-pays and sales of services (47%)Wineries by size and Dept. Of Agriculture50% Governement ( CFI $ Coviar) and 50% User-pays35% Governement and 65% User-pays95% tax (Re7/Lbt RE5/Lbu), 5% additional GovernementTax (€ 1.25 per liter- 0.75 per kg)Total  2009 budget (Millions of USD)11.97.3764.13.6Total 2009 budget (USD/ Case)0.2310.3210.2930.1410.1510.35120102011201220132014201520162017201820192020Total budget (Millions of USD)7.5411.1811.9111.2611.7212.6514.1915.0216.6617.4419.02USD/ Case (estimations)0.170.230.230.210.210.210.220.220.230.230.24 
 
 
 
institutions)  of  producing  countries,  aimed  at  improving  the  efficiency  of  the  supply  chain  and  the 
competitiveness of wine products (including a range of policies). 

5.5.5.1  Tax regimes in consumer countries 

Tab. 20 summarises the tax system applied to wine in the main EU wine import countries, including the three 
case study Member States.  

All monetary values, originally expressed in national currencies, are converted into Euros using the average 
exchange rate for the year 2013.  

Tax regimes are quite differentiated across the examined countries. The reasons for such differences range 
from  protectionism  of  domestic  wine  and/or  other  locally  produced  alcoholic  drinks  (beer,  spirits,  etc.)  to 
prevention  of  alcoholism,  or  again  environmental  reasons  (taxation  on  recycling).  Tab.  20  shows  import 
duties and other fees for imported wines and consumer taxes currently applied across countries. 

Tab. 20: Fiscal policy and taxation in the most important country markets for EU wine exports 

Source: ICEX, ICE, Sud de France Développement, OECD and other national sources 

The observation of Tab. 20 shows the following main differences across countries:  

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Import dutyCustoms clearance tax  / Harbour Maintenance FeesMerchandise Processing FeesVATExcise dutyTax on packagingNoteBottled wine14%017%10%Bulk wine20%017%10%Honk KongBottled wine0%00%0%JapanBottled still wine (2 lt or less)15% (or 0.96 €/lt, whichever is lower with a minimum of 0.52 €/lt)08%0.617 €/lt Bottled still wine (2 lt to 150 lt)15% (or 0.96 €/lt, whichever is lower with a minimum of 0.52 €/lt)08%0.617 €/lt Bulk wine (> 150)0,35 €/lt08%0.617 €/lt Bottled still wine18.1% on CIF (^)0,15%oncustomsvalue(*)18%0.16 €/lt (°)Mosts and bulk wine5% on CIF (^)0,15%oncustomsvalue(*)18%0.16 €/lt (°)Bottled still winefrom 0.033 €/lt to 0.169 €/lt (°)0.125% AV0.21% on FOBmin 18.8 €; max 365 €From 0 to 9.45% (^)FET: Still wine < 14% : 0.16 €  bottle 0.75 lt (=)SET: from 0.04 €/lt to 0.50 €/lt (^)Bulk wine0.063 €/lt0.125% AV10% vol : 5.29 €/lt11% vol: 5.86 €/lt12% vol: 6.34 €/lt13% vol: 6.90 €/lt10% vol : 5.82€/ltBottles :       0.67 €11% vol: 6.40 €/ltBag.in-Box.  1.30 €12% vol: 6.98 €/lt13% vol: 7.56 €/lt10% vol : 5.58 €/lt11% vol: 6.14 €/lt12% vol: 6.70 €/lt13% vol: 7.26 €/ltCanada Still wine < 13.7% vol0.0137 €/lt0.453 €/lt Average exchange rate 2013 CAD/€ 0.725840 to 60 cl:      0,00 €60 to 110 cl.:   0,21 €110 to 160 cl.: 0,32€>160 cl.:          0,43€GermanyStill wine19%0UKStillwines5.5-15% vol20%3.14 €/ltS pecial Tax (excise) based on “The Alcoholic Liquor Duties Act” of 1979Average exchange rate 2013 £/€ 1.177503WET: 29% AV (°)DenmarkStill wines  6-15% vol25%0.824 €/lt(°) WET is calculated on the taxable value of sales, imports and applications to own use. Generally applies to the last wholesale sale Average exchange rate 2013 AUD/€ 0.7258Australia Still wines  > 1.15 % vol5% AV10%NorwayStill wines  4.75-22% vol25%Average exchange rate 2013 NOK€ 0.1280949United States(°) Customs duties apply according to the nomenclature of the product(^) State excise taxes and Sales taxes on wine vary according to the State(=)  Federal Excise Tax  ax for still wines varies according to alcohol content.Average exchange rate 2013 $/€ 0.75294SingaporeStill wine07%Average exchange rate 2013 SGD/€ 1.177503ChinaTotal tax =  ((Import duty+ VAT + Exise duty + (Import Duty*VAT))/(1-Excise Duty)Russia(^) in 2013. (*) 0,10% in Rubles and 0,5% in foreign currency. (°) 0.16 €/lt in 2013, 0.19 €/lt in 2014; 0.21 €/lt in 2015Average exchange rate 2013 R/€ 0.02362 
 
 
  Import  duties:  Hong  Kong  and  Singapore  do  not  apply  any  import  duties;  In  addition,  low  duties  are 
applied by the USA, Canada and Australia; in contrast, very high tariffs are applied in Russia, Japan and 
China. With regard to types of wine, Russia, USA and Japan apply a lower import duty to bulk wine 
compared to bottled wine. The opposite is observed for China.  

  Excise duty is particularly high in Singapore, Norway, Australia and the UK (but also in Denmark) and 
is calculated on sales value (not as a percentage). In contrast, no excise duty is applied in Hong Kong 
and in Germany.  

  VAT:  Denmark  and  Norway  apply  the  highest  Value  Added  Tax,  in  contrast  to  Japan,  USA  and 

Singapore, where VAT is relatively low. Hong Kong does not apply this tax at all. 

In theory, the level of taxation applied in the examined countries should not generate competitive advantages 
for  different  types  of  wine  and  different  origin,  it  should  only  have  an  effect  on  the  size  of  demand  at 
aggregate level51. As an example, Tab. 21 shows the consumer price of the same wine in different country 
markets.  The  important  price  differences  observed  influence  demand  in  terms  of  targets  (socioeconomic 
groups) and sale volumes (as a result of the first effect). 

Tab. 21: Formation of wine market price (€/bottle) 

Source: Based on ICEX, 2012, 2013. 

In  reality,  the  situation  is  more  complex,  with  different  tax  systems  de  facto  generating  competitive 
advantage for certain types of wine.  

In countries (such as the UK) where the Excise Duty is not in line with the value of production, but is applied 
to volume unit, it is not worth buying low-priced wines: the incidence of  the excise duty on the consumer 
price  is  exaggerated  compared  to  high  price/quality  wines52.  Therefore,  in  these  countries,  wines  of  low 
price/ quality are virtually absent from the market. As a result, this severely limits the access to the market 
for wines originating from countries/regions53 specialized in the production of wines for the mass market54.  

A concrete example provided in Tab. 22 for the UK helps to clarify this concept.  

Tab. 22: Price formation for wines of different price at origin and final price/price at origin ratio (£) 

Source: Bibendum, 2014 

5.5.5.2  Multilateral and bilateral trade agreements between producer and consumer countries 

This part  of the  analysis  aims  to  assess  whether  a  relationship exists  between  wine import trends  and  free 
trade agreements (FTA) of the top importers of bottled wine at global level (including the country markets 
analysed as case studies) with the most important exporters (EU, NWC, Western Balkans and Caucasus).  

51 In general, taxation represents an obstacle for market demand growth, especially in the low income segments of the population. 
However, for the high-income segments that are sensitive to the “status” content of wines, the opposite may be true. In Russia, for 
example,  the  elasticity  of  demand  to  price  is  positive  for  Top  Range  wines.  Paradoxically  then,  wine  demand  grows  with 
increasing consumer prices (i.e. Veblen effect. See Russia Case Study monograph). 

52  In  other  words,  the  consumer  would  spend  a  disproportionate  amount  in  taxes  for  low  quality  wines  compared  to  high  quality 

wines, which would make purchase irrational. 

53 For example, low price/quality wines of Italy (Sicily, Apulia), Spain (Castilla-La Mancha) and France (Languedoc-Roussillon).  
54 In this respect, we can recall the differences between the UK market and the German market previously mentioned.  

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Ex-works price2.002.002.002.00Trasportation cost1.100.500.180.20CIF price3.102.502.182.20Price + Customs duties14%3.5320%3.000%2.180%2.20Price + Excise duties10%3.890.40 €3.402.42 €4.600%2.20Price + VAT17%4.5518%3.9820%5.3819%2.57Price + Importer's margin25%5.6980%7.1610%6.7310%3.22Price + Retailer's margin50%8.5340%10.0232%10.0932%4.83ChinaRussiaUnited KingdomGermanyConsumer cost per bottleRetailer marginExcise dutyVATPackagingLogisticsMoney for wineConsumer cost /Money for wine5.01.092.050.830.360.200.4710.647.52.032.051.250.360.201.614.6610.02.852.051.670.360.202.873.4820.06.892.053.330.360.207.172.79 
 
 
 
                                                      
A summary of existing FTAs (bi- and multi-lateral) including wine is presented in Tab. 23.   

Tab. 23: Free Trade Agreements with reduced or zero import duties 

Sources: EU - DG Trade (Market Access Database), WTO and National Governmental Trade Departments 

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EUChinaRussiaUSAJapanCanadaSwitzerlandNorwayAustraliaSingaporeBrazil••*•1999 (customs duty 8.5CHF/100 kg gross weight)Since 1994 Norway is part of EEA (duty free)°°X•Argentina•1991 (duty free)^Australia•2004 (tariff phasing-out over 11 years)2014 (immediate tariff phasing-out for bulk, gradual for bottles)2003 (immediate tariff abolition on all goods)Chile2002 (tariff phasing-out over 4 years except denominations protected by EU)2006 (tariff phasing-out over 10 years to 2015)2004 (tariff phasing-out over 11 years)2007 (tariff phasing out over 12 years)1997 (tariff phasing out - duty free by 2003)2004 (wine is not included in FTA)°°2004 (wine enters duty free)°°2009 (Chilean wines face 5% import tariff. Tariff to be eliminated by 2015)1996 (duty free)^^New Zealand2008 (wines enter duty free since 2013)•1983 (duty free since 1990)2001 (immediate tariff abolition on all goods)South Africa 1999 (duty free quota)2008 (immediate duty-free access)°°°2008 (immediate duty-free access)°°°USA•1994 (NAFTA)2004 (US wines face 5% import tariff)2004 (duty free)•Bosnia-Herzegovina2008 (duty free quota)X°°X°°FYROM2001 (duty free quota)2002 (MFN duty rate minus 17.50 CHF/100 kg gross for still wine)°°2002 (Duty free)°°Montenegro2007 (duty free quota)2012 (duty free for still wines)°°2012 (duty free)°°Serbia2010(duty free quota)2000 (only 1% customs record keeping tariff for still wine)2010 (duty free for still wines)°°2011 (duty free)°°ArmeniaXGeorgiaX1994 (Embargo imposed in 2006, lifted in 2013)MoldovaX°1993 (Ban on wine imports in Sept 2013)UkraineX2012 (0.3 or 0.4 €/litre for still wines; 7 years phasing-out)°°2012 (duty free)°°* MFN at 0% except for Icewine and 4-5 other wines• Negotiations for FTA between China and Australia are ongoing• Negotiations for FTA between USA and EU are ongoing (Transatlantic Trade and Investment Partnership - TTIP)• Negotiations for FTA between Japan and EU are ongoing• Negotiations for FTA between Canada and EU are ongoing (Comprehensive Economic and Trade Agreement - CETA)• Negotiations for FTA between NZ and Russia-Belorus and Kazakhstan started in 2010, then halted in Feb 2014 because of Ukraine-Crimea crisis• Negotiations for FTA between EU and MERCOSUR are ongoing (Argentina, Brazil)• Agreement on Trade and Economic Cooperation was signed between USA and Brazil in 2011° FTA with Moldova including wines will become effective at beginning of 2015°° FTA through EFTA (often added bilateral agreement on food products)°°° Bilateral FTA with Southern African Customs Union (SACU)^ Mercosur^^ Agreement of Chile with MercosurX FTA signed but not yet appliedNWCCaucasusFormer Soviet RepublicsMain market competitors Main wine consumer marketsWestern BalkansEuropean Union 
 
 
 
Horizontal  analysis  of  Tab.  23  shows  Chile  as  the  producer  country  that  has  developed  more  bilateral 
agreements  with  wine  consumer  countries  (in  practice,  with  all  considered  countries,  except  Russia  and 
Singapore). Vertical analysis of Tab. 23 highlights the European Union as the consumer “country” that has 
developed more bilateral agreements with wine producing countries. 

Within existing trade agreements, a distinction needs to be made between those specific to wine (or wine and 
spirits), such  as  between  the  EU  and  the  US  (2006) and  the  EU-Australia (2009)  and  those that  include a 
number  of  sectors  (agricultural  or/and  non-agricultural)  or  cover  not  only  goods,  but  also  services  and 
investments, such as China-Chile and China-New Zealand FTAs. For the latter types, it can be argued that 
rules for wine may acquire or lose importance (in relative terms) depending on the economic importance of 
other sectors covered by the agreements, as trade-offs between different types of traded goods (or services) 
are likely to occur. 

Distinction  should  also  be made  between  trade  agreements  specifically  aimed  at  tariff  reduction  and  those 
specific  for  or  including  mutual  recognition  of  Geographical  Indications  (GIs),  oenological  practices, 
protection of traditional terms and labelling. Since 1994, the EU has developed various specific agreements 
for protection of GIs for wines and spirits (see also §3.3.3) with other key producing countries, beginning 
with Australia (wine 1994, renewed 2008), Chile (wine  and  spirits, 2002), South Africa (wine and spirits, 
2002), Canada (wine and spirits, 2003) and the USA (wine, 2006; updated 2011). The primary purpose of 
these agreements was to provide for the mutual recognition of specific GIs as well as phase-out the use of 
specific  wine  and  spirit  terms  of  European  origin,  which  had  acquired  ‘generic’  status  in  the  partner 
countries, in particular Canada and the USA. 

At the international level, GIs are legally provided for by the WTO Agreement on Trade Related Aspects of 
Intellectual Property Rights (TRIPS), which defines GIs as “indications which identify a good as originating 
in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other 
characteristic  of  the  good  is  essentially  attributable  to  its  geographical  origin”55  and  establishes  a  two-tier 
system for their protection (art.22 provides a basic level of protection for all GIs,  while art.23 provides an 
enhanced  level  of  protection  specifically  for  wines  and  spirits).  This  protection  system  has  been  under 
negotiation within the WTO’s Doha Development Agenda (DDA). 

The  EU  has  also  asked  for  the  inclusion  of  an  annex  to  the  TRIPS  Agreement  establishing  a  multilateral 
system of registration of GIs56. However, such initiative has not made much progress due to opposition,  in 
particular, from the USA, Australia, Chile, New Zealand, Argentina, Canada and Japan57. Until the TRIPS 
agreement  will  not  offer  adequate  protection  for  European  GIs,  the  EU  is  seeking  this  objective  through 
different types of bilateral agreements58. These include stand-alone agreements for wine and spirits (e.g. EU 
with Australia, Canada, the US59, etc.) and as part of agreements for trade in agricultural products (e.g., EU 
with  Switzerland);  agreements  with  countries  involved  in  the  EU  enlargement  (e.g.  Western  Balkans  and 
Turkey)  finalised  at  aligning  their  GI  systems  to  the  acquis;  GI  specific  agreements  with  neighbouring 
countries (e.g. Moldova, Ukraine, Georgia); through negotiation of FTAs with key trading partners as part of 
the  Global  Europe  Strategy  launched  in  200660;  and  also  through  commitments  to  GI  cooperation  in 
Economic Partnership Agreement (EPA) negotiations with African and Caribbean Countries (ACP). 

5.5.5.2.1  Effects of bilateral trade agreements on wine trade 

For  each  of  the  13  most  important  wine  import  markets,  we  have  considered  imports  of  bottled  and  bulk 
wine between 2000 and 2012 (source: Comtrade) from the EU and the other main exporters with whom a 

55  “Protection  of  Geographical  Indications”  of  the  Agreement  on  Trade-Related  Aspects  of  Intellectual  Property  Rights  (TRIPS 

Agreement), http://www.wto.org/english/docs_e/legal_e/27-trips_03_e.htm 

56World  Trade  Organisation,  Geographical  Indications,  Communication  from  the  European  Communities,  14  June  2005, 
http://www.wto.org/english/tratop_e/trips_e/gi_background_e.htm (last negotiations on the multilateral register were held in 2011). 

57 They submitted a Joint Proposal on the register suggesting a mere GI database. 
58 DG AGRI Working Document on international protection of GIs: objectives, outcomes and challenges, 25 June 2012. 
59 However, the 2006 EU-US wine agreement provides for mutual protection of “names of origin” but not specifically of GIs. 
60 European Commission, Communication from the Commission to the Council, the European Parliament, the European Economic 
and  Social  Committee  and  the  Committee  of  the  Region,  Global  Europe:  Competing  in  the  World.  A  Contribution  to  the  EU’s 
Growth and Jobs Strategy, COM(2006) 567, Brussels, 4 October 2006. 

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trade agreement is in place. The analysis of import trends, in the light of the existing trade agreements that 
include import tariff reduction or elimination, leads to the following observations61: 

  In  general,  the  analysis  does  not  reveal  obvious  structural  breaks  or  “jumps”  in  imports  that  can  be 

connected to the implementation of trade agreements; 

  However,  in  a  few  cases  a  more  pronounced  growth  of  imports  starting  after  implementation  of  an 
agreement (growth that is also maintained in the following years, therefore not a market effect of some 
sort) suggests that trade agreements may have had an impact, as it would be expected. In most of such 
cases, imports increase appears to be gradual, probably moving in parallel with phasing-out of import 
tariffs.  It  is  however  difficult  to  know  whether  other  market  occurrences  and/or  policies  may  have 
played a simultaneous role. In synthesis, we observe that in: 

-  Singapore: FTAs with New Zealand, USA and Australia have probably had some effect in boosting 
imports of bottled wine from these countries. In particular, Australian wine imports reach the same 
import levels of EU wines in 2004 and only after 2008 EU wines recover their market leadership; 

-  Japan and China: FTAs with Chile has probably had an effect on bottled wine imports, as shown by 
more pronounced growth starting in the year right after implementation of the agreements (2006 for 
China and 2007 for Japan). In Japan, the impact is even stronger on bulk wine imports, with Chile 
overtaking  the  EU  in  2008  and  maintaining  leadership  in  this  market  in  subsequent  years.  We 
should  not  forget,  though,  that  both  markets  show  greater  preference  for  European  wines  and 
Chinese imports of bottled wines from the EU grow at a much faster pace than imports from Chile 
and  New  Zealand  (the  only  other  country  with  which  China  has  a  bilateral  agreement  for  wine 
since 2008); 

-  USA: a marked increase in bulk wine imports from Australia is observed in 2005 and 2006, right 
after  a  bilateral  agreement  was  signed  between  these  two  countries  (however,  imports  of  bottled 
wine stabilise from 2005 onwards after consistent growth in the 5 previous years, suggesting that 
there  was at least  partial  substitution  of bottled  wine  with  bulk).  An  even  larger  leap  upwards is 
observed between 2008 and 2009 in bulk imports from both Australia and Chile. Notwithstanding a 
possible impact of FTAs, this sudden leap in US bulk imports from the two countries is likely to be 
related to other factors, as US bulk exports (mainly towards the UK and Italy)  also considerably 
increase over the same time interval. 

  On  the  three  EU  markets  (Denmark,  Germany  and  the  UK),  FTAs  of  the  EU  with  Chile  and  South 
Africa may have had some impact on bulk wine imports. Bulk imports from South Africa, in particular, 
grow  quite  consistently  especially  in  the  UK  (but also  in  Denmark),  however  this is also  an effect  of 
substitution of bottled imports with bulk imports from this country. 

As  for  impact  of  trade  agreements  specific  for  the  protection  of  GIs  between  the  EU  and  its  main  trade 
partners on wine imports from the EU, we have examined the share of of PDO and PGI wine imports over 
total still wine imports from the EU in three major markets: the US, Canada and Australia, between 2000 and 
2013 (source: Comext). 

Overall,  the  results  do  not  suggest  a  significant  impact  of  such  trade  agreements  in  boosting  imports  of 
PDO/PGI wines into the US and Canada. In fact, the share of PDO/PGI wines over total wine imports from 
the  EU  decreases  for the US  (64% on  average  in  2000-2002;  58%  on  average in  2011-2013)  and  remains 
fairly  stable  for  Canada  (60%  in  2000-2002;  62%  on  average  in  2011-2013).  On  the  other  hand,  and 
notwithstanding year-on-year fluctuations, the share of European GI wines over total EU wines imported into 
Australia increases from 52% (on average 2000-2002) to 59% (average 2011-2013). This increase occurred 
in the years after 2008. 

5.5.5.3  Support policies and regulatory measures in the EU and in NWC  

The aim of this part of the analysis is to provide a synthesis of governmental (or other institutional) strategic 
policies to improve the performance of supply chains, market access and wine competitiveness.   

61 In the cases where FTAs are in place since the 1990s or earlier, it is impossibile to discern a relationship between import flows 

(which we consider from 2000 onwards) and trade agreements. 

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As  previously  illustrated,  the  2008  wine  CMO  reform  has  introduced  measures  specifically  aimed  at 
improving competitiveness of EU wines on foreign markets (in particular, the measure "Promotion on third 
country markets"). However, the EU is not alone in the adoption of policies targeted to assist domestic wine 
industries promote their wines on international markets and develop export markets so as to improve their 
competitiveness62. In particular during the last decade, the EU’s main competitors have developed specific 
policies to support wine marketing, market access and export initiatives. 

Tab. 24: Policy measures developed by the EU and NWCs with potential effects on market access and competitiveness 

Sources: EU-DG Agri, E-Bacchus, National legislation for NWC and various literature 

From a vertical reading of Tab. 24, it is clear that the EU has developed measures in virtually all policy areas 
and more than its competitors. A horizontal examination of Tab. 24 suggests that the most popular measures 
are those geared to directly support exports through promotional activities (benefitting from public funding 
or  co-funding,  see  previous  §5.5.4),  participation  of  industry  in  international  trade  fairs  and  similar. 
Therefore, all wine producers (EU and non-EU) compete on a par in this respect.  

Some  NWCs  have  also  developed  national  wine  brands  or  other  initiatives  such  as  international  Wine 
Awards,  used  to  promote  and,  thus,  increase  awareness  of  national  wine  products  through  generic 
advertising.  Examples  are  the  cases  of  New  Zealand  (“New  Zealand  Wine”  brand),  South  Africa  (“Brand 
South Africa”) and Argentina (annual “Argentina Wine Awards” organised by Wines of Argentina). 

A wine's origin is a key part of its identity, as it implies something about its style and quality. Many names of 
origin  are  used  on  wine  labels  worldwide.  Some  of  these  indicate  only  the  wine's  origin,  while  others 
combine origin, style and quality.  

Examples of the first type include 696 US wines under geographical indication (most of which linked to an  
American  Viticultural  Area  AVA),  Australia's  78  wines  under  GI  (Geographical  Indication)  and  South 
Africa's 153 wines with geographical indication (Wine of Origin scheme) (source: DG Agri E-Bacchus).  

Examples  of  the  second  type  are  found  mostly  in  Europe  (i.e.  PDO  and  PGI).  Similarly  to  trademarks, 
Geographical  Indications  (GIs)  are  intellectual  property  instruments.  However,  in  spite  of  these  being 
covered  by  the  WTO  Agreement  on  Trade  Related  Aspects  of  Intellectual  Property  Rights  (TRIPS),  legal 
recognition of GIs outside Europe often requires the existence of a bilateral agreement between the EU and 
importing countries, as previously illustrated in §5.5.5.2. 

In terms of the potential impact of this type of policy measure on EU wines access to and competitiveness on 
export  markets,  PDO  and  PGI  can  be  considered,  per  se,  as  an  asset  for the  image  of  European  wines  on 
foreign  markets,  in  particular  for  wines  positioned  at  the  top  end  of  the  price/quality  range.  However, 
restrictions  sometimes  imposed  by  producers’  organisations  or  PDO/PGI  consortia  in  the  production 
protocols, such as prohibition of bottling the wine outside the geographical production area (e.g. Rioja) may 
produce negative effects in terms of hindering market access to certain European GI wines (e.g. the Spanish 
wine Rioja, cannot be exported in bulk (i.e. at competitive prices) to be bottled directly at destination, thus 
risking  loss  of  market  share  to  similar  wines  from  non-EU  competitors,  as  illustrated  in  the  analysis  of 
Theme 3 – see §6.3.2). It should be mentioned, however, that for particular market segments (i.e. Top Range 
wine  consumers  with  higher  interest  in  and  knowledge  of  high  quality  wines), PDO  wines  bottled  outside 
their terroir may lose in image. 

62 See Chapters 3 and 4. 

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EUUSAChileArgentinaAustraliaNew ZealandSouth AfricaWine export/promotion programmesхххххххDuties and tax refundsхSupport to generic advertising (country brands)ххххSupport to R&D and innovationххххControl of production potentialхOenological practices, labelling rulesххGeographical indications, designations of originхххх 
 
 
                                                      
Similarly, restrictions adopted in some Member States for the  use of grape varietals in labelling (e.g. Italy) 
may play against foreign market development in countries where the mention of grape variety is considered 
as a factor of competitiveness (e.g. USA and UK). 

In terms of oenological practices and labelling requirements, the EU has always had overall more stringent 
rules  than  its  competitors  (possibly,  with  the  only  exception  of  the  US  that  have  a  similarly  developed 
system). This can constitute a negative factor for the development of the competitiveness of European wines 
on  international  markets  (i.e.  higher  production  costs).  In  some  cases,  however,  mutual  recognition  of 
oenological  practices  and  labelling  requirements  between  the  EU  and  its  trade  partners  is  in  place  within 
trade agreements (see §3.3.3).  

Between  1998-1999  the  most  important  non-EU  wine  producers  created  the  World  Wine  Trade  Group 
(WWTG)  as  “an  informal  group  of  government  representatives  with  a  mutual  interest  in  facilitating  the 
international  trade in  wine  and  avoiding  the  application  of obstacles  to  international trade in  wine”  and  in 
participating in networking and information sharing to provide better access to international wine markets. 

The founding members of the WWTG are: Argentina, Australia, Canada, Chile, New Zealand, South Africa, 
and the United States. The Republic of Georgia acceded to the WWTG Agreements in 2010. Brazil was also 
a  founding  member,  regularly  attending  WWTG  meetings.  Other  countries  have  also  participated  in  the 
meetings on a less regular basis: China, Mexico, Paraguay and Uruguay. 

Within  the  WWTG,  Australia,  Canada,  Chile,  New  Zealand  and  the  US  have  signed  an Agreement  on 
Mutual Acceptance of Oenological Practices (entered into force in December 2002). The same countries with 
the addition of Argentina have also signed an Agreement on Requirements for Wine Labelling, entered into 
force in July 2010. 

Control  of  production  potential  is  only  implemented  by  the  EU  (through  restructuring  of  vineyards  and 
restrictions on planting rights63). Given the overall expansion of vineyard areas and wine production in third 
countries that are the EU’s main competitors in world markets (see §5.5.1.1), it could be argued that there is 
a risk that these measures create a constraint to further export market development for European wines. 

Finally,  one  interesting  measure  is  the  Drawback  scheme  implemented  by  the  US,  as  described  in  §4.1.2. 
This  scheme  allows  for  refunds,  total  or  partial,  of  paid  duties  and  taxes  when  an  imported  good  is  re-
exported,  thus  allowing  American  companies  to  compete  in  foreign  markets  without  the  handicap  of 
including  taxes  and  duties in  the costs.  According  to  a  recent  study,  under specific  market  conditions, the 
drawback  scheme  is  believed  to  stimulate  imports  and  exports  of  wine  in  bulk  (Sumner  et  al.,  2011  and 
2012). The evidence provided by the analysis of import-export trends observed for US wine in bulk suggests 
that the drawback scheme may indeed represent a competitive factor for the US.  

5.5.6  Chances  

“Chances”  group  influences  that  cannot  be  foreseen,  such  as  adverse  climatic  events  that  impact  on 
production level or quality, sudden political or policy changes, economic downturns, etc.  

A good example is the embargo recently imposed by Russia to EU foods as a response to Euro-American 
restrictions following Russia-Ukraine political tensions. Unforeseen events also occurred at different times in 
China, such as: 

  Retaliation  against  European  wines  following  imposition  of  a  EU  tax  on  Chinese  solar  panels,  and 

investigation on subsidies to the European wine sector (antidumping); 

  Measures  taken  against  public  officials  lavish  spending  has  affected  the  top  end  of  the  wine  market: 

grand crus volumes have plummeted and prices have collapsed (source: IWSR). 

Another  example  of  “chance”  factors  is  the  Danish  government  decision  to  increase  excise  duty  on  wine, 
while lowering it on beer. 

With  regard  to  this  group  of  influencing  factors,  we  analyse  the  evolution  of  the  relationships  between 
exchange rates of the various competitors currencies with the Euro. In previous sections we have seen the 

63 Transitional planting rights will be replaced, from 2016 to 2030, by a new system of authorizations for vine planting (Articles 61-

70 of Reg. EC No 1308/2013). 

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role played by exchange rates in the evolution of imports (exports from) into importing countries (exporting 
countries).  

In fact, as it is known, the evolution of the exchange rate between the Euro and other currencies affects the 
relationship between the EU internal price and the world price of a certain product (in this case, wine) and, 
therefore,  the  commercial  performance  of  European  manufacturers.  For  example,  with  reference  to  the 
exchange rate EUR/USD, an appreciation of the US Dollar translates into an increase of the world price in 
Euros  and,  subsequently,  an  increase  of  domestic  prices  in  the  various  markets.  Higher  prices  stimulate 
supply but discourage market demand, leading to an increase in net exports. A similar mirrored effect would 
be expected in the case of appreciation of the Euro64. 

The graphs in Fig. 44 show the evolution of the exchange rate index between the Euro and the currencies of 
major competitiors and major trading partners (Euros per 1 unit of foreign currency: 2000 = 100).  

Fig. 44 show a decidedly unfavorable evolution of exchange rates between the Euro and the currencies of our 
major competitors, but also the currencies of the main partners. This represents a competitive disadvantage 
for EU wines compared to wines from almost all new world competitors, with the exception of New Zealand 
and Australia. In the latter two cases, therefore, the evolution of exchange rates creates a disadvantage for 
their wines (compared to both EU wines and wines from all other competitors).  

The  analysis  highlights  the  particularly  dramatic  slump  of  the  Argentine  Peso  against  the  Euro  (but  also 
compared to all other currencies of competitors) between 2001 and 2002. This is due to the Peso/US Dollar 
parity wanted by the Argentine government, resulting in the country default in those years. In the subsequent 
years, the Peso/Euro exchange rate has continued to decrease, generating increasing competitive advantage 
for Argentinian wines. 

Fig. 44: Exchange rates of the currencies of competitors and of consumer markets with the Euro (Euros per 1 unit of foreign 
currency) (Index: 2000=100) 

Currencies of competitors / Euro 

Currencies of consumer markets / Euro 

NZD=New Zealand Dollar; CLP=Chilean Peso; ARS=Argentine Peso; USD=US Dollar; ZAR=South African Rand; 
AUD=Australian Dollar; CNY=Chinese Yuan; YEN=Japanese Yen; GBP=British Pound; RUB=Russian Ruble, 

Source: calculated on the basis of Eurostat data 

5.5.7  Synthesis of the results of the Porter’s Diamond 

In the last part of the analysis based on the Porter's Diamond, we sought to determine whether the elements 
of each of the six groups of factors facilitate or hinder the competitiveness of European wines compared to 
competitors, by giving them  a score (respectively, 1 and  -1, or zero in case of no impact). In addition, we 
tried to distinguish between wine in bottles and in bulk.  

The positive or negative score is obviously “qualitative”, as it originates from a subjective "value judgment" 
based on a synthesis of the results and the considerations (i.e. prevailing assumptions on possible impact) for 
each  set  of  factors  set  out  in  the  previous  sections.  This  warning  is  all  the  more  necessary  given  country 

64 For a discussion of the effects of the evolution of the Euro/US Dollar exchange rate on European agriculture, please refer to the 
AGMEMOD model. AGMEMOD is an econometric model developed since2001 under the EU 5th Framework Programme. A first 
version,  continuously  updated  in  collaboration  with  the  European  Commission  (in  particular  the  IPTS,  Institute  for  Prospective 
Technological Studies) is now available. A second and more complete version (AGMEMOD2020) is  being developed under the 
6th Framework Programme.  

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02040608010012014020002001200220032004200520062007200820092010201120122013NZDCLPARSUSDZARAUD02040608010012020002001200220032004200520062007200820092010201120122013CNYYENGBPRUB 
 
 
 
                                                      
differences  (i.e.  different  context  of each country  market;  different situations  in  wine  producing  countries, 
etc.) 

Finally, the value judgment for each of the influencing factors is calculated as a simple arithmetic mean of 
the single components and represented in Fig. 45, which summarizes the factors which influence positively 
and negatively the competitiveness of EU wine compared to non-EU wines. 

Fig. 45: Porter’s Diamond: A synthesis of the results 

Score=1 means EU wines are more competitive with respect to the factor; Score=-1 means EU wines are less competitive; Score=0 in 
case of no impact. 

Source: Cogea 

Factor conditions  
In  terms  of  structural  factors,  given  expectations  of  future  growth  of  wine  consumption  in  the  analysed 
country  markets,  the  negative  growth  rates  of  vineyard  area  and  wine  production  in  the  EU  compared  to 
positive growth rates of all competitors is likely to lead to a further decrease of EU wine market shares.  

On  the  other  hand,  the  restructuring  and conversion  of  vineyards,  achieved through  implementation  of  the 
dedicated measure of the reformed wine CMO, stimulates recovery of EU wines competitiveness relative to 
competitors  (i.e.  through  planting  of  varieties  best  suited  to  market  demand  and  improved  orientation 
towards quality wines in regions where these products are not exclusive).  

In terms of commercial factors, the low propensity to export EU wines makes export activities less vital for 
the EU compared to its competitors (export is residual with respect to the internal market). Therefore, the EU 
expresses a less aggressive competitive behaviour on export markets.  

By contrast, bilateral trade intensity indices show, overall, a more balanced distribution of EU exports on a 
larger number of consumer markets, and thus lower dependence from few vital markets (in comparison to 
competitors). This allows EU wines to better react to unexpected economic downturns and market risks. 

Demand conditions in consumer country markets 
With regard to population trends in the examined countries, all players should potentially benefit from the 
same market growth opportunities and, in principle, none of them should be favoured a priori.  

On  the  other  hand,  significant  growth  of  GDP  per  capita  in  countries  where  EU  wines  are  leader  should 
encourage an increase in consumption. More in general, growth of GDP should encourage consumption of 
quality wines (i.e. Ultra Premium and Top Range segments) where EU wines are better represented.  

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BottlesBulkGrowth rate of vineyard planted area and production -1-1Growth rate of  production -1-1Structural changes (vineyard restructuring, etc.)11Export propensity-1-1Bilateral trade intensity11Average score for factor conditions-0.20-0.20Population size and growth rate00GDP per capita and growth rate11Wine demand growth1-1Average score for demand conditions0.670.00Number of brands in consumer country markets0n.aConcentration of wine companies in consumer countries-1n.aMarket shares of big players in consumer markets-1n.aProduct portfolio of big players-1n.aAverage score for firm strategy, structure and rivalry-0.750.00Co-financed promotion programmes1n.aTechnology innovation in wine containersn.a-1Average score for supporting industries1.00-1.00Tax regimes adopted in consumer countries00Bilateral and multilateral trade agreements -1-1Rules relating to designations of origin and geographical indications10Oenological practices and restrictions11Average score for government0.250.00Changes in the euro/other currencies exchange rate-1-1Average score for chance-1.00-1.00ChanceFactor conditions in producer countriesDemand conditions in consumer countriesGovernmentFirm strategy, structure and rivalryRelated and supporting industries-1,00-0,80-0,60-0,40-0,200,000,200,400,600,801,00factor conditionsdemand conditionsfirm strategy, structure and rivalrychancesupporting industriesgovernmentBottlesBulk 
 
 
 
The  observed  evolution  of  demand  is  beneficial  for  both  wines  in  bottle  and  for  wine  in  bulk.  However, 
changes  in  the  transport  system  adopted  by  some  New  World  wine  exporters  amount  to  competitive 
disadvantage for EU wines in bulk and to an advantage for EU wines traded in bottles.  

Firm strategy, structure and rivalry (bottled wines) 
All factors  related  to  firm  strategies  on  key  consumer  markets  suggest that  EU wines are  less competitive 
compared to competitors. Specifically:  

  The  lower  percentage  of  European  brands  in  the  analysed  consumer  markets  translates  into  lower 

influence of European wines on consumer preferences (i.e. less choice compared to competitors).  

  In terms of market concentration, European major wine companies (i.e. French) do not appear in the top 
four  market  leaders  in  most  markets,  except  for  two  Member  States  (Germany,  Denmark)  and  Hong 
Kong. Therefore, EU companies hold more limited market power compared to competitors.  

  Compared to competitors, European wine businesses hold marginal market shares in all markets. Such 

market shares are in any case attained through marketing of non-EU wine brands.  

  European wine companies have a percentage of non-EU wines in their product portfolios much larger 

than the percentage of EU wines in the portfolios of non-European companies. 

Related and supporting industries 
EU wines appear to have an advantage over competitors due to larger investments in promotion programmes 
(i.e. bottled wines) under the “Promotion on third-country markets” measure of the  reformed wine CMO.  

The  use  of  new  technology  for  transportation  of  wine  in  bulk  (i.e.  flexitank)  by  certain  NWC  leads  to 
competitive disadvantage for EU wines. However, this is due to self-imposed constraints by PDO and PGI 
wine producers to bottling outside the production area. 

Government 
The  different  tax  regimes  applied  in  consumer  countries  have  a  greater  or  lesser  influence  on  consumer 
demand,  but  they  apply  in  the  same  way  to  wines  of  different  origin.  Therefore,  they  do  not  generate 
competitive advantage or disadvantage to EU wines compared to competitors, except for very few cases in 
which Excise Duty is calculated on sales value, as it is in the UK.  

On  the  other  hand,  bilateral  trade  agreements  that  lower  or  abolish  tariffs  can  generate  considerable 
competitive advantage to country-systems. Some countries (Chile, in particular) have consistently developed 
agreements with a number of wine importing partners. Compared to these countries, the EU finds itself in a 
position of competitive disadvantage.  

Overall,  EU  wines  are  in  a  position  of  advantage  over  individual  competitors  with  respect  to  regulatory 
measures.  In  particular,  measures  such  denominations  of  origin  and  geographical  indications  increase  the 
competitiveness of European wines (at least on the EU market). In addition, the alignment of EU oenological 
practices  with the  recommendations  of the  OIV  (less  restrictive than those  historically  applied  by  the  EU) 
can  improve  the  competitiveness  of  European  wines  in  market  segments  where  competitors  have  strong 
presence. 

Chance 
With regard to exchange rates between the Euro and other currencies, their evolution over time has generated 
competitive disadvantage for European wines relative to most competitors. 

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6  THEME 2 – IDENTIFICATION OF THE KEY FACTORS OF COMPETITIVENESS 

This  part  of  the  analysis  aims  at  identifying  and  analysing  the  key  factors  of  competitiveness  within  the 
system.  By  “within  the  system”  we  refer  to  all  factors  linked  to  product  characteristics,  as  well  as  to  the 
behaviour of wine suppliers.  

6.1  PROCEDURE AND METHODOLOGY ADOPTED FOR THE ANALYSIS 

The analysis was carried out only for case study countries (China, Japan, Russia, USA, Denmark, Germany, 
UK),  separately  for  packaged  wines  (for  final  consumers)  and  for  bulk  wines  (mainly  for  intermediate 
consumption). 

The analysis comprises two distinct phases: 

1-  The first phase, based on information collected directly from key market players and from the literature, 
aims at identifying the factors of competitiveness and defining their current importance in establishing a 
competitive advantage. The analysis seeks to discover: 

a.  The way in which EU wines currently respond to such factors, compared to wines from NWC and (if 

applicable) to domestic wines;  

b.  A projection of the current importance of competitive factors to 2025 (to assess whether they will be 

more or less important compared with the current situation). 

2-  The  second  phase,  based  on  structural  analysis,  aims  at  identifying  direct  and  indirect  cause-effect 
relationships  among  factors  identified  in  the  first  phase  (therefore  establishing  the  key  factors  that 
generate competitive advantage, so-called levers, as well as passive key factors, i.e. factors depending 
on the activation of other factors). 

6.1.1 

Identification of factors of competitiveness and assessment of their importance  

Survey of factors: the survey was carried out using three methods: 

1-  By administering a short questionnaire to interviewed key market actors, in which a series of possible 
factors  of  competitiveness  were  suggested.  For  each  of  the  two  business  areas  (packaged  and  bulk 
wines)  the  questionnaire  contained  two  tables:  the  first  was  related  to  company  behaviour,  while  the 
second was related to the product. For packaged wines, in the second table, we asked interviewees to 
express an opinion with respect to three market segments: Entry Level (EL), Medium Range (MR) and 
Top Range (TR)65, in order to identify any differences in the hierarchical structure of importance of the 
factors of competitiveness. The questionnaire was used to collect informed opinions about the following 
issues: 

  the importance of proposed factors of competitiveness on the basis of an evaluation scale: Extremely 

important (3); Important (2); Not very important (1), Not a competitive factor (0); 

  the current competitiveness of EU wines compared to NWC and domestic wines. In this case, and 
only  for  the  proposed  factors,  interviewees  were  asked  to  express  their  opinion  on  the  basis  of  an 
evaluation scale: Better (B); Worse (W); Same (S); Do not know, do not answer (N); 

  the change of factors importance from the present situation to that expected in 2025. In this case too, 
and  only  for  the  proposed  factors  on  which  they  had  expressed  an  evaluation  of  importance, 
interviewees  were  asked  to  express  their  expectations  on  the  basis  of  an  evaluation  scale:  More 
important (+); Equally important (=); Less important (-). 

2-  By means of in-depth interviews. In this case, interviewees were asked to express spontaneous opinions 

regarding packaged wines, by answering the following questions: 

65 We recall that such segmentation does not represent actual price ranges, but espresses a judgment/opinion relative to price/quality 

levels (see §2.3).   

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  What  are  the  most  important  criteria  adopted  by  importers/distributors/buyers  to  select  and  decide 

which wines and which brands to import and distribute? 

  What  are  the  most  important  factors  that  companies  must  meet  to  distribute  to:  i)  The  on-trade 

business; ii) Specialist wine stores/chains; iii) Food retail chains? 

  Given the segmentation of the consumer market in the Entry Level, Medium Range and Top Range, 

what are the most important factors that a wine must possess to be successful in each segment? 

In this case too, in relation to product factors, interviewees were asked to give their views for each of 
the three market segments. 

3-  By analysing the available literature concerning the wine market in the case study countries. 

Aggregation of factors of competitiveness: in particular for packaged wines, in addition to factors proposed 
in the questionnaire to interviewees,  we obtained a rather long list of factors (for both company behaviour 
and  product),  in  some  cases  expressed  with  only  slight  differences  between  them.  Therefore,  surveyed 
factors  were  classified  on  the  basis  of  “conceptual  assonance”  in  order  to  reduce  their  number  and  avoid 
useless repetitions.   

With regard to packaged wine, the aggregation exercise allowed us to identify 41 factors of competitiveness. 
Subsequently, we aggregated the factors into five groups that represent the areas in which competitiveness is 
determined:  

  factors related to bargaining power and access to distribution channels 

  factors related to product 

  factors related to brand 

  factors related to marketing service 

  factors related to positioning. 

Awarding  of  a  “score”  to  non-suggested  factors:  in  order  to  define  the  importance  of  the  factors  of 
competitiveness  in  case  study  countries  and  within  market  segments,  we  had  to  award  a  “score”  to 
“classified” factors spontaneously mentioned by interviewees and those found in the literature (product- or 
behaviour-related).  Based  on  experience  that  spontaneous  answers  indicate  the most  important  factors,  we 
assigned  a  value  of  3  (Extremely  important)  to  these  answers,  unless  the  interviewees  gave  a  different 
indication. 

Furthermore, in the case of packaged wines, the judgement made by interviewees on factors related to the 
behaviour  of  suppliers  (for  both  proposed  factors  and  those  spontaneously  suggested)  was  considered  the 
same for all three market segments (unless different indications were provided by interviewees).   

Scores of factors of competitiveness indicated in analytical tables: in the analytical tables (presented in §6.2), 
overall scores for each factor represent an average of the scores given by individual interviewees or based on 
their spontaneous  statements.  Average  values  thus calculated  were then  rounded  to  the  nearest  figure  (e.g. 
≤1.49=1; between 1.5-2.49=2; ≥2.5=3). 

Limitations  of  the  analysis:  due  to  the  limited  number  of  interviews,  the  results  are  not  statistically 
significant and merely represent a synthesis of individual opinions. Furthermore, the awarding of scores to 
spontaneously  reported  factors  and  to  those  mentioned  in  the  literature  is,  to  some  extent,  inevitably 
arbitrary.  

With regard to opinions expressed differentiating between the proposed market segments, we should bear in 
mind  that  the  concept  of  Entry  Level,  Medium  Range  and Top  Range  segments  may  vary  in  the  different 
market/country contexts. Therefore, the results should also be contextualised and the overall score values for 
all seven surveyed countries should be treated with caution.  

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6.1.2  Methodology used to establish cause-effect relationships among factors 

In the second phase, we used structural analysis and applied the MicMac method. This method was only used 
for packaged wines66. It comprises the following steps: 

Step  1:  description  of  the  direct  relations  between  the  factors  defined  in  the  preliminary  phase.  Direct 
relationships can be represented in a matrix (Tab. 25). In this matrix, the total of the connections in a row 
indicates  the  importance  of  the  influence  of  a  factor  on  the  whole  system,  whereas  the  total  in  a  column 
indicates the degree of dependence of a factor. The entries in the matrix are qualitative: 0 if there is no direct 
relation  between  factors  I  and  J,  and  1  in  the  opposite  case.  Alternatively,  it  is  possible  to  express  the 
intensity of the relationships on a scale (e.g. 0 = null, 1 = weak, 2 = medium, 3 = strong).  

Tab. 25: Structural analysis matrix 

Step 2: The values of row and column sums are then transferred onto an Influence-dependence map, where 
the x-axis shows the dependence and the y-axis shows the influence (Fig. 46).   

Fig. 46: Influence-dependence space map 

  Sector  1  groups  factors  with  high  influence  on  other  factors  and  low  dependence  from  other  factors. 
These are termed “levers” as they influence the analysed system more than they are influenced by it; 

  Sector  2  includes  factors  that  have  strong  influence  on  the  system  and,  at  the  same  time,  are  also 
strongly influenced by other factors. This means that intervention on such critical factors will be passed 
on to other factors within the system (i.e. the initial impact is spread and amplified); 

  Sector  3  groups  so  called  passive  factors  with  low  influence  and  high  dependence.  These  factors  are 

influenced by the analysed system more than they appear to influence the system;  

  Sector  4  includes  so  called  buffering  or  “lazy”  factors:  they  are  independent  factors  (whatever  their 

objective importance), with no influence or dependence relationship with other factors. 

Step 3: application of the MicMac method. This method, applied through a specific software, calculates the 
indirect  relationships  between  the  factors.  Indirect  relationships  of  the  second,  third  ...  nth  degree  are 
calculated  through  matrix  multiplication  (exponentiation  of  the  Matrix  to  M2,  M3,  ...  Mn).  From  each 
exponentiation  a  new  hierarchy  of  factors  is  obtained.  The  matrix  becomes  stable  after  a  number  of 
iterations. Therefore, the method makes it possible to prioritise the factors on the basis of their influence or 
their dependence, and taking into account their inter-relationships. This hierarchy of indirect factors allows 
us to identify factors that, thanks also to their indirect action, play a major role, which the direct ranking did 
not allow us to detect.  

66 For wine in bulk, the extremely limited number of competitive factors prevented the application of this analytical tool. 

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Effect:of         onFact 1Fact …Fact iFact j…Fact nΣFact 1Fact …Fact iaijLFact jaji…Fact nΣC1-Levers (active factors)2-CriticalDynamic factors)4-Buffering (lazyfactors)3-PassivefactorsDependenceInfluence 
 
 
 
                                                      
This method also allows us to assess the shift (displacement) of factor coordinates on the map (as well as 
their hierarchical structure) when moving from direct to indirect relationships. 

Finally (for both direct and indirect relationships), the MicMac software allows us to render the relationships 
between factors into graphs that show the intensity and direction of relationships between factors. 

The analysis applied to factors of competitiveness of packaged wines was carried out on two levels: 

1-  A  general  level  reflecting  the  hypothetical  situation  in  which  all  41  factors  identified  in  the  previous 

survey phase are taken into consideration.  

2-  For  each  case  study  country  and  market  segment  (Entry  Level,  Medium  Range  and  Top  Range),  in 
which  only  significant  factors  (Extremely  important  or  Important)  are  taken  into  consideration 
(therefore, the number of factors analysed for each country/segment combination is <41).  

Limitations of structural analysis depend on the limitations in the identification of competitive factors and on 
the subjective nature of the assessment of their relationships (existence of a relationship and its importance). 

6.2  RESULTS OF THE ANALYSIS FOR PACKAGED WINE 

6.2.1  Factors of competitiveness and their importance 

Tab. 26 contains the results of our analysis  for each case study country. Factors considered as “Extremely 
important”  (score=3)  and  “Important”  (score=2)  are  highlighted  (red  and  green  cells,  respectively).  Cells 
related to factors considered scarcely or not at all important (score=1 or 0) have been left empty.  

Furthermore,  with  all  possible  caution,  we  calculated  for  each  factor  an  average  score  for  all  seven  case-
study countries (i.e. total calculated as an average of values obtained for individual countries, rounded to the 
nearest figure, 2 or 3).  

Tab. 26: Overview of the factors of competitiveness, classified according to their importance (total, by market segment and 
case study country)  

“Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are highlighted in green. Empty cells 
correspond to factors considered scarcely or not at all important (score=1 or 0) 

Source: questionnaires, interviews to market players, literature 

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ELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporter or domestic)222222222222222Ability to provide volumes that satisfy demand333333333Ability to manage relationships with importers/distributors333222333222333333222Intensity of PR activities with importers, buyers, ... 333333333333222Ability to select importers/distributors/buyers333333222333222333333333Exclusive sale agreements 333333333333222Granting of higher profit margins222222222222222333222222Organisation of customer visits at wineries222333222222Brand extension222223222232322Product quality2323333323323233333233Taste (Easy to drink)33Taste (complex to drink )3Convenience in packaging (screw caps, PET, BIB....)33Label design2233333Price3323323333323332333332Origin of the product/terroir322232222232223322322PDO-PGI popularity32332Perception of product authenticity33Type and quality of the packaging  (presentation) 22232233232222223332222Indication of grape variety22223232222233322222Story to tell333Ensuring product safety 333Brand building, branding  33333333332Presence of brands in specialised trade magazines222222222222222Brand/Image of the product 232223333333222223222222Price stability22232222232233232332322Flexibility (prices, payment system,…)333333Quality consistency over time 333333333333332Offer of logistics services333222222222222222222Flexible logistics management (Just-in-time)333Width / range of wines selection (type & price)222222222222222333222Reliability / Compliance with contractual agreements / Timeliness of delivery333333333222333333222Advertising, promotion and comunication activities directed to traders222333222222222222222Ability to innovations (packaging, labels) 333Reactive adaptation of the product to customers' demand333333222333333333222333Encourage the importer to present the wines in specialised magazines 333Appropriate advertising, promotion and comunication activities directed to consumers333333333333222222222Status symbol content33Correct price/quality positioning23333222223333233222232Consistency in the quality/price ratio 33222High rating in specialised press3333Factors related to marketing serviceFactors related to positioningTOTALFactors related  to bargaining  power and access to distribution channelsFactors related to productFactors related to brandUKGermanyChinaJapanRussiaUSADenmark 
 
 
Based  on  the  results  obtained  through  the  analysis  described  above,  we  draw  the  following  general 
observations: 

  The  results  are  strongly  differentiated  across  countries  with  presence  of  certain  factors  of 
competitiveness  only  in  some  countries/segments,  in  particular,  those  deriving  from  spontaneous 
answers or obtained from literature. For example, “Ensuring product safety” is only mentioned in Japan 
and  is  considered  extremely  important  for  wines  in  all  three  segments.  Similarly,  “Flexibility”  (of 
prices, payment systems, etc.) is a factor considered very important in the United States and Germany, 
but  not  mentioned  in  the  other  countries.  On  the  contrary,  the  factor  “Taste”  was  mentioned  only  in 
Germany (“easy to drink” for Entry Level and Medium Range wines; “complex to drink” for Top Range 
wines). 

  On  the  other  hand,  some  factors  are  widely  mentioned  in  all  countries.  For  example,  “Appropriate 
advertising,  promotion  and  communication  activities  directed  to  consumers”  (a  spontaneous  answer) 
was considered extremely important or important in all countries (except China) and for all segments.  

  In  general,  factors  related  to  supplier  “behaviour”  are  more  numerous  and  more  frequently  cited 
compared  with  factors  related  to  “product”  features.  Therefore,  in  general,  the  modus  operandi  of 
wineries/suppliers represents a critical area of the competitive strategy, although it is rather complex. 

The  analysis  of  “average”  values  for  all  case  studies  (notwithstanding  the  necessary  caution  in  the 
interpretation of results, as already discussed) allows us to learn some more specific lessons, namely: 

  Within  factors  pertaining  to  company  behaviour,  the  “Ability  to  select  importers/distributors/buyers” 
and the “Reactive adaptation of the product to customers' demand” are the most quoted ones and those 
with the highest level of importance. 

  As for factors pertaining to the product, those considered most important are price and quality, as well 
as other factors in some way related to these two. However, not surprisingly, quality is a critical factor 
for Medium and especially Top Range wines, while price is a critical factor for Entry level and Medium 
Range  segments.  Medium  Range  wines  combine  (on  average)  price  and  quality  factors,  therefore  the 
“Correct  price/quality  positioning”  factor  acquires  an  equally  critical  importance  (and  it  is  important, 
although not critical, for wines of the other two segments).   

  Also linked to price and quality, stability (“Price stability” and “Quality consistency over time”)  is of 
critical  importance  especially  in  the  Entry  Level  segment  and,  although  to  a  lesser  degree,  in  the 
Medium Range segment. 

  With  regard  to  product  brand,  on  average  there  are  no  extremely  important  factors.  However,  the 
“Indication  of  grape  variety”  appears  to  be  important  in  all  segments,  while  “Origin  of  the 
product/terroir” is important only for Medium and Top Range wines. On the other hand, the concept of 
Origin (as often stated by interviewees) refers to the country (e.g. France) or to the region where it is 
produced (e.g. Tuscany), while the origin linked to geographical indication labels (PDO-PGI) is not, on 
average, an important factor of competitiveness. 

A “vertical” reading of Tab. 27 shows that on average the total number of important + extremely important 
factors  ranges  from  a  minimum  of  19  (Entry  Level)  to  a  maximum  of  21  (Medium  and  Top  Range). 
However, of these, only 5 (for Entry Level and Medium Range) are extremely important, decreasing to 3 for 
the Top Range segment. Differences observed across countries depend on the greater or lower differentiation 
of  factors  spontaneously  cited  by  interviewees,  that  in  turn  depends  on  the  different  characteristics  and 
complexities of individual country markets. 

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Tab. 27: Total number of factors of competitiveness, both “extremely important” and “important”, by segment, by country 
and overall 

EL=Entry Level; MR=Medium Range; TR=Top Range. 
EI = Extremely important; I = Important. 

Source: questionnaires, interviews with market players, literature 

6.2.2  Degree of response to factors of competitiveness of EU wines compared to NWC and 

domestic wines, based on opinions of market players 

As  already  mentioned  in  the  methodology,  this  analysis  was  carried  out  only  for  the  factors  of 
competitiveness proposed through the questionnaire during interviews to market players.  

In  the  tables  presenting  the  results  (Tab.  28  and  Tab.  29),  cells  highlighted  in  red  refer  to  factors  of 
competitiveness that were previously considered Extremely important (score=3), cells highlighted in green 
refer to factors considered as Important (score=2). Empty cells identify factors considered scarcely or not at 
all important (score=0 or 1) (see also analysis in the previous section).   

The results of the comparison between EU and NWC wines are presented in the following table. 

Tab. 28: Response of EU packaged wines to factors of competitiveness, compared with NWC wines 

B=Better response of EU wines; W=Worse response; S=Same response 
“Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are highlighted in green. Empty cells 
correspond to factors considered scarcely or not at all important (score=1 or 0) 

Source: questionnaires administered to market players 

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ELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRTotal455455888887555888666566EI222222343444222334333111I233233545443333554333455Total155879455555364787556455EI122347224232212367332121I033532231323152420224334Total122222333222012333111112EI010001211222001111000000I112221122000011222111112Total332888888776766876666776EI111766333543211533332311I221122555233555343334311Total012332234334221334222222EI012331123123211011000010I000001111211010323222212Total91616252526252728252524172018292928202021192121EI477151517111214141514857121416997553I5991010914151411101091511171512111114141618UKTOTALChinaJapanRussiaUSADenmarkFactors related to productFactors related to brandFactors related to marketing serviceFactors related to positioningGermanyTotal factorsFactors related  to bargaining  power and access to distribution channelsELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporting or domestic company)BBBBBBSSSWWWAbility to manage relationships with importers/distributorsBBBBBBBBBSSSBBBSSSBBBAbility to select importers/distributors/buyersBBBBBBBBBSSSWWWBBBBBBGranting of higher profit marginsBBBWWWSSSSSSSSSWWWSSSOrganisation of customer visits at wineriesWWWBBBBBBBBBBrand extensionWBBBBBBBWSWWBSBProduct qualityBBBBBBBBBBBWBWBWSBBBBBPriceWWSBBBWWBWBBSWBBSSWSWBBOrigin of the product/terroirBBWBBBBBBBBBBBWBBBBBBType and quality of the packaging  (presentation) WWWBBBBBWBBSSWWWWWBBSBBIndication of grape varietyBWWBBBWBSSSWWWSSSSBSPresence of brands in specialised trade magazinesBBBWWWSSSSSSBrand/Image of the product BBBBBBBBBBBBWBWBBBWSBBBBPrice stabilityBBWSBBSWBWWWSBSBWBBBWBBOffer of logistics servicesBBBWWWBBBWWWBBBBBBBBBWidth / range of wines selectionBBBBBBWWWSSSSSSWWWBBBReliability / Compliance with contractual agreements / Timeliness of deliveryBBBWWWBBBSSSBBBWWWBBBAdvertising, promotion and comunication activities directed to tradersBBBBBBSSSSSSWWWBBBReactive adaptation of the product to customers' demandBBBBBBSSSSSSBBBSSSBBBAppropriate advertising, promotion and comunication activities directed to consumersBBBBBBWWWSSSWWWSSSBBBCorrect price/quality positioningSBBBBBSBBWWBBWBSBSSWSBB4991920202021202121191517172121191717171618182651419191315161012121331079467101616123411564753343786655200TotalChinaJapanRussiaUSADenmarkGermanyFactors related  to bargaining  power and access to distribution channelsUKFactors related to productFactors related to brandFactors related to marketing serviceFactors related to positioningTotal Factors Total BetterTotal Worse 
 
 
 
Total  average  results (always  using  the  greatest  caution)  suggest  that  EU  wines  (and the  behaviour  of  EU 
suppliers)  respond  better  to  extremely  important factors  of competitiveness  in  all  market segments,  except 
for price and its stability in the Entry Level segment. Furthermore, again on average, EU wines also appear 
to respond better to all factors of competitiveness (extremely important + important), with the only exception 
of few factors for which there is no difference between response of EU and NWC wines. 

This general result derives from rather diversified opinions expressed at individual country level.  

With regard to “Extremely important” factors of competitiveness, the response for EU wines (and  supplier 
behaviour)  was  considered  clearly  better  than  competitors’  in  Japan  (for  almost  all  factors  and  segments), 
while  in  other  countries,  although  EU  wines  generally  appear  to  be  winners,  results  are  less  clear-cut. 
However,  the  analysis  does  not  identify  any  factors  for  which  EU  wines  show  a  strength  or  a  weakness 
across all segments or all countries.   

For  some  “Extremely  important”  factors,  EU  wines  (and  supplier  behaviours)  are  never  worse  than  their 
competitors (in some cases they are equal): these are, in particular, the “Ability to manage relationships with 
importers/distributors” and “Brand/Image of the product”.  

With  regard  to  most  important  factors  of  competitiveness  considered  jointly  (Extremely  important  + 
Important), the opinions of market players appear to be quite encouraging: in all countries and segments, the 
number of factors for which EU wines (and supplier behaviour) response is better, is higher than the number 
for which the response is worse. The only exceptions are Denmark (where for most factors the response is to 
be considered the same), and the UK, in particular for the Entry Level segment.  

With regard to market segments, results show that, in general, EU wines response improves moving from the 
Entry  Level  to  the  Top  Range  segment  (in  the  latter  case,  the  Better/Total  ratio  is  indeed  highest  in  all 
countries,  with  the  only  exception  of  China).  On  the  contrary,  worse  response  of  EU  wines  (and  EU 
suppliers) is always found in the Entry Level segment, with the only exception of Germany. 

With regard to factors for which the response of EU wines appears to be worse than the competitors’, the 
situation  is  quite  diversified  across  the  examined  markets.  The  most  frequent  factors  are  the  following: 
“Granting  of  higher  profit  margins”  (in  Russia  and  UK);  “Price”  (mainly  in  the  Entry  level  and  Medium 
Range  segments  of  China,  USA,  Russia,  Denmark  and  UK);  “Type  and  quality  of  packaging”  (in  some 
segments, but not always the same ones, in a  large number of countries); “Indication of grape variety” (in 
particular, but not only, in the Entry Level segment); “Reliability / Compliance with contractual agreements / 
Timeliness of delivery” (in Russia and the UK); “Width / range of wines selection” (in USA and the UK); 
“Appropriate  advertising,  promotion  and  communication  activities  directed  to  consumers”  (in  USA  and 
Germany); “Offer of logistics services” (in Denmark and Germany) and “Reactive adaptation of the products 
to customers’ demand” (USA and UK). 

In any case, “Price” and “Type and quality of the packaging” seem to represent the main weaknesses of EU 
wines  (in  both  cases,  the  Worse/Total  ratio  reaches  40%),  followed  by  “Indication  of  grape  variety” 
(Worse/Total = 35%). 

As far as the comparison between EU and domestic wines is concerned, the analysis was carried out only for 
China, Russia, USA and Germany (countries with significant wine production). Results are summarised in 
Tab. 29. 

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Tab. 29: Response to factors of competitiveness of EU packaged wines vs. domestic wines 

B=Better response of EU wines; W=Worse response; S=Same response 
“Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are highlighted in green. Empty 
cells correspond to factors considered scarcely or not at all important (score=1 or 0) 

Source: questionnaires administered to market players 

In  this  case  we  notice  a  clear-cut  difference  between  China  and  Russia,  on  the  one  hand,  and  USA  and 
Germany on the other.  

In  the  first  two  countries,  EU  wines  respond  better  to  factors  of  competitiveness  compared  to  domestic 
wines. Factors for which their performance is worse include: in Russia (quite obviously, we might say) the 
“Offer  of logistics  services”,  and  “Price  stability” in  the  Medium  Range  segment; in  China,  in  addition to 
“Price  stability”  (in  this  case  only  in  the  Entry  level  and  Top  Range  segments),  the  “Indication  of  grape 
variety” and the “Correct price/quality positioning” factors in the Entry level segment. 

Generally speaking therefore, Russian and Chinese domestic wines are considered as performing worse than 
both EU and NWC wines. 

In the other two countries, EU wines perform definitely worse than domestic wines in the US and wines from 
other EU Member States perform more or less similarly to domestic ones in Germany.  

In particular, the positive opinion about US wines stated by American market players for all three segments 
(and particularly for Top Range wines) may appear somewhat contrived. However, US wines appear to be 
more  competitive  with  regard  to  factors  that  are  linked  to  suppliers  organisational  characteristics  and 
behaviour: the better response of domestic suppliers can be explained by the fact that they “play at home” or 
by  structural  factors.  We  refer,  for  example,  to  the  “Size  of  the  supplier”  (large  wineries  are  mainly  US 
companies), a factor clearly linked to “Width / range of wines selection”; “Presence of brands in specialised 
trade magazines”; “Offer of logistics services” and “Reliability / Compliance with contractual agreements / 
Timeliness of delivery”.  

Finally, US wines apparently respond better to both positioning factors (a realistic finding, since European 
companies  have  less  knowledge  and  less  ability  to  control  the  US  market  and  its  internal  structure,  and 
therefore have to rely on local distributors). 

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ELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporting or domestic company)BBBWWWSSSAbility to manage relationships with importers/distributorsBBBSSSWWWAbility to select importers/distributors/buyersSSSBBBSSSGranting of higher profit marginsBBBBBBBBBOrganisation of customer visits at wineriesBBBSSSBBBBrand extensionBBBBBBBBBSProduct qualityBBBBBBBBWWWPriceWBWBBBBBBSBOrigin of the product/terroirBBBBBBBBWWBType and quality of the packaging  (presentation) BBBBBWSWSSWIndication of grape varietyWWBSSSSSPresence of brands in specialised trade magazinesBBBWWWSSSBrand/Image of the product BBBBBBBWWBWSPrice stabilityBBBSWBWWWSBOffer of logistics servicesWWWWWWSSSWidth / range of wines selectionBBBWWWSSSReliability / Compliance with contractual agreements / Timeliness of deliveryBBBWWWSSSAdvertising, promotion and comunication activities directed to tradersBBBSSSSSSReactive adaptation of the product to customers' demandBBBSSSSSSAppropriate advertising, promotion and comunication activities directed to consumersBBBWWWSSSCorrect price/quality positioningWBBBBBWWWBSB4992021202121192121192871718187655541121219910343USAFactors related  to bargaining  power and access to distribution channelsFactors related to productFactors related to brandFactors related to marketing serviceTotal Factors Total BetterTotal WorseChinaFactors related to positioningGermanyRussia 
 
 
On  the  other  hand,  European  wines  apparently  respond  better,  compared  with  local  wines,  to  “Product 
quality” and “Price” factors, as well as to “Origin of the product/terroir”, all three linked to the product.  

With regard to Germany, wines from other Member States apparently respond less well to “Product quality” 
and  “Origin  of  the  product/terroir”  factors  (in  the  latter  case,  only  for  the  Entry  level  and  Medium  level 
segments).  This  seems  to  be  due  to  the  fact  that  all  German  wines  are  PDO  or  PGI.  Furthermore,  wine 
suppliers from other Member States seem to have less “Ability to manage relationships with the customers”. 

On the other hand, wines (or we should say wineries) from other Member States seem to have a competitive 
advantage in “Granting of higher profit margins” and for the “Organisation of customer visits at wineries”. 

6.2.3  Application of structural analysis 

As previously mentioned, structural analysis and the application of the MicMac method was carried out for 
the factors of competitiveness identified and summarised in Tab. 26. 

We followed the procedure described below. 

First,  we  built  a  general  square  matrix  (General  Matrix  -  GM)  including  the  41x41  identified  factors  of 
competitiveness  and  the  direct  relationships  among  factors  (with  values  ranging  from  1  to  3  based  on  the 
intensity  of  influence  in  the  case  of  a  direct  relationship;  0  when  there  is  no  direct  relationship.  See  the 
methodology illustrated in §6.1.2).  We obtained the GM shown in Tab. 30.  

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Tab. 30: General Matrix of direct relationships between factors 

3=“Extremely important” factor; =2 “Important” factor; 1=”Scarcely important” factor; 0= Not at all important factor. 

Source: Cogea 

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Size of the supplier (exporting or domestic company)Ability to provide volumes that satisfy demandAbility to manage relationships with importers/distributorsIntensity of PR activities with importers, buyers, ... Ability to select importers/distributors/buyersExclusive sale agreements Granting of higher profit marginsOrganisation of customer visits at wineriesBrand extensionProduct qualityTaste (Easy to drink)Taste (complexity to drink )Convenience in packaging (screw saps, PET, BIB....)Label designPriceOrigin of the product/terroirPDO-PGI popularityPerception of product authenticityType and quality of the packaging  (presentation) Indication of grape varietyStory to tellEnsuring product safety Brand building, branding   (for Medium and Top Range).Presence of brands in specialised trade magazinesBrand/Image of the product Price stabilityFlexibility (prices, payment system,…)Quality consistency over time Offer of logistics servicesFlexible logistics management (Just-in-time)Width / range of wines selection (type & price)Reliability / Compliance with contractual agreements / Timeliness of deliveryAdvertising, promotion and comunication activities directed to tradersAbility to innovations (packaging, labels) Reactive adaptation of the product to customers' demandEncourage the importer to present the wines in specialised magazines Appropriate advertising, promotion and comunication activities directed to consumersStatus symbol contentCorrect price/quality positioningConsistency in the quality/price ratio High rating in specialised pressA1A2A3A4A5A6A7A8A9B1B2B3B4B5B6B7B8B9B10B11B12B13C1C2C3D1D2D3D4D5D6D7D8D9D10E1E2E3E4E5E6Size of the supplier (exporting or domestic company)A10200002330001020000000200111112110110000026Ability to provide volumes that satisfy demandA2000001000000002000000000011000000010001007Ability to manage relationships with importers/distributorsA30002120200000110002000100121000322223032035Intensity of PR activities with importers, buyers, ... A40020000300000000002000100000000122322031024Ability to select importers/distributors/buyersA50001010000000020000000100000000020022020013Exclusive sale agreements A60000000000000010000000100000000010022021010Granting of higher profit marginsA7000001000000002000000000000000000001100005Organisation of customer visits at wineriesA8000000000000000000000220100000010001100008Brand extensionA90010013000000010000000201100003020002000017Product qualityB10000000000000030000000333000000000000322221Taste (Easy to drink)B2000000000300002000000010200000000000100009Taste (complex to drink )B30000000003000020000000102000000000001000110Convenience in packaging (screw caps, PET, BIB....)B4000000000100002000200000100000000000100007Label designB5000000000100000000300010100000000000100007PriceB6000000000000000000000010000000000000230208Origin of the product/terroirB70000000002220020330030002001000000001201125PDO-PGI popularityB80000000002220023030030212001000000001201128Perception of product authenticityB9000000000100001000000010100000000000110107Type and quality of the packaging  (presentation) B100000000002000020000000103000000000001200112Indication of grape varietyB110000000001310010020000111001000000101003017Story to tellB12000000000000002000000020200000000000120009Ensuring product safety B13000000000100000000000010100000010000000004Brand building, branding   (for Medium and Top Range).C10000000001000110000000023000000030012230120Presence of brands in specialised trade magazinesC2000000000000002000000000200000000000030029Brand/Image of the product C30000000000000030000000020000000000022320317Price stabilityD1000000100000001000000000000000000000001306Flexibility (prices, payment system,…)D2000000100000001000000000000000000000000002Quality consistency over time D3000000000000001000000000020000000000001307Offer of logistics servicesD4010000000100001000000000010102000000000007Flexible logistics management (Just-in-time)D50200002000000010000000000110000200000001010Width / range of wines selection (type & price)D6010001000000001000000000110000000020001008Reliability / Compliance with contractual agreements / Timeliness of deliveryD7011000100000001000000010011000000000000007Advertising, promotion and comunication activities directed to tradersD8000100010000001000000000000000000012101008Ability to innovations (packaging, labels) D90000000001002200002001101000000000200010013Reactive adaptation of the product to customers' demandD10000000000100111000100100100001000000001009Encourage the importer to present the wines in specialised magazines E1000000000000000000000002100000000000112018Appropriate advertising, promotion and comunication activities directed to consumersE2000000000000002000000001200000000000013009Status symbol contentE3000000000000003000000000000000000001003007Correct price/quality positioningE4000000000000000000000000000000000000100203Consistency in the quality/price ratio E5000000000000001000000000200000000000200005High rating in specialised pressE60000000000000020000000000000000000012330011074417109321754553338120642712361066145913413183628352313Total Total  
 
 
 
 
 
 
 
 
 
 
From  the  General  Matrix  we  constructed  21  sub-matrices  pertaining  to  the  three  market  segments  in  the 
seven case-study countries. Such sub-matrices were obtained by progressively eliminating factors that in the 
base table did not obtain a score of 2 or 3 (i.e. we eliminated all scarcely or not at all important factors for 
each segment/country combination).  

Furthermore, in order to reach a more general overview with respect to country/segment combinations, also 
allowing for a synthetic representation of relationships among factors, we built other three sub-matrices for 
each segment taken into consideration, but including all the countries together. These are general matrices by 
segment,  representing  a  situation  that  is  completely  theoretical,  but  allowing  us  to  obtain  a  clearer 
understanding of all possible relationships among factors.    

Thirdly, we applied the MicMac method to each of the 21 country/segment sub-matrices, as well as to the 
three  general  sub-matrices by  segment,  in  order  to  establish  a  global  effect  (direct  relationships  +  indirect 
relationships among factors and relative hierarchy of importance).  

Here we illustrate the overall results derived from the individual 24 analyses.  

First of all, in order to better understand the construction and meaning of the analysis that was carried out, it 
is necessary to illustrate an example of the analytical procedure we followed. The example below (Tab.31) 
concerns Top Range segment wines in the United Kingdom. 

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Tab. 31: United Kingdom – General matrix of direct relationships among factors in the Top range segment 

3=“Extremely important” factor; =2 “Important” factor; 1=”Scarcely important” factor; 0= Not at all important factor. 

Source: Cogea 

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Size of the supplier (exporting or domestic company)Ability to provide volumes that satisfy demandAbility to manage relationships with importers/distributorsAbility to select importers/distributors/buyersExclusive sale agreements Granting of higher profit marginsProduct qualityPriceOrigin of the product/terroirPDO-PGI popularityType and quality of the packaging  (presentation) Indication of grape varietyBrand/Image of the product Price stabilityQuality consistency over time Offer of logistics servicesWidth / range of wines selection (type & price)Reliability / Compliance with contractual agreements / Timeliness of deliveryReactive adaptation of the product to customers' demandAppropriate advertising, promotion and comunication activities directed to consumersCorrect price/quality positioningA1A2A3A5A6A7B1B6B7B8B10B11C3D1D3D4D6D7D10E2E4Size of the supplier A102000202000001112110013Ability to provide volumes that satisfy demandA20000100200000100001016Ability to manage relationships with importers/distributorsA300012001002001100323319Ability to select importers/distributors/buyersA50000100200000000000227Exclusive sale agreements A60000000100000000000225Granting of higher profit marginsA70000100200000000000104Product qualityB10000000300003000000028PriceB60000000000000000000202Origin of the product/terroirB700000022030020100001011PDO-PGI popularityB800000022300020100001011Type and quality of the packaging  (presentation) B100000002200003000000108Indication of grape varietyB110000001100001010001106Brand/Image of the product C30000000300000000000227Price stabilityD10000010100000000000013Quality consistency over time D30000000100000200000014Offer of logistics servicesD40100001100000110000005Width / range of wines selection (type & price)D60100100100001100002018Reliability / Compliance with contractual agreements / Timeliness of deliveryD70110010100000100000005Reactive adaptation of the product to customers' demandD100000001100101000000015Appropriate advertising, promotion and comunication activities directed to consumersE20000000200002000000037Correct price/quality positioningE400000000000000000001010511649313330158612471719Total Total  
 
 
 
 
 
 
 
 
 
 
In this particular case we have a 21x21 matrix with 308 null values (absence of direct relationships between 
factors), 52 cells with a value of 1, 28 cells with a value of 2 and 12 with a value of 3. From the pairs of 
values  obtained  for  each  factor  (Row  Sum  and  Column  Sum)  we  created  the Direct  influence/dependence 
map.  By  applying 
the  Indirect 
influence/dependence map, in this case after 6 iterations to reach stability. The two maps are shown in Fig. 
47. 

the  MicMac  (matrix  multiplication)  method  we 

then  obtained 

Fig. 47: UK (Top range) – Direct and indirect influence-dependence maps  

The results presented in the two maps of Fig. 47 lead to the following observations:   

Source: Cogea 

  In  the  first  and  third  quadrants  there  is  a  limited  number  of  factors  representing,  respectively,  lever 
factors  (i.e.  those  with  a  stronger  influence)  and  passive  factors  (i.e.  those  subject  to  stronger 
dependence). In the second quadrant no factors are found, while the highest concentration of factors can 
be found in the fourth quadrant. This does not imply scarce importance of these factors, but only that 
they have limited interaction (i.e. scarce influence on others and/or scarce dependence from others). 

  The  shift  from  direct  relationships  to  indirect  relationships  among  factors  (after  applying  the  matrix 
multiplication)  generates  a  rather  important  change.  The  most  significant  aspect  is  a  “polarisation” of 
the factors, shown by their shift towards the horizontal and vertical axes of the map (the factors lose part 
of  their  dependence  or  influence).  This  means  that  the  number  of  significant  factors  (in  terms  of 
influence, but also of dependence) is rather small. This result, revealed by the Displacement map below, 
applies to nearly all the 21 analyses that were carried out. 

  Following  the  displacement,  the  hierarchy  of  the  degrees  of  influence  and  dependence  of  factors 
changes radically from direct to indirect (in some country/segment combinations the change is also very 
large). The hierarchical changes are summarised in graphs A and B of Fig. 48. In this particular case, for 
example,  factors  B7  (Origin  of  the  product/terroir)  and  B8  (PDO-PGI  popularity)  show  the  largest 
influence, while factors A3 (Ability to manage relationships with importers/distributors) and A1 (Size 
of  the  supplier)  lose  in  importance.  Higher  importance  is  also  gained  by  factors  D7  (Reliability  / 
Compliance  with  contractual  agreements  /  Timeliness  of  delivery),  moving  from  the  15th  to  the  6th 
position, whereas B1 (Product quality) loses importance, shifting from the 5th to the 9th position. 

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Fig. 48: UK (Top range) – Displacement map and graphs representing factor hierarchy changes, from direct to indirect, 
for influence (A) and dependence (B) 

Displacement map 

A: influence 

B: dependence 

Source: Cogea 

Finally,  the  indirect  influence/dependence  graph  (Fig.  49)  not  only  highlights  the  most  important  factors 
(those we can refer to as key factors of competitiveness) in terms of influence and dependence, but also the 
relationships among factors, by degree of intensity.  

Fig. 49: UK (Top range) – Indirect influence/dependence graph 

Source: Cogea 

The analysis of Fig. 49 provides us with interesting indications from a strategic point of view, as it allows to 
identify  the  levers  (influential  factors)  on  which  we  can  intervene  to  achieve  competitive  advantage  in 
dependent factors that are considered important.    

In  the  example  presented  in  Tab.31,  in  the  UK/Top  Range  combination,  the  factor  “Correct  price/quality 
positioning” (E4) had been considered “Extremely important”. Consequently, the results in Fig. 49 show that 
to obtain competitive advantage for this factor, it is necessary to be effective in all variables that influence it 
directly or indirectly: variables B7 (Origin of the product/terroir) and B8 (PDO-PGI popularity), but also A3 
(Ability  to  manage  relationships  with importers/distributors)  and,  albeit to  a  lesser  extent,  A1  (Size  of  the 
supplier).  Other  factors  such  as  B10  (Type  and  quality  of  the  packaging-presentation),  D7  (Reliability  / 
Compliance with contractual agreements / Timeliness of delivery) and D6 (Width / range of wines selection) 
are less influential, even though they still contribute significantly to the generation of competitive advantage 
for factor E4.  

Furthermore,  the  relationship  graph  (Fig.  49)  allows  us  to  steer  strategic  choices  based  on  available 
resources. In practice, it helps to choose where to concentrate  efforts, in order to maximise efficiency and 

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effectiveness (namely on lever factors that have the greatest number of direct and indirect relationships with 
other factors of competitiveness that are considered important). 

Based  on  the  hierarchical  ranking  of  factors  (i.e.  the  values  obtained  from  matrix  multiplication)  it  is 
therefore possible to define key factors of competitiveness, classified by importance (in Tab. 32, cell borders 
are colour-coded based on class of importance – see also Tab.33). 

Tab. 32: United Kingdom (Top range) – Hierarchy of factors of competitiveness, by influence and indirect dependence 

This same procedure was applied to obtain the overall results by country and segment. 

Source: Cogea 

6.2.4  Overall results obtained with the MicMac method by country/segment combination 

Tab.  33  contains  a  synthetic  representation  of  the  results  obtained  by  applying  the  MicMac  method  to  all 
three market segments for each case-study country. Furthermore, the method was applied to the “Total” (i.e. 
a synthesis of results for the seven case study countries together).  

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LabelIndirect influenceLabelIndirect dependenceB71694E42911B81694E22829A31310B62635A1825C31488B10502B137D7500B726D6423B826B11360D318B1332D113D10331A75A5277A63C3261D71E2249D101A2242B101D4231A50A6194A20A7180A30B6128A10D398B110D195D40E464D60  Very strong influence  Very strong dependence  Relatively strong influence  Relatively strong dependence  Moderate influence  Moderate influence 
 
 
 
 
 
 
Tab. 33: Results of MicMac analysis by country and market segment (°) 

 (°) Cells marked with * indicate factors that are both more or less equally influential and dependent: these are therefore Dynamic Factors.         Source: Cogea 

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ELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporting or domestic company)A1Ability to provide volumes that satisfy demandA2Ability to manage relationships with importers/distributorsA3Intensity of PR activities with importers, buyers, ... A4Ability to select importers/distributors/buyersA5Exclusive sale agreements A6Granting of higher profit marginsA7Organisation of customer visits at wineriesA8Brand extensionA9Product qualityB1Taste (Easy to drink)B2Taste (complexity to drink )B3Convenience in packaging (screw saps, PET, BIB....)B4Label designB5PriceB6Origin of the product/terroirB7PDO-PGI popularityB8Perception of product authenticityB9Type and quality of the packaging  (presentation) B10Indication of grape varietyB11Story to tellB12Ensuring product safety B13Brand building, branding   C1***Presence of brands in specialised trade magazinesC2*Brand/Image of the product C3*Price stabilityD1Flexibility (prices, payment system,…)D2Quality consistency over time D3Offer of logistics servicesD4Flexible logistics management (Just-in-time)D5Width / range of wines selection (type & price)D6Reliability / Compliance with contractual agreements / Timeliness of deliveryD7Advertising, promotion and comunication activities directed to tradersD8**Ability to innovations (packaging, labels) D9Reactive adaptation of the product to customers' demandD10Encourage the importer to present the wines in specialised magazines E1Appropriate advertising, promotion and comunication activities directed to consumersE2Status symbol contentE3Correct price/quality positioningE4Consistency in the quality/price ratio E5High rating in specialised pressE6  Very strong influence  Very strong dependence  Relatively strong influence  Relatively strong dependence  Moderate influence  Moderate influenceFactors related to positioningTotalChinaUKFactors related  to bargaining  power and access to distribution channelsFactors related to productFactors related to brandFactors related to marketing serviceJapanRussiaUSADenmarkGermany 
 
 
 
 
 
 
 
 
 
 
 
As already mentioned above, there is only a small number of factors that are both significant and frequent in 
all country/segment combinations: 

  With  regard  to  dependence,  these  are  “Price”  (B6);  “Appropriate  advertising,  promotion  and 
communication  activities  directed  to  consumers”  (E2);  “Correct  price/quality  positioning”  (E4). 
Furthermore, a fourth factor that is frequent, but with a lower degree of dependence, is “Brand/Image of 
the product” (C3). 

  With  regard  to  influence,  the  most  important  factor  in  absolute  terms  is  the  “Ability  to  manage 
relationships  with importers/distributors (A3)” followed  by  “Intensity  of  PR  activities  with  importers, 
buyers, etc.” (A4) and by  the “Ability to select importers/distributors/buyers” (A5). Other factors that 
are frequent, albeit with a lower degree of influence, are “Product quality” (B1), “Brand extension” (A9) 
and  “Type  and  quality  of  the  packaging  (presentation)”  (B10).  Furthermore,  “Origin  of  the 
product/terroir” (B7) is a more or less important factor mainly in the Top Range segment.   

It should also be noted that in some country/segment combinations the factors “Brand building, branding” 
(C1)  and  “Advertising,  promotion  and  communication  activities  directed  to  traders”  (D8)  are  at  the  same 
time influential and dependent and should therefore be considered as Dynamic Factors. 

6.2.5  Generalisation of results by segment 

As previously mentioned, in the final stage of the analysis we applied the same method to the three general 
sub-matrices (all case-study countries together) by segment, in order to have a synthetic overview also with 
regard to relationships among factors. These sub-matrices, which reflect a totally theoretical situation, have a 
much larger size than those pertaining to the individual country/segment combinations (Tab. 34).  

Tab. 34: Size of general sub-matrices by segment 

EL=Entry Level; MR=Medium Range; TR=Top Range 

The influence/dependence maps obtained by applying the MicMac method to these sub-matrices are shown 
in Fig. 50. 

Fig. 50: General indirect influence/dependence graphs in the Entry Level, Medium Range and Top Range segments 

Entry Level 

Medium Range 

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ELMRTR35x3538x3839x39 
 
 
 
 
 
 
 
 
 
 
Top Range 

Source: Cogea 

Finally, starting from the ranking of importance and from relationships among factors, for each segment we 
focused on the first six factors that show an influence on the first six dependent factors (in both cases,  the 
factors are listed in Fig. 51 in decreasing order of importance). 

Fig. 51: First six influential factors and first six dependent factors by segment (in decreasing order of importance)  

Observations: 

Source: Cogea 

  Most of the major influencing factors are linked to behaviour (in particular Factors related to bargaining 

power and access to distribution channels – group A); 

  However, when moving upwards from one segment to another, from Entry level to Top range, some of 

the behavioural factors are replaced by product-related factors (B8, B7 and B1 in the Top Range); 

  In  a  similar  way,  many  dependent  factors  are  related  to  behaviour,  for  instance  “Appropriate 
advertising,  promotion  and  communication”  (E2),  “Correct  product  positioning”  (E4),  “Providing 
consistent  price/quality”  (E5).  The  most  important  product-related  dependent  factors  for  all  three 
segments are few:  “Price” (B6), “Brand / Image of the product” (C3) and “Status symbol content” (E3). 

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A3Ability to manage relationships with importers/distributorsB6PriceA4Intensity of PR activities with importers, buyers, etc.E2Appropriate advertising, promotion, communication to consumersA1Size of the supplier (exporter or domestic company)E4Correct price/quality positioningA9Brand extensionC3Brand / Image of the productD9Ability to innovate (packaging, labels, etc.)E5Consistency in the quality/price ratioA5Ability to select importers/distributors/buyersC2Presence of brand(s) in specialised magazinesA3Ability to manage relationships with importers/distributorsE4Correct price/quality positioningB8PDO-PGI popularityE2Appropriate advertising, promotion, communication to consumersA4Intensity of PR activities with importers, buyers, etc.B6PriceB7Origin of the product/terroirC3Brand / Image of the productA1Size of the supplier (exporter or domestic company)E5Consistency in the quality/price ratioA9Brand extensionE6High rating in specialised pressB8PDO-PGI popularityE4Correct price/quality positioningA3Ability to manage relationships with importers/distributorsB6PriceB7Origin of the product/terroirE3Status symbol contentA4Intensity of PR activities with importers, buyers, etc.E2Appropriate advertising, promotion, communication to consumersA1Size of the supplier (exporter or domestic company)C3Brand / Image of the productB1Product qualityE5Consistency in the quality/price ratioEntry LevelMedium RangeTop RangeInfluenceDependence 
 
 
 
6.3  RESULTS OF THE ANALYSIS FOR BULK WINE 

With regard to bulk wine, very few market players agreed to be interviewed and to fill in the questionnaires. 
Furthermore, the answers of those who agreed to do the interview were quite poor, vague and incomplete. 
We were not able to understand the reasons for such reticence. Probably, it can be explained by the fact that 
wines  imported  in  bulk  are  “nationalised”  through  blending  with  local  wines  by  importers-bottlers  (who 
would  not  be  willing  to  admit  that  wines  marketed  as  domestic  product  are  in  fact  totally  or  partially 
produced  in  other  countries).  However,  in  addition  to  this,  our impression  is that  the  industry  is  not  at  all 
transparent. 

Due to these considerations, results reported below should be viewed with great caution. 

The method used to collect and process information and to prepare the tables is the same already used for 
packaged wines. 

6.3.1  Factors of competitiveness of bulk wines and their importance 

Notwithstanding  the  above-mentioned  limitations,  the  answers  we  obtained  all  focus  on  a  very  limited 
number  of  factors  (Tab.  35).  There  is  almost  general  consensus  on  the  fact  that  competition  in  the  bulk 
market is based on two key factors:  

  The first, linked to the product, is price;  

  The second, linked to the structure of suppliers, is the size of supply volumes (i.e. the operating size of 

suppliers).  

Tab. 35: Overview of factors of competitiveness for bulk wines ranked by importance, by case study country and total 

“Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are highlighted in green. 
Empty cells correspond to factors considered scarcely or not at all important (score=1 or 0) 

Source: questionnaires, interviews with market players 

Overall, the other factors play a less important role. Among these, the most often mentioned factors are price 
stability and a correct price/quality positioning (therefore all factors are in some way related to price). 

It should be noted that in the interviews, some market players operating in the UK maintained that there is no 
significant difference between factors of competitiveness for bulk wines and packaged wines. The reason is 
that in the UK most suppliers are the same, and imported bulk wines are packaged “as  they are” under the 
brand of the supplier or retail chain label. 

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CNJPRUUSADKDEUKTotalProduct quality233Price3333233Price stability32332Origin of the product/terroir2Correct price/quality positioning333323Large supply volumes3333233Ability to manage relationships with importers/distributors32222Reactive adaptation of the product to customers' demand22222Offer of logistics services3222Reliability / Compliance with contractual agreements / Timeliness of delivery323222Organisation of customer visits at wineries3Consistent quality over time33Stability of supplies332Factors related to the productFactors related to the exporting company 
 
 
6.3.2  Degree  of  response  of  EU  bulk  wines  to  factors  of  competitiveness  compared  to 

competitors, based on opinions of market players 

The  very  few  answers  to  this  question  (in  some  countries  no  market  player  answered)  prevent  us  from 
obtaining sufficiently reliable results (Tab. 36). However, the partial picture obtained is not very encouraging 
for EU wines.  

The  few  situations  in  which  EU  wines  appear  to  have  a  competitive  advantage  over  competitors  are  the 
following: 

  In  Russia,  for  all  product-related  factors  (but  mainly  when  compared  with  wines  from  neighbouring 

countries of former USSR, the Caucasus and Serbia).  

  In Germany, key factors (price and volume size), quite understandably due to the relative proximity and 
to well-established relationships with Italian, French and Spanish suppliers (generally large co-ops) for 
Entry Level wines.   

Tab. 36: Response of EU bulk wines to factors of competitiveness compared with wines of competitors 

B=Better response of EU wines; W=Worse response; S=Same response 
Factors originally rated as “Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are 
highlighted in green. Empty cells correspond to factors considered scarcely or not at all important (score=1 or 0) 

Source: questionnaires, interviews with market players 

Finally,  it  is  worth  mentioning  a  critical  weakness  of  EU  wines  that  was  indicated  in  UK  interviews: 
according to some market players, the main weakness of EU wine for bulk imports is the impossibility of 
importing  certain  PDO  wines  in  bulk  (e.g.  the  Spanish  Rioja,  due  to  restrictions  to  bottling  ouside  the 
production area imposed by the producer organisation in the relative production protocol), leaving a gap for 
NWC wines of the same quality level. It appears that NWC countries have gained a competitive advantage in 
this growing segment of the UK market. 

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CNJPRUUSADKDEUKProduct qualityBWSPriceWBSBSPrice stabilityBWWOrigin of the product/terroirBWSCorrect price/quality positioningBWSLarge supply volumesWSBSAbility to manage relationships with importers/distributorsSBSReactive adaptation of the product to customers' demandSSSOffer of logistics servicesSWSReliability / Compliance with contractual agreements / Timeliness of deliveryWSOrganisation of customer visits at wineriesBConsistent quality over timeFactors related to the exporting companyFactors related to the product 
 
 
 
7  THEME 3 – HOW TO IMPROVE THE COMPETITIVENESS OF EUROPEAN WINES 

7.1  METHODOLOGICAL APPROACH FOR THEME 3 

Theme  3  requires  analysis  (mostly  “qualitative”)  to  be  developed  through  the  formulation  of  hypotheses 
about  the  most  probable  evolution  (from  the  current  situation  to  the  horizon  2025)  of  the  external  factors 
influencing the competitiveness of European wines (emerging from the analysis of Theme 1) and of the key 
factors of competitiveness (resulting from the analysis of Theme 2). 

The definition of the competitive outlook for 2025 results from the combined analysis of:  

a.  expected trends of certain factors of the Porter's Diamond, in particular, Factor conditions and Demand 

conditions;  

b.  the likely changes in the competition dynamics characterising the most important country markets; 

c.  expected changes in the hierarchy of the identified key factors of competitiveness; 

d.  the possible adaptation strategies developed by economic actors to changes occurred in the competitive 

arena and in the hierarchy of key factors of competitiveness. 

The formulation of hypotheses relative to future trends and changes listed above mainly arise from:  

  analysis of the IWSR 2013-2018 forecasts for still wine and outlook reports for the case study countries;  
 
  analysis of the available literature.  

the informed opinions of key economic players interviewed in the case study countries;  

The formulation of prospects to 2025 results from a combined critical analysis of the available information 
and from logical inferences about related causes and effects. 

7.2  EVOLUTION OF FACTOR CONDITIONS IN PRODUCER COUNTRIES 

7.2.1  Future prospects for vineyard areas, wine production and probable impacts 

A simple extrapolation of the trend of the surface (and production) to 2025 provides a disconcerting picture:  

  Continuation of the current growth rate could bring the vineyard area of all nine EU main competitors67 
(see  §5.5.1.1)  from  the  current  1.77  to  2.19  million  hectares  (+23.9%),  mainly  owing  to  the  huge 
potential of China. Given the current growth trend of yields per hectare, wine production could rise by 
an even higher percentage.  

67 Argentina, New Zealand, Canada, Chile, USA, South Africa, Australia, China, Brazil. 

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Competitionprospectsto2025Underlying trends of P's Diamond  variablesand competition dynamics in country-marketsHypotheseson economic actors' adaptation strategies to changes inKey factors and in the contextHypotheses on evolution of Key-factors of competitiveness 
 
 
 
                                                      
  By contrast, the downward trend of the EU vineyard area, offset (only partly?) by authorisations for new 
planting (up to a maximum of 1%) would lead to substantial stability of surfaces, if not to a decrease68.  
  The gap between the EU’s area under vine and that of its nine main competitors, currently amounting to 

about 1.57 million hectares, would drop to 1.15 million hectares (-422 thousand hectares). 

In  reality  (at  least  according  to  some  interviews),  this  scenario  is  likely  to  be  more  or  less  dramatic 
depending on the occurrence of certain opposed events:  

  The first is the likely slowdown in growth of planted areas in some NWC (South Africa, New Zealand) 
or downturn in others (Australia), who seem to suffer to some extent from more difficult international 
market conditions and show problems in placing their production on the market (i.e. growing stocks). 
Environmental  problems  seem  to  add  to  market  difficulties,  in  particular  climate  change,  and  the 
resulting irrigation difficulties  which would prevent new planting. This could contribute to mitigating 
the scenario for European wines described above.  

  The second is the likely acceleration in growth of planted areas in countries that more recently appeared 

on the wine scene, such as Brazil and India69. This could contribute to aggravate the scenario. 

In a situation where growth of wine production in China will serve to satisfy part of domestic market demand 
especially,  but  not  exclusively,  at  the  expenses  of  wine  imported  in  bulk  for  blending,  we  can  expect  an 
increase of instability of the international market for wine in bulk (e.g. greater difficulty in placing bulk wine 
on the international market, pressure on prices). The intensification of competition in the international bulk 
market is expected to reflect also on the market for bottled wine. 

7.2.2  Future prospects relative to export propensity 

It  is  reasonable  to  expect  that  for  countries  already  strongly  export-oriended,  the  growth  of  surfaces  and 
production will further increase export propensity, and with it, their aggressive competitive behaviour. For 
such countries, this will translate into the need to increase market opportunities, both through a strategy of 
expansion of their “market-portfolio” and through greater complexity of their competitive strategies. 

All  actions  aimed  at  facilitating  access  to  (new)  markets  and  /  or  at  establishing  the  conditions  to  attain 
competitive advantage (such as preferential trade agreements with consumer countries) are an essential part 
of this strategy. 

In this scenario, Australia and, even more so, Chile appear to be the most aggressive competitors. For Chile, 
exports  are  vital  to  the  national  economy  (high  propensity),  thus  private  companies  and  governmental 
institutions  work  in  synergy  to  apply  a  coherent  set  of  policies:  structural  (surfaces  and  production),  trade 
(bilateral agreements for import tariff reduction), promotion (increase of funds made available).  

In  this  context  of  increasingly  aggressive  behaviour  of  competitors,  stability  (or  decrease)  of  the  EU's 
production potential (despite new planting authorisation rules) may represent a limit for growth (or even for 
preservation) of its wine shares in international markets. 

Given this constraint, the export propensity of the EU to the horizon 2025 will also depend on what happens 
on the internal market. We can make two hypotheses:  

  If the ratio between consumption and production will increase or remain stable (considering also recent 
EU  enlargements),  the  EU  export  propensity  will  decrease  (therefore  wine  export  volumes  on  third 
country markets will stabilize at lower levels than the current ones).  

Based  on  currently  available  data,  the  combination  of  decreasing  wine  consumption  (i.e.  human 
consumption) in the producing Member States with increasing consumption in all other Member States 
(also  related  to  EU  enlargement)  leads  to  a  substantially  stable  level  of  consumption  in  the  last  two 

68 According to views of some sector representatives, authorisation for new planting at maximum of 1% will not allow to compensate 
for the downward trend of vineyard areas. According to such views, the production potential of the EU is thus likely to decrease 
further. 

69 In India, the vineyard area has grown from 40,000 ha to 120,000 ha between 2000 and 2012 (+8.3% average per year) in India and 
from 59,900 ha to 82,600 ha in Brazil. Overall, India and Brazil have (already in 2012) a surface greater than that of Australia and 
slightly lower than that of Chile. In 2025 (extrapolation of the trend) India and Brazil together could reach 290,000 ha (i.e. an area 
second only to that of the United States and of China, among EU competitors).  

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years in the EU27 (see Fig.52). Given the downward trend of EU wine production (i.e. for vinification), 
the ratio between consumption and production increases (from about 72% to 82% on the interpolation 
curve). This translates into diminishing wine volumes potentially available for export.  

Fig. 52: EU wine production for vinification, human consumption and their ratio ( 1,000 hl, %) 

Source: based on DG AGRI data  

  If the Consumption/production ratio decreases, an increase in the propensity to export may be expected 
(and therefore a increase in export volumes) driven by the difference between supply and demand on the 
domestic market. This hypothesis is suggested by DG Agri projections (2012)70.  

In  this  second  case,  however,  the  possibility  of  translating  the  potential  in  competitive  strength  will 
depend  on  the  strategic  measures  implemented  to  counteract  the  increased  aggressiveness  of 
competitors. 

7.3  EVOLUTION OF DEMAND CONDITIONS IN THE CASE STUDY COUNTRIES 

7.3.1  Population and GDP prospective growth 

Linking consumption forecasts to the evolution of the population (population growth rate) and to economic 
development  (GDP  growth  rate)  requires  some  caution,  since  the  evolution  of  consumption  depends  to 
varying degrees on a number of other factors and their joint effects.  

  First  of  all,  changes  in  the  cultural  environment  can  influence  consumption.  The  evolution  of  the 
cultural  environment  (new  consumption  occasions,  adoption  of  foreign  consumption  models,  fashion 
factors,  etc.)  influences  the  consumption  behaviour  of  current  and  potential  consumers,  thus  also  the 
diffusion rate of the product (which has an impact on average per capita consumption);  

  Second,  consumption  can  be  “driven”  by  governments  through  taxation  policy  aimed  at  discouraging 
alcohol  abuse  (thus  shifting  consumption  from  high  to  lower  alcohol  content  beverages),  or  aimed  at 
protecting domestic industries that produce other alcoholic beverages that are wine substitutes.   

However,  since  these  factors  are  not  easily  foreseeable,  in  country  markets  where  wine  is  past  the 
introduction stage of its life cycle, demographic changes together with economic development allow to make 
an  informed  guess  about  the  likely  evolution  (increase  or  decrease)  in  consumption.    For  the  case  study 
country markets, we examined the 2013-2018 forecast data published by various official sources concerning 
evolution of the adult population and GDP growth rates (Tab. 37). 

. 

70  EC  –  DG  Agri.  Medium  term  projections  for  the  world  wine  market  2012-2020  -  Meeting  of  the  High  Level  Group  on  Wine 
Planting Rights, July 6, 2012. However, these projections were obtained using total production (not production for vinification) 
and total apparent consumption (not human consumption). 

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y = 4,5956ln(x) + 71,65560,065,070,075,080,085,090,0100.000110.000120.000130.000140.000150.000160.000170.000180.000190.000200.0002000/012001/022002/032003/042004/052005/062006/072007/082008/092009/102010/11Prod for vinif.Human Cons% Cons/prodEU 15EU 25EU 27 
 
 
                                                      
Tab. 37: Forecast evolution of adult population and growth rates in case study countries, 2013-2018 (Million, %) 

Source: Demographic data – US Census; Economic data – IMF 

The  USA,  China  and  Hong  Kong  have  the  highest  average  demographic  growth  rate  forecast  per  year, 
mirrored by a decrease for Russia (continuing the negative demographic trend of previous years, albeit at a 
slower  rate)  and  for  Germany  (due  to  low  birth  rates  and  negative  net  migration).  Substantial  stability  is 
expected for Japan.  

China  is  the  country  that  will  benefit  from  the  highest  GDP  growth  in  the  future,  albeit  at  a  lower  rate 
compared to previous years (8.4% on average per year). Hong Kong (4.2%) and Russia (3.6%) follow from a 
distance and about 3.0%  growth (on average for all years of the period) should also be  seen in the United 
States.  

By  contrast,  the  average  annual  GDP  growth  should  remain  on  much  lower  rates  in  Japan  and  in  the 
European countries, ranging between 1.2% in Germany and 1.8% in the UK. 

7.3.2  Consumption forecasts for bottled still wine 

Evolution  of  demand  conditions  influences  expectations  about  consumption  in  the  examined  country-
markets. Consumption forecasts of wine in bottles (expressed in equivalent ‘000s 9-litre cases between 2013 
and 2018) are sourced from IWSR71.  

IWSR  forecasts  are  based  on  the  two  parameters  in  Tab.  37  above,  but  also  on  indications  generated  by 
analysis of current economic and political issues (e.g. probability that Chinese government announcement of 
anti-dumping investigation on European wines in 2013 affects imports from the EU; expected effects of the 
ban  on  advertising  alcoholic  drinks  introduced  by  the  Russian  government  in  January  2013  on  wine 
consumption).  For  this  reason,  IWSR  forecasts  are  preferred  over  other  projections  based  on  simple 
extrapolation  of  per  capita  wine  consumption.  IWSR  consumption  data  are  subdivided  according  to  wine 
origin (in our case, grouped into “local”, EU and Others for convenience).  

To allow for a more contextualised reading of forecast data, forecasts were "tied" to the consumption trend 
observed for the period 2000-2013. Fig. 53 shows the entire evolution of consumption (past and forecast) for 
the years 2000-2018. 

71 As usual, forecast data must be taken with due caution, as consumption is influenced by country-specific factors. It should also be 
remembered that IWSR consumption data refer to still packaged wines sold through the Off-trade channel. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 126 

201320142015201620172018% AAGR 2013-18China1,023.11,033.41,043.11,051.71,058.91,065.20.81Hong Kong6.06.16.16.16.26.20.63Russia115.7115.3114.9114.5114.0113.6-0.37Japan104.0104.1104.1104.2104.2104.20.03USA228.0230.4232.7234.9237.2239.30.98Denmark4.44.44.44.54.54.50.50Germany66.566.566.466.466.466.3-0.06UK50.250.550.851.151.351.60.55China8.08.28.58.58.58.5Hong Kong3.04.44.44.54.54.5Russia3.43.83.73.63.63.6Japan1.61.41.11.21.21.1USA1.93.03.63.43.32.9Denmark0.81.31.51.51.51.5Germany0.61.51.31.31.31.2UK0.71.51.81.92.12.5Adult Population (Mn)% GDP 
 
 
 
 
 
 
 
                                                      
 
Fig. 53:  Consumption evolution: 2000-2013 time series and forecasts for 2013-2018 (000s 9-litre cases) 

Source: IWSR 

Moreover,  other  sources  were  taken  into  consideration  for  the  analysis  of  wine  consumption  trends,  as 
reported in the box below. 

Evolution of wine consumption in traditional markets: Other data sources 

The evolution of consumption (source: IWSR) is substantially confirmed by other sources. As an example, OIV data of 
total wine consumption (of which still wines represent the largest share) from 2000 to 2011 approximately confirm the 
same  trends  (Fig.  54).  In  particular,  OIV  data  confirm  the  significant  growth  of  consumption  in  China  and  in  the 
United States, and the trend break for Russia in 2007-2008, from strongly positive between 2000 and 2007 to slightly 
negative afterwards, until 2011. 

Fig. 54: Evolution of wine consumption in traditional markets 2000-2011 (million hl) 

Source: OIV 

To  complete  the  analysis,  Tab.  38  reports  consumption  figures  for  2000,  2013  and  projections  to  2018 
(bottled  still  wine),  as  well  as  annual  average  growth  rates  of  consumption, in  total  and  by  origin,  for  the 
years 2000-2013 and for the 2013-2018 forecast interval. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 127 

0500001000001500002000002500003000003500004000002000200120022003200420052006200720082009201020112012201320142015201620172018UKUSARussiaJapanHKGermDenmChina05.00010.00015.00020.00025.00030.000200020012002200320042005200620072008200920102011UKUSARussiaJapanHong KongGermDenmChina 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tab. 38: Consumption of bottled still wine and annual average growth rates (2000-2013 and 2013-2018 forecasts), total and 
by origin  – Annual average growth rates of market shares by origin (2013-2018 forecasts) 

Negative values in red 

Source: Cogea, based on IWSR data 

Some important aspects emerge from the analysis:  

  In  all  studied  country-markets  forecasts  for  2013-2018  are  positive,  although  growth  rates  vary 
considerably, ranging from a minimum of 0.02% in  Denmark to a maximum of over 7% per year for 
China.  Looking  ahead,  China  and  the  US  emerge  as  the  most  dynamic  markets  and,  therefore, 
potentially more attractive; 

  In  all  countries,  except  for  the  USA  and  Germany,  growth  rates  suffer  a  slowdown  compared  to  the 
previous period, very strong in Hong Kong and China, almost insignificant in Denmark and in Japan;  
  In all country-markets, EU wines show positive growth rates, with the exception of Denmark and Japan 

(showing, however, very small negative change rates). 

In addition, the distinction of wine consumption by origin shows that:  

  Consumption  growth  in  the  USA  and  Japan  is  mainly  sustained  by  “local”  wine  production  (which 
means that growth is satisfied in large part by wine imported in bulk)72 followed by European wines in 
the US and wines of other origin in Japan.  

  Consumption growth in China is also mainly satisfied by “local” production, but European wine imports 
show  the  highest  growth  rate  (suggesting  that  they  should,  therefore,  increase  their  market  share).  In 
contrast with the two previous countries, growth of domestic wine production should mainly be driven 
by increase of vineyard areas.  

  Consumption growth in Germany and Hong Kong is expected to be mainly satisfied by European wines, 

in volume terms. 

72  The  total  US  vineyard  area  is  expected  to  remain  stable  and  wine  grape  production  should  only  grow  thanks  to  increased 

productivity (higher yields). 

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2000201320182000-132013-18ΔTotal Consumption36,109166,307234,84913.917.03-6.880.00Others14210,02214,12937.126.89-30.23-0.13EU19221,28537,72042.9911.26-31.733.96Chinese35,775135,000183,00012.216.27-5.94-0.70Total Consumption16,80017,19017,1780.160.02-0.140.00Others2,8108,0658,4958.471.04-7.431.02EU13,9909,1258,683-4.00-0.923.08-0.94Total Consumption224,552235,511241,4710.240.560.320.00Others15,30125,35224,3503.05-1.07-4.12-1.62EU209,252210,159217,1210.430.760.330.19Total Consumption9913,5854,22211.863.82-8.040.00Others3891,8702,17714.262.76-11.50-1.02EU5971,6852,0459.555.03-4.521.16Chinese5305514.1012.89-1.218.73Total Consumption27,31634,31734,2471.271.03-0.240.00Others3,7699,0338,6966.601.57-5.030.53EU12,14214,48413,6510.63-0.07-0.70-1.08Japanese11,40610,80011,900-0.801.962.760.92Total Consumption36,10065,05565,9245.180.27-4.910.00Others7,6579,92210,66611.201.46-9.741.19EU1,14318,03318,75822.970.79-22.180.52Russian27,30037,10036,5002.67-0.33-3.00-0.59Total Consumption100,308121,686126,0961.500.47-1.030.00Others37,70065,68868,8313.900.65-3.250.18EU62,60855,99857,265-0.800.251.05-0.22Total Consumption210,098318,165373,3903.113.250.140.00Others13,85134,80437,7436.491.59-4.90-1.60EU27,96745,58153,1973.373.14-0.23-0.11US168,280237,780282,4502.653.500.850.25Market Share: % AAGR 2013-18United StatesChinaDenmarkGermanyUnited KingdomHong KongJapanRussiaConsumption 000s 9 litre cases% AAGR Consumption 
 
 
                                                      
  The weak consumption growth in Russia is supported by both EU wines and wines of other origin, at 
the expenses of a decrease in “local” production (therefore, probably also by a decrease  in bulk wine 
imports).  However,  EU  wine  consumption  is  expected  to  grow  at  a  lower  rate  compared  to  wines  of 
other origin.  

  The  expected  recovery  in  consumption  in  the  UK  (after  marked  decrease  between  2009  and  2013)  is 
mainly supported by wines from other origins (which should, therefore, increase their market share).  
  The substantial stability of consumption in Denmark will see substitution of European wines with wines 

from other origin. 

In synthesis, all observed trends may be expected to lead to: 

a.  Tendency towards increasing EU wines market share  in China, Germany, Hong Kong and  Russia, 
although wines of other origin are expected to grow at a slightly higher rate than EU wines in Russia; 

b.  Tendency towards decreasing EU wines market share in Denmark, Japan, UK and USA.  

7.3.3  Expectations about changes in consumer markets and impact on consumption 

Besides  the  increase  in  consumption  (i.e.  quantity),  it  is  also  necessary  to  assess  in  which  segments 
consumption is likely to develop in the future (i.e. towards which wine quality). In addition to the growth of 
GDP per capita73, this will be linked to both evolution of the different consumer targets and to growth of the 
various functions / occasions of wine consumption. The combination of consumer targets and consumption 
occasions helps to define the direction in which the segments will develop. To illustrate this concept, the map 
in Fig. 55 shows two consumer targets (Expert and affluent consumers; New consumers) and two functions / 
occasions  of  consumption  (Consumption  as  an  aperitif/in  social  occasions/purchased  as  gift;  Daily 
consumption as meal accompaniment). For each of the four quadrants generated by the combination of these 
factors, the types of products mainly consumed can be represented. 

Fig. 55:  Representation of types of wine consumed according to consumer targets and consumption occasions 

Source: Cogea 

Thus,  the  direction  of  development  of  the  factors  may  indicate  which  segments  may  be  expanding.  For 
example:  

 

if the number  of  expert  and  affluent  consumers  who mainly  drink  wine in  social  occasions  increases, 
demand growth will interest more wines in the Top range and Ultra premium (including PDO-PGI in 
Europe, but also regional wines with GI of other competitors);  

73 Correlation exists between growth of GDP per capita and consumption of wines in the higehr price/quality ranges. 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 129 

Expert and affluent consumersNew consumersConsumption as aperitif / Social occasions / Purchase as giftEveryday consumption as meal accompaniment> consumption of Top/Ultra premium  PDO-PGI wines> consumption of Super premium  PDO-PGI wines> consumption of wines easy to drink / varietal wines> consumption of Entry level/Commercial premium, varietals and non GI wines 
 
 
                                                      
  on the contrary, if the number of new consumers (low-income) who mainly consume wine at home in 
accompaniment  to  a  meal  increases,  demand  growth  will  be  more  geared  towards  Entry  level  and 
Commercial premium wines, probably in BiB and/or other convenience packaging. 

In  addition,  all  consumer  profiles  in  between  the  two  extremes  represented  by  the  map  will  behave 
differently according to consumption occasions, which of course are not mutually exclusive but can coexist.  

It is not possible to determine what the future market directions will be. However, it is very likely that, in all 
countries,  growth  can  affect  all  segments,  as  a  combined  effect  of  higher  penetration  rates  and  income 
growth,  but  also  because  of  changing  habits  /  lifestyles  /  consumption  occasions74.  At  individual  country 
level, wine demand is likely to be more complex and more sophisticated than at present. 

Finally, it may be interesting to develop market opportunities (currently ignored or not adequately explored) 
expressed by potential consumer targets who, for personal ethical reasons (religion, sports), health (diabetes, 
pregnant  women)  or  for  specific  situations  (driving)  can  not  consume  alcoholic  beverages,  but  would 
welcome  the  opportunity  to  enjoy  wine.  Existing  technology  (i.e.  partial  or  total  wine  de-alcoholisation) 
already allows to meet this target potential. 

7.3.4  Expected future developments of wine demand in the case study markets  

The  information  collected  through  interviews  with  key  market  agents  in  the  case  study  countries  is  
summarized in Tab.39 to show the main developments in consumer markets and wine demand expected in 
the near future.  

Tab. 39: Expected future developments in the case study consumer markets 

Expected developments in consumer 
markets 

Expected developments in 
product demand 

Expected developments in 
sales channels 

 Still high growth rate of wine consumption, 

but slightly slowing down  

 Growth of middle classes 

CHINA 

 Consumers becoming better informed and  

more experienced 

 Consumption increase in third and fourth-

tier cities 

 Moderate future growth, mainly driven by 

consumption at home 

 Persisting price sensitivity 

JAPAN 

 Low interest in wine for younger 

generations 

 Expansion of wine’s “reach” to larger 

segments of population (i.e. penetration  
increase) 

 Growth mostly expected 

within Medium Range wines 

 Trading-up from lower to 
higher price/quality wines 

 Premium wines (Commercial, 
Super and Ultra Premium) 
expected to increase market 
share 

 Growth of wine 

consumption On-trade 

 Growth of Off-trade sales 

 Growth mostly expected at 

Entry Level, partly for 
Medium Range wines 

 Growth of Off-trade sales 

 Growth of online sales 

RUSSIA 

USA 

 Fairly stable wine consumption overall 

 Slow growth expected, but depends on 

growth of middle classes, political stability 
and better information to consumers 

 Expected increase of 

consumption of imported 
wine to detriment of 
“domestic” wine 

 Expected increase of wine consumption 

 No acidic wines, preference 

outside two main cities 

for taste of tannins 

 Wine market growth driven by fast 

population growth  

 Wine consumption expected to grow 
especially in younger generations 
(Millennial) 

 Trading-up from lower to 
higher price/quality wines 

 Market for higher priced 

wines expected to develop 
further 

 Lifestyle developments affect positively 

 Overall, better future 

wine consumption (better knowledge, wine 

prospects for red wine 

 Development of wine sales 
On-trade and Off-trade 
outside two main cities (due 
to enhancement of 
distribution network) 

 Growth of wine 

consumption On-trade 

 Growth of online sales 

74  For  example,  in  Japan,  partly  as  a  result  of  the  economic  crisis,  wine  consumption  at  home  is  increasing,  even  as  an 

accompaniment to meals.  

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as accompaniment to meals, etc.) 

 Expected increase in market penetration at 

geographical level (i.e. States where 
consumption levels are still low) 

 High per capita wine consumption, market 

expected to remain stable overall 

 However, consumption is expected to grow 

somewhat because of 

a. 

b. 

Increasingly affluent population of 
older Danes  
Increasing interest in wine for 
younger Danes 

 Persisting price sensitivity 

 Little market growth due to population 

ageing trend. However, as population ages, 
more consumers expected to switch from 
spirits to wine 

 Persisting price sensitivity 

 Market is overall mature, wine 

consumption expected to remain fairly 
stable  

 As a result of economic crisis, the wine 

market is expected to remain fairly price-
driven 

 However, some scope for market 

development through ”trading-up” from 
lower to higher quality/price wines (better 
knowledge by consumers leads to placing 
more importance on quality) 

DENMARK 

GERMANY 

UK 

 Overall, better prospects for 
wines in the lower price 
ranges 
However, 

 Market for higher price wine 

expected to develop (a.) 

 Higher sales of small bottles 

are expected (b.) 

 Overall, better prospects for 
wines in the lower price 
ranges 

 Persistance of current trends: 
wine mainly consumed at 
home; if consumed outside, 
mainly as aperitif 

 Due to trading-up, premium 
wines expected to increase 
market share (both upper 
Medium Range and Top 
Range) at the expenses of 
other types of wine 

 Further development of 

market niche of consumers 
willing to spend more and 
consume less wine 

 Retail chains expected to 

retain market leadership in 
wine sales 

 Persisting low importance of 

On-trade for wine sales 

 Growth of online sales (i.e. 
largely online stores of big 
retail chains) 

 Retail chains expected to 

retain market leadership in 
wine sales 

 Developments in On-trade 

sector may create new ways 
of wine consumption (e.g. 
gastro-pubs) 

 Growth of online sales 

Source: COGEA, based on interviews  

In  general,  in  markets  where  trading-up  and  increase  of  wine  sales  in  the  higher  price/quality  tiers  of  the 
market (Super and Ultra Premium, Top Range) are expected, European wines should benefit from an already 
established  competitive  advantage.  Strategies  of  European  wine  businesses  should,  thus,  be  directed  to 
maintaining such competitive edge. 

Development  of  the  On-trade  sector  is  also  considered  to  favour  EU  wines,  chiefly  Italian  and  French, 
because  of  widespread  presence  of  dedicated  restaurants  and  because  European  wines  are  generally 
considered as more suitable and easier to drink than other wines as accompaniment to meals. 

In markets such as Japan, where growth is expected mostly at Entry Level (through increase of sales in the 
off-trade and online retail channels), European wines will probably find themselves competing more fiercely 
with NWC wines to develop market shares. Indeed, NWC wines are genereally considered as well positioned 
in this segment across the examined markets, although European wines also have respectable presence.  

It emerges from the interviews in the UK (but mentioned also in the US, Germany and Denmark) that one of 
the weaker points of European suppliers/wines compared to NWC in market development is in their lower 
ability to understand the consumer market and to quickly adapt to new market demand trends.  

7.3.5  BCG matrix based on 2018 consumption forecasts  

Based on forecasts for wine consumption and composition of market shares to 2018 provided by IWSR, we 
have placed different countries / markets within a “growth- market share” matrix. This matrix was originally 
conceived by the Boston Consulting Group (BCG) in order to position the products / activities of a company 
in terms of their ability to generate incoming resources (cash flow) and their need for output resources (i.e. 
investments), then to help the management make strategic decisions about the future of the product portfolio 
of the company.  

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Through  a  suitable  adaptation,  the  matrix  can  give  useful  indications  at  macro  level,  in  particular  for  the 
identification  of  countries  /  markets  on  which  it  might  be  more  interesting  (for  both    public  and  private 
stakeholders in Europe) to focus and to direct economic resources available to the horizon 2025 (hence, from 
a strategic viewpoint). 

The matrix uses two classification parameters (see Fig. 56):  

  Growth rate of the still wine market in different countries (the vertical axis). This is a measure of market 
attractiveness. The boundary (horizontal dividing line) between low and high attractiveness was set to 
1% per year between 2013 and 2018 (i.e. <1%: low attractiveness; >1% high attractiveness).  

  Relative  Market  Share  of  European  wines  in  2018  (the  horizontal  axis).  It  measures  the  competitive 
strength of European wines compared to its competitors. The Relative Market Share is calculated as the 
ratio  between  the  Market  share  of  European  wines  and  the  market  share  of  all  wines  from  all  other 
origins (imported or “local”). A logarithmic scale base-10 is used. The boundary (vertical dividing line) 
between low and high competitive strength has been set equal to 1 annual average (i.e. from 0.1 to 1.0 
low competitive strength; 1 to 10, high competitive strength).  

The combination of these two parameters identifies 4 categories. For each combination it is possible to make 
recommendations about strategic behaviour. 

The four quadrants in the BCG matrix (Fig. 56), adequately adapted to a macro level of analysis, represent: 

Question Mark: The term indicates that European wine is in an attractive market (i.e. attractive for all competitors), 
but  does  not  possess  a  significant  competitive  strength.  Therefore,  there  is  uncertainty  about  the  possibility  of 
increasing  its  market  share,  achievable  only  through  use  of  higher  financial  resources  than  those  invested  by 
competitors (Question Mark products generate a weak cash in-flow and require significant resources in output). The 
recommended behaviour is to develop investments with the aim to progressively move towards the Star box. 

Star: The term indicates that European wine is strongly competitive in highly attractive markets, able to generate the 
highest Return on Investments (ROI). Star products require continuous investments (high need for cash) to maintain or 
further  develop  the  advantage  competitive  position.  The  recommended  behaviour  is  to  invest  to  maintain  achieved 
positions until the product moves to a later stages of the life cycle of (ie, up to market maturity). 

Cash Cow: The term indicates that European wine is in the markets characterised by low growth (and therefore less 
attractive  to  potential  new  entrants),  but  highly  competitive.  This  position  generates  high  cash  flow  (through  little 
investments,  mainly  as  defensive  strategy)  that  potentially allow  to  finance  investments  in  Question  Mark  countries. 
The recommended behaviour is to continue to exploit the market (i.e.  gain without investing a lot). 

Dog: The term indicates that European wine has low competitive strength in a market  characterised by low growth. 
Thus,  it  is  possible  to  generate  just  enough  revenue  to  reach  budget  balance,  or  even  incur  in  losses.  A  country 
decision to enter this quadrant makes it necessary to evaluate the following alternatives: reduce investment and / or try 
to revitalize the market segments potentially sensitive to offered products. 

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Fig. 56:  Growth-Market Share Matrix for still wine – Case study markets* 

* The size of each country circle represents the relative size of the consumer market. 

Source: Cogea, based on IWSR data 

The results of this exercise highlight the following:  

a.  The existence of a group of countries (China, USA and Japan) that by 2018 should be positioned in the 
“Question  Mark”  box.  These  markets  are  characterised  by  expanding  consumption  and  where  an 
important  role  is  played  by  “local”  products,  whose  market  share  could  be  eroded  through  adequate 
aggressive strategy (i.e.  adequate investments to maximize  response to key factors  of competitiveness 
specific  to  each  individual  country-market).  In  these  markets,  strategies  such  as  developing 
communication  and  advertising  to  traders  and  to  consumers,  Public  Relation  activities  with  importers 
and  distributors,  organisation  of  visits  to  wineries  by  clients  and  granting  of  higher  profit  margins  to 
distributors/retailers  should  be  considered.  In  principle,  these  markets  should  be  given  priority  when 
making investment decisions.  

b.  The  position  of  Hong  Kong  (not  a  wine  producer)  in  between  “Question  mark”  and  “Star”.  It  seems 
advisable for EU wines (companies) to insist on an aggressive strategy (thus, invest heavily) in order to 
move  to the “Star” quadrant in view of 2025. This also in reason of the role played by Hong Kong as an 
international hub in Asia.  

c.  The existence of a group of countries (Germany and Denmark) that by 2018 should be positioned in the 
“Cash-cow” box. These are markets characterised by limited development potential, but dominated (in 
particular Germany) by EU wines, including German wines. Although these markets can be defined as 
unattractive,  it  is  highly  likely  that  some  EU  competitors  will  try  to  penetrate  these  markets  further 
(such  as  Australia  and  Chile,  that  need  to  broaden  their  market-portfolios).  So,  ultimately,  it  is 
recommended  that  EU  wines  (companies)  implement  a  strategy  of  consolidation  of  the  positions 
achieved and defense from the likely aggressiveness of competitors (for example, through actions aimed 
at strengthening customer loyalty).  

d.  The position of Russia (wine producer country) in the “Dog” quadrant. The expected stagnation of wine 
consumption and low competitiveness of EU wines  generate doubts about the strategic opportunity to 
allocate resources to this market. However, the low market share of European wines refers to the entire 
wine market (all segments included). Therefore, focusing on and revitalising market segments expected 
to be less interested by domestic wines in the future (i.e. Top Range and Ultra Premium) would seem as 
the most appropriate strategy to maintain presence in this market.  

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Question MarkStarDogCash CowRelative market shareMarket growthHighLowLowHighUSADECNUKJPRUDKHK 
 
 
 
e.  Finally, the position of the United Kingdom between “Cash Cow” and “Dog”. As this country is not a 
significant wine producer, European wine presence is most threatened by wines of the competitors, and 
this very important market could eventually lose interest in the future (in case EU wines should further 
decrease their competitive strength). It would be necessary, therefore, for European wine companies to 
implement a strategy to move the position of this market in the “Cash Cow” quadrant (where the UK 
was,  in  fact,  before  the  erosion  of  market  shares  by  the  NWCs).  The  strategic  objective  would, 
therefore, be to recover market share, to be achieved through the adoption of the same strategies that 
have helped NWC wines to achieve success on this market (transport in flexitank, bottling on site and 
granting of higher margins75 to retail chains). 

7.4  HYPOTHESES ON THE EVOLUTION OF KEY FACTORS OF COMPETITIVENESS 

7.4.1  Perceived  changes  in  the  importance  of  factors  of  competitiveness  for  packaged 

wines, from the current situation to 2025  

The factors of competitiveness and their hierarchy  according to importance  have been previously analysed 
(§6.2). In particular, the current importance of a number of factors of competitiveness was assessed through 
administration of  a  short  questionnaire  to  key  market  players interviewed in the  case  study  countries. The 
same  interviewees  were  also  asked  to  evaluate  whether  the  importance  of  the  suggested  factors  would 
increase, decrease or remain stable by 2025 (i.e. relative to the importance attributed at present).  

In  Tab.  40,  cells  highlighted  in  red  refer  to  factors  of  competitiveness  that  are  currently  considered 
Extremely  important  (score=3).  In  our  prospective  analysis  we  also  took  into  consideration  the  factors  of 
competitiveness that were considered scarcely or not at all important at present (as we could not rule out that 
what is a scarcely or not at all important today might become important or extremely important in the future). 

Tab. 40: Opinions about future evolution of the importance of factors of competitiveness for packaged wines (from the 
current situation to 2025) 

 “+” More important in the future; “-“ Less important in the future; “=” Equally important in the future 
Factors  originally  rated  as  “Extremely  important”  factors  (score=3)  are  highlighted  in  red;  “Important”  factors  (score=2)  are 
highlighted in green. Empty cells correspond to factors considered scarcely or not at all important (score=1 or 0) 
Influence factors highlighted in yellow; Dependence factors in blue. 

Source: questionnaire administered to market players 

Tab. 40 shows two extremes, Japan on the one hand, where all factors are predicted to grow in importance, 
and  Denmark  on  the  other,  where  only  a  very  small  number  of  factors  are  expected  to  increase  their 

75 “Granting of higher profit margins” is a factor of competitiveness expected to become  more important in the future (outlook to 

2025) by key market players interviewed in the case study countries, with the only exception of China and Denmark.  

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ELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporting or domestic company)++++++======+++===+++Ability to manage relationships with importers/distributors---+++++++++===+++++++++Ability to select importers/distributors/buyers===+++++++++===+++++++++Granting of higher profit margins---+++++++++===+++++++++Organisation of customer visits at wineries++++++++++++===+++++++++Brand extension-++++++++===++=+++++=+++Product quality+++++++++====+++=+++++++Price++-+++++++++===+++++++++Origin of the product/terroir+++++++++====+=+++++++++Type and quality of the packaging  (presentation) +++++++++++++==+++++++++Indication of grape variety+==+++++=+=====++++=-+++Presence of brands in specialised trade magazines===+++++++++===+++++++++Brand/Image of the product +++++++++++++==++++==+++Price stability+++++++++===++=+++++++++Offer of logistics services===+++===+++===+++++++++Width / range of wines selection===++++++======+++++++++Reliability / Compliance with contractual agreements / Timeliness of delivery++++++++++++===+++++++++Advertising, promotion and comunication activities directed to traders===++++++---===+++---+++Reactive adaptation of the product to customers' demand++++++++++++===+++++++++Appropriate advertising, promotion and comunication activities directed to consumers===++++++---===+++===+++Correct price/quality positioning++=+++=+++++++=+++++=+++Factors related to positioningUKTotalFactors related  to bargaining  power and access to distribution channelsFactors related to productFactors related to brandFactors related to marketing serviceChinaJapanRussiaUSADenmarkGermany 
 
 
                                                      
importance  in  the  future,  while  all  other  factors  will  remain  the  same.  Furthermore,  in  all  countries  (to 
varying  extents)  predictions  indicate  a  further  importance  increase  for  factors  that  have  already  been 
considered (by the same market players) to be extremely important at present.  

We feel that these opinions, probably slightly exaggerated, are generated by the expectation that competition 
will  intensify  in  the  near  future.  Therefore,  in  a  situation  that  is  perceived  as  more  turbulent,  factors 
contributing  to  generate  a  competitive  advantage  tend  to  raise  their  overall  importance  (i.e.,  the  bar  is  set 
higher and higher). 

On the other hand, there are very few factors for which a decrease in importance is expected. In particular, 
“Advertising,  promotion  and  communication  activities  directed  to  traders”  in  USA  and  UK;  “Appropriate 
advertising,  promotion  and  communication  activities  directed  to  consumers”  in  USA;  “Ability  to  manage 
relationships with importers/distributors” and “Granting of higher profit margins” in China.  

Finally, it is interesting to observe that in some cases forecasts are different for the various market segments. 
For example:  

  In the UK, the importance of “Indication of grape variety” is expected to increase for the Entry Level 
segment, remain the same for the Medium Range and decrease for the Top range. In the same way, in 
USA it is likely to increase for Entry Level and remain the same in the other two segments. 

  In Denmark, the importance of “Origin of the product/terroir” is expected to increase for Medium Range 

wines and to remain the same in the other segments. 

  In  China,  the  importance  of  “Price”  is  expected  to  increase  in  the  Entry  Level  and  Medium  Range 

segments, while it is expected to decrease for wines in the Top Range. 

It seems reasonable to expect that further increase in the importance of most factors of competitiveness will 
be reflected on the importance of Influence factors and Dependence factors (respectively, in yellow and in 
blue in Tab. 40) identified through application of the MicMac method (see §6.2.3) but, most likely, not on 
their impact hierarchy. 

Therefore, the analysis suggests that the main results (previously discussed) should be confirmed also for the 
future: 

  Most of the major Influence factors are linked to behaviour (in particular factors related to bargaining 

power and access to distribution channels); 

  However, when moving upwards from one segment to the next, from Entry level to Top range, some of 

the behavioural factors are replaced by product-related factors; 

  In  a  similar  way,  many  Dependence  factors  are  related  to  behaviour  (in  particular  factors  related  to 

positioning and factors related to brand), except one key factor relating to the product (i.e. price). 

We recall that the factors for which an opinion was asked about their likely future importance were given to 
interviewees in the questionnaire (a total of 21 factors), while those used in the MicMac structural analysis 
(to  assess  the  current  situation  only)  were  41  in  total,  including  both  the  suggested  ones  and  those 
spontaneously mentioned by respondents in the interviews. 

One of these spontaneously mentioned factors (i.e. product-related) is “PDO-PGI popularity”. This is a key 
Influence factor, in particular for Top range wines, but also for Medium range wines, that complements the 
key Influence factor “Origin of the product / terroir”. 

7.4.2  The competitive position of EU bottled wine by 2025 

In order to identify the possible future competitive position of EU wines (and wineries) with respect to NWC 
and  domestic  wines  in  the  case  study  countries,  we  developed  a  combination  for  each  factor  of 
competitiveness,  between  the  current  leading  position  of  EU  wines  (i.e.  best  response  to  factors  of 
competitiveness compared with NWC and domestic wines) and the factors for which market players forecast 
an increase in importance by 2025 (in practice, this was done by combining the results in Tables 28 and 29 
with the results presented in Table 40: the future advantage position, indicated with “§” in Tab. 41 and Tab. 
42) is given by the combination of “B” (i.e. Better response of EU wines to a factor of competitiveness)  and 
“+”(i.e. factors considered to become more important in the future). 

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The underlying hypothesis is that, ceteris paribus, in a situation in which there is an increase in importance 
of  a  competitive  factor,  the  market  players  that  already  have  this  competitive  advantage  will  have  greater 
potential of maintaining or increasing it.  

This is equivalent to identify expected future strengths and weaknesses of European wines relative to main 
competitors  in  the  examined  markets.  At  this  stage  of  the  analysis,  it  becomes  all  the  more  important  to 
identify the areas in which European wines are expected to underperform compared to competitors, as these 
“weak”  areas  are  the  ones  on  which  to  focus  strategic  countermeasures.  The  present  analysis  centres,  in 
particular, on the identified key factors of competitiveness, either characterised as Influence or Dependence 
factors (respectively, in yellow and in blue in Tab. 41 and Tab. 42). 

Tab. 41: Combination between factors that will increase in importance and factors to which EU wines respond better 
compared to NWC wines 

“§” factors for which EU wines are expected to have competitive advantage in the future 
Factors  originally  rated  as  “Extremely  important”  factors  (score=3)  are  highlighted  in  red;  “Important”  factors  (score=2)  are 
highlighted in green. Empty cells correspond to factors considered scarcely or not at all important (score=1 or 0) 
Influence factors highlighted in yellow; Dependence factors in blue. 

Source: questionnaires administered to market players 

The results presented in Tab. 41 show that, compared with NWC wines, EU wines (wineries) could maintain 
(or increase) a significant overall competitive advantage in Japan76 and Russia, but also in Germany and the 
US.  On  the  other  hand,  the  smaller  number  of  factors  to  which  European  wines  are  expected  to  respond 
better than competitors in Denmark, China and the UK suggest a more uncertain future position, even if the 
factors involved for the former group of markets and for the latter are different. 

With  respect  to  factors  related  to  characteristics  and  behaviour  of  suppliers,  EU  suppliers  main  strengths 
(compared  to  NWC)  across  most  examined  markets  can  be  identified  in  their  “ability  to  establish  and 
manage relationships with importers and distributors” (both Influence factors), in particular in Japan, Russia, 
USA, Germany and UK. 

Conversely,  EU  wines  main  weaknesses  (compared  to  NWC)  expected  to  persist  in  the  future  in  most 
examined  markets  are  relative  to  “size  of  the  supplier”  in  all  countries  but  Russia,  “brand  extension”77  in 
Denmark, UK and US (also in China and Germany, but only for Entry level and Medium range wines).  

76 Results for Japan do not appear to confirm forecasts (to 2018) presented in Tab.38, however IWSR data, on which forecasts are 

based, only consider packaged wines sold through Off-trade channels. 

77  Development  of  new  products  using  an  existing  brand  name.  A  company  using  brand  extension  aims  to  leverage  its  existing 

customer base and brand loyalty to increase its profits with a new product offering. 

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ELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporting or domestic company)§§§Ability to manage relationships with importers/distributors§§§§§§§§§§§§Ability to select importers/distributors/buyers§§§§§§§§§§§§Granting of higher profit margins§§§Organisation of customer visits at wineries§§§§§§§§§Brand extension§§§§§§§Product quality§§§§§§§§§§§Price§§§§§§§Origin of the product/terroir§§§§§§§§§§§§§Type and quality of the packaging  (presentation) §§§§§§§§§Indication of grape variety§§§Presence of brands in specialised trade magazines§§§Brand/Image of the product §§§§§§§§§§§§§§§Price stability§§§§§§§§§§Offer of logistics services§§§§§§§§§§§§Width / range of wines selection§§§§§§Reliability / Compliance with contractual agreements / Timeliness of delivery§§§§§§§§§Advertising, promotion and comunication activities directed to traders§§§§§§Reactive adaptation of the product to customers' demand§§§§§§§§§Appropriate advertising, promotion and comunication activities directed to consumers§§§§§§Correct price/quality positioning§§§§§§§§§§DenmarkGermanyUKFactors related to positioningChinaJapanRussiaUSAFactors related  to bargaining  power and access to distribution channelsFactors related to productFactors related to brandFactors related to marketing service 
 
 
                                                      
With respect to factors related to products, brands and positioning, EU wines’ main strengths (compared to 
NWC  wines)  expected  to  be  maintained  in  the  future  across  most  markets,  in  particular  in  the  Top  and 
Medium Range segments, concern “product quality”, “origin of the product/terroir” (both Influence factors) 
and “product/brand image” (Dependence factor). 

Conversely, at Entry level, the main weaknesses of European wines (compared to NWC wines) expected to 
persist are “price” (Dependence factor) (i.e. in general, NWC wines are perceived  to offer better value for 
money in China, Russia, the US, Denmark and the UK) and “price stability” (Japan, US and Denmark).  

In  markets  such  as  China,  Denmark,  Germany  and  UK,  “appropriate  advertising,  communication  and 
promotion to consumers” (Dependence factor) also appear as a weak strategic area for EU wines.  

Tab. 42: Combination between factors that will increase in importance and factors to which EU wines respond better 
compared to domestic wines 

“§” factors for which EU wines are expected to have competitive advantage in the future 
Factors originally rated as “Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are 
highlighted in green. Empty cells correspond to factors considered scarcely or not at all important (score=1 or 0) 
Influence factors highlighted in yellow; Dependence factors in blue. 

Source: questionnaires administered to market players 

Results regarding the prospective competitive position of EU wines relative to domestic wines (Tab.42) in 
the  case  study  countries  that  are  wine  producers  appear  to  be  quite  clear-cut,  showing  that  competitive 
advantage of EU wines is expected be maintained in Russia and to an extent in China, but mainly for wines 
in the Medium and Top Ranges.  

The situation appears to be less certain on the US and German markets, as most factors of competitiveness 
considered as important (relating to both product and supplier behaviour) seem to represent weak points for 
European wines78 compared to domestic wines.  

With respect to suppliers structure and behaviour, the main weaknesses of European bottled wines (i.e. other 
European wines in the case of Germany) in most markets (compared to domestic products) can be identified 
in 
relationships  with 
importers/distributors” (both  key  Influence  factors)  and  in terms  of  the “size  of suppliers”.  With  regard to 
factors related to positioning, “appropriate communication directed to consumers” (key Dependence factor) 

importers/distributors  and  “manage 

their  “ability 

respect  of 

to  select 

78 In the case of Germany, by « European wines » we intend « other European wines » besides domestic wines. 

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ELMRTRELMRTRELMRTRELMRTRSize of the supplier (exporting or domestic company)§§§Ability to manage relationships with importers/distributors§§§Ability to select importers/distributors/buyers§§§Granting of higher profit margins§§§§§§§§§Organisation of customer visits at wineries§§§§§§Brand extension§§§§§§§Product quality§§§§§Price§§§§§§§§Origin of the product/terroir§§§§§§Type and quality of the packaging  (presentation) §§§§§Indication of grape variety§Presence of brands in specialised trade magazines§§§Brand/Image of the product §§§§§§§§Price stability§§§§§Offer of logistics servicesWidth / range of wines selection§§§Reliability / Compliance with contractual agreements / Timeliness of delivery§§§Advertising, promotion and comunication activities directed to traders§§§Reactive adaptation of the product to customers' demand§§§Appropriate advertising, promotion and comunication activities directed to consumers§§§Correct price/quality positioning§§§§§Factors related  to bargaining  power and access to distribution channelsFactors related to productFactors related to brandFactors related to marketing serviceFactors related to positioningChinaRussiaUSAGermany 
 
 
                                                      
also appears as a weakness for EU wines compared to domestic products in the US and China, and for other 
European wines in the case of Germany.  

With respect to product factors, the main weaknesses of EU wines in the US and other European wines in 
Germany,  compared  to  domestic  wines,  are  found  “product  quality”  (especially  in  the  Medium  and  Top 
Range segments) and “origin of the product/terroir” (both Influence factors)79. 

7.4.3  Perceived  changes  in  the  importance  of  factors  of  competitiveness  for  bulk  wine, 

from the current situation to 2025  

In the case of bulk wines too, we asked market players to express their opinion on the possible variation of 
importance of factors of competitiveness, from present to the horizon 2025 (Tab.43).  

Tab. 43: Opinions about future evolution of the importance of factors of competitiveness for bulk wine (from the current 
situation to 2025) 

 “+” More important in the future; “-“ Less important in the future; “=” Equally important in the future 
Factors originally rated as “Extremely important” factors (score=3) are highlighted in red; “Important” factors (score=2) are 
highlighted in green. Empty cells correspond to factors considered scarcely or not at all important (score=1 or 0) 

Source: questionnaires, interviews with market players 

Compared with the current situation, there seems to be a certain agreement on the greater importance that 
product quality will have in the future. This seems to be linked to increasing consumer demand for quality, 
especially for Entry level wines (for whom imported bulk wines are mainly intended). Furthermore, the price 
factor  might  acquire  even  greater  importance,  due  to  expected  increase  in  competition  in  this  segment  (in 
turn, due also to the appearance on the market of new players such as China, India and Brazil).  

7.5  POSSIBLE  STRATEGIC  ADAPTATION  OF  ECONOMIC  ACTORS  TO  CHANGES  IN 
THE  COMPETITIVE  SCENARIO  AND  IN  THE  HIERARCHY  OF  KEY  FACTORS  OF 
COMPETITIVENESS  

What  will  happen  between  now  and  2025  will  be  also  the  result  of  contrasting  strategies  (i.e.  moves  and 
countermoves) of the main wine producer countries.  

In  the  medium  to  long  term  it  is  likely  that  the  following  competitive  strategies  will  develop,  which  are 
described in the next four sections. 

7.5.1  Strategies of expansion or penetration of export markets 

With regard to penetration of export markets, the evidence resulting from the analysis of historical data gives 
some indication of the strategies that the various competitors are likely to implement in the future.  

79 An explanation of the possible reasons was provided in §6.2.2. The interviews suggests that such responses may, at least partly, be 
due to national pride. However, US wines appear to be more competitive with respect to suppliers characteristics and behaviour: 
the better response of domestic suppliers can be explained by the fact that they “play at home” or by structural factors. 

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CNJPRUUSADKDEUKProduct quality+++++Price++++Price stability+=+Origin of the product/terroir-===Correct price/quality positioning+=++Large supply volumes+==Ability to manage relationships with importers/distributors+=+Reactive adaptation of the product to customers' demand+=+Offer of logistics services+==Reliability / Compliance with contractual agreements / Timeliness of delivery+=+Organisation of customer visits at wineries=+-Consistent quality over time+Factors related to the productFactors related to the exporting company 
 
 
                                                      
To this end, Tab. 44 shows, for each of the main competitors, the share of exports (in volume) accounted for 
by the top 10 country-markets in 2000 and in 2012, respectively for wine in bottles and in bulk. A negative 
difference  between  2000  and  2012 suggests  the  adoption of a  strategy  of  expansion into  new  markets.  By 
contrast, a positive difference highlights a strategy more focused on a smaller number of markets. 

Tab. 44: Percentage share of first 10 export markets in 2000 and 2012 (in volume) 

Sources: Comtrade, Comext 

In the wine in bottles, all competitors have adopted strategies of expansion of their market portfolios, albeit 
in a differentiated manner. Among considered competitors, Argentina and  South Africa have implemented 
this strategy to the largest extent. At the other extreme, New Zealand and the European Union have adopted 
a more "conservative" strategy80. It is interesting to note the position of Chile, starting from an already lower 
level of market concentration, it has progressed further in its market expansion strategy. 

On the contrary, for wine in bulk, all competitors have increased their focus on a  smaller number of export 
markets81. Argentina, Australia and Chile have pursued this strategy to the largest extent, mainly as a result 
of  demand  growth  in  the  United  States  (for  all  three  exporters)  and  in  the  UK  (for  Australia).  Other 
competitors (including the EU) show less important changes in their market concentration strategies. 

The issue is to be able to assess whether these strategies will continue in the future. 

On  the  basis  of  the  analysis  presented  in  the  previous  chapters,  it  is  likely  that  in  the  medium  term,  the 
United  Kingdom  and  the  United  States  will  continue  to  be  the  markets  with  the  greatest  potential  for 
producing  countries  of  the  “anglosphere”  (i.e.  Australia,  South  Africa,  New  Zealand),  for  wine  in  bulk. 
However, in the long term the ties may weaken, as signals of fatigue are already perceived in both markets 
(in particular for Australia82).  

For  Australia  (but  also  for  Chile  and  Argentina),  interest  to  expand  exports  towards  less  traditional  or 
completely new markets should, therefore, grow in the future. Indeed, at least for Australia and Chile, such 
strategic  direction  is  mentioned  in  recent  policy  documents  (export  expansion  towards  Germany,  the 
Netherlands, Denmark, Japan, Singapore, Norway, Switzerland, South Korea, etc.)83.  

Therefore,  on  the  horizon  to  2025,  we  can  expect  an  increase  in  the  intensity  of  competition  in  markets 
where presence of EU wines is currently quite strong (notably, the nearby markets), at least by Chilean and 
Australian wines. 

Regarding  non-traditional  markets,  according  to  OIV  data  (see  Fig.57),  Algeria,  Ghana,  Kenya,  Mexico, 
Mozambique,  Philippines,  Saudi  Arabia,  South  Korea  show  interesting  wine  consumption  growth  figures. 
For these eight non-traditional export markets, consumption has seen a total increase from 1.23 million hl to 
approximately 2 million hl between 2005 and 2011 (+7.4% on average per year). 

80  However,  we  must  take  into  account  that  each  EU  Member  State  is  a  potential  export  market  for  competitors  (i.e.  the  EU 
comprises  some  of  the  largest  importers  in  the  world,  such  as  the  UK),  while  for  the  EU  only  exports  to  third  countries  are 
considered here. 

81 New Zealand represents the only exception with an extremely small variation), which is also related to very high levels of market 

concentration both in 2000 and in 2012 (i.e. the first 10 markets concentrate the near totality of NZ bulk exports). 

82 Especially if the unfavourable exchange rate of the Australian Dollar to the US Dollar and the British Pound were to persist.  
83 For Australia through the "Directions to 2025" plan and for Chile through the “Wines of Chile strategic plan 2020  - International 

market”. 

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20002012% point diff20002012% point diffArgentina87.476.0-11.485.197.412.3Australia93.488.8-4.689.897.88.0Chile77.069.8-7.284.490.86.4New Zealand 95.494.1-1.399.999.8-0.1South Africa89.375.7-13.686.186.50.4USA84.979.8-5.193.095.02.0EU27*82.980.7-2.289.190.41.3*Extra-EU markets onlyStill wine exported in bottlesStill wine exported in bulk 
 
 
 
 
                                                      
Fig. 57: Evolution of wine consumption in non-tradional markets, 2005-2011 (million hl) 

Source: OIV 

7.5.2  Strategies of expansion for products positioned in the higher price/quality segments 
Some NWC84 have developed strategic plans with the aim of extending their product positioning to the Ultra 
premium and Top Range segments, more traditionally led by European wines85.  

This occurs with a two-fold objective of (i) counteracting the loss of market share in volume terms and (ii) 
avoid possible competition from new entrants that are more likely to position their products at the lower and 
middle segments of the market.  

It  is  very  likely  that  growth  in  the  upper  end  of  the  wine  market  can  only  be  achieved  by  responding 
appropriately to the key factors of competitiveness in the corresponding segments. In particular, this could be 
attained  by  focusing  on  Geographical  Indications  and  by  associating  attributes  that  express  the  region  of 
origin  and  the  specific  product  image.  In  perspective,  then,  some  NWC  will  move  towards  the  European 
model of competition, and their higher range wines will come into direct competition with EU wines. United 
States and Australia seem to have already started on this path86. 

7.5.3  Strategies  of  growth  of  bulk wine  exports  to  the  detriment  of  bottled  wine  exports, 

adapted according to product usage function and market segment  

Export strategies for wine in bulk (and, therefore, the relationship between  bulk and bottled  wine  exports) 
will probably be differentiated depending on usage function and target market segments. In particular:  

  Imported wine for blending with local wines and/or packaging in BIB under retailer label (in the Entry 
level / Commercial premium segments). In this case, international demand trends shall be guided by two 
contrasting  variables.  The  first  is  the  development  of  local  production  (ie  wine  from  local  grapes) 
through progressive quantity and quality improvement (for example in China and Russia, with partial 
replacement of wine imports). The second is growth in the number of new consumers (usually not very 
demanding) and in everyday wine consumption as an accompaniment to meals (e.g. Japan, with growth 
prospects  for  “domestic”  wines  at  Entry  level).  The  balance  between  these  two  variables  leads  to 
expectation of moderate market growth for the future, but with improving quality level. The expected 
increase of turbulence and competitive conflict in the wine market will require businesses to explore the 
possible economies of scale. This could represent an advantage for large size cooperatives (particularly 
in Europe) and/or the big private companies, whereas opportunities to operate on international markets 
should gradually decrease for smaller size businesses. 

84 We refer to the above mentioned strategic plans for the future developed by Australia and Chile.  
85 Other NWC, such as New Zealand, already adopt such a strategy. 
86 This, for example, is the strategy envisaged by the plan "Directions to 2025" of Australia, through 110 Geographical Indications 
and in the United States through the AVA (American Viticulture Areas), which are areas with specific geographical characteristics, 
decided by the government. In 2012, 206 AVA were recorded.  

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-200 400 600 800 1.000 1.200 1.400 1.600 1.800 2.000 2005200620072008200920102011South KoreaSaudi ArabiaPhilippinesMozambiqueMexicoKenyaGhanaAlgeria 
 
 
                                                      
  Imported wine for bottling in the consumer market under producer brand, positioned at the Super and 
(partly)  at  Ultra  premium  segments.  The  diffusion  of  flexitank  for  bulk  wine  transportation  should 
consolidate,  in  the  future,  the  tendency  towards  bottling  wine  imported  in  bulk  near  the  place  of 
consumption,  thus  expanding  the  number  of  markets.  In  addition  to  other  benefits  (maintain  quality, 
reducing  environmental  impact87),  the  cost  reduction  related  to  this  form  of  transport88  will  allow 
wineries to increase their competitiveness, not so much on the final price (to the consumer), but rather 
through granting of larger margins to the off-trade. In fact, the expected increase in market turbulence 
will  increase  the  importance  of  factors  related  to  market  access.  In  view  of  further  concentration  of 
distribution,  and  consequent  growth  of  distributors’  bargaining  power,  achieving  larger  margins  is  a 
decisive factor in choosing the wines to distribute89.  

  Imported wine for bottling in the consumer market under producer brand, positioned (partly) at the Ultra 
premium and Top range segments. For wines of this segment, market activity is already limited, and the 
prospects are even worse. In fact,  the loss of image of a product not bottled at the origin, because the 
product is intended for a target of affluent consumers and connoisseurs, makes businesses desist. On the 
other hand, if expectations concerning the growth of the “connoisseur” consumer market were met, we 
could hypothesise a rise in exports of bottled wines positioned in these segments. 

7.5.4  Strategies of (further) industry concentration  

It is likely that the process of Mergers & Acquisitions and alliances between large companies and medium-
sized enterprises in the sector will continue, even if (perhaps) in a more complex way than in the past. This 
process of external growth responds to the factor of competitiveness “size of operations”, whose importance 
may  be  expected  to  increase  in  some  countries,  in  parallel  with  the  increase  of  the  concentration  of 
importers/distributors. In addition,  an increase in the number of “big players” can be foreseen, due to new 
players  entering  world  markets.  This  hypothesis  is supported  by  observation  of  recent  acquisition  of  new- 
and old-world brands by Chinese and Russian companies. 

In  this  scenario,  European  businesses  could  find  themselves  at  a  further  disadvantage  compared  to  the 
current  situation  (already  not  very  favourable,  at  least  in  the  markets  of  the  “anglosphere”).  In  fact,  it  is 
conceivable  that  organisational  forms  of aggregation of  European supply  (similar to those used  by  the  big 
American and Australian companies) would hardly emerge spontaneously (i.e. without external prompting). 

7.6  CONCLUSIONS ABOUT THE IMPROVEMENT OF EU WINES COMPETITIVENESS  

This  last  part  of  the  study  aims  at  assessing  the  main  problem-areas  and  at  providing  suggestions  for  the 
improvement of the competitive position of European wines. Problem-areas and related suggestions emerge 
directly from the conclusions drawn as to the current competitive scenario and the likely developments to the 
horizon 2025 and, indirectly, through logical inference of the authors of the study. 

87 By 2025 all economic sectors should adapt to the norms for reduction of environmental impact, in particular with regard to CO2 
emissions. It is therefore likely that the amount of CO2 produced in the processing of one litre of wine will have to be stated on the 
label.  

88 We observe that in some countries of destination (with lower wages compared to exporting countries), the reduction in transport 
costs would be added to the cost reduction in bottling (for example, export by flexitank to China would reduce transport costs and 
also  bottling  costs),  but not  in  other  countries  with the  same  level  of  labour  costs.  However,  in  these  countries  the  reduction in 
transport costs is greater than the increase in costs of bottling.  

89 We previously noted the growing importance foreseen for the factor of competitiveness “Granting of higher profit margins”.  

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The  following  problem-areas  were  identified:  market access;  decision-making  process  of economic actors; 
product adaptation to markets.  

7.6.1  Market access 

The (widely shared) expectation of increase in the turbulence on the international wine market leads to  the 
first  issue,  that  of  market  access.  All  types  of  initiatives  (policy,  strategic  and  operational)  aimed  at 
facilitating market access generate competitive advantage. 

Market access entails different levels: 

1.  The first strategic level is the extension of the “market-portfolio”. Expansion to new markets or to non-
traditional markets (e.g. Republic of Korea, Algeria, Philippines, Mexico, etc. – see §7.5.1) would have a 
three-fold purpose:  

  To reduce the risk associated with sudden economic changes and resulting from implementation of 
competitive strategies by competitors on their traditional markets, particularly in mature markets;  

  To  counter  the  expansion  strategies  of  some  NWC  (in  particular,  Chile  and  Australia),  notably  in 

new markets; 

  To ensure presence (with the highest possible relative market share) in markets where wine is at the 
introduction or development stage of its life cycle. High market shares and strong growth prospects 
(though  expectations  would  not  be  for  huge  volumes)  are  likely  to  generate  increasing  returns  on 
investments  (positioning  in  the  “Question  mark”  quadrant  and  then  shifting  to  “Star”  of  the  BCG 
matrix, as illustrated in the previous chapter). 

The implementation of an expansion strategy implies the availability of adequate financial resources for 
the necessary investments: 

a.  To develop a “push” for EU wines on the market, in particular through promotion to the consumer. 
In  this  sense,  the  increasing  availability  of  funds  through  the  Promotion  measure  established  by 
Regulation (EU) No 1308/2013 represents a significant opportunity for businesses (which, however, 
at present, seem to focus too much on traditional markets). 

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Increaseinmarket turbulence and competitive pressure on EUwinesGrowth of size of operations of EU wineriesExpansion of market segmentsExpansionofexports to new markets Needfor market expansionIncreaseof wine production in consumer countries (China) Increase of  productionand  export propensity ofNWCProblem-area 1: MarketaccessProblem-area 2: Decision-making process of economic actorsProblem-area 3: Product adaptation to marketsGrowing complexity of demandGrowingintensity of rivalry between wineriesNeed to improve market knowledgeIncreaseof bargaining powerof distributorsNeedto grant larger margins and contain unit costsRelocation of packaging operations in consumer marketsStagnating EU wine productionAccess conditions to distribution channelsSuggestions for improvement of the competitiveness of European winesScenarioelements tohorizon 2025Needs Competitive responsesProblem-areas 
 
 
 
b.  To  generate  structural  adjustments  in  wineries,  which  are  necessary  to  achieve  greater  integration 

into the international market. 

Therefore, it would be desirable:  

  to encourage more EU businesses to use the funds of the Promotion measure of the wine CMO for 
penetration of non-traditional markets such as Republic of Korea, Algeria, Philippines and Mexico 
(for example, through a modulation of the rate of co-financing or other incentives);  

  to  give  priority  to  the  use  of  RDP  measures  (EAFRD)  and  the  investment  measures  of  the  wine 
CMO  (EAGF)  for  structural  and  organizational  adaptation  of  export-oriented  wineries,  through 
adequate definition of the selection criteria (scores) for businesses to access funding. 

However,  a  policy  of  expansion  probably  involves  changing  two,  partly  cultural,  aspects.  The  first 
concerns  the  rather  “inward”  vision  of  European  production,  by  which  wine  exports  remain  marginal 
relative  to  the  internal  market.  The  second  is  due  to  the  constraints  posed  to  production  potential90, 
which, in principle, clash with the objective of increasing penetration of European wines on third country 
markets. 

2.  The  second  level  is  political-institutional  and  concerns  the  signing  of  bilateral  preferential  trade 
agreements  with  third  consumer  countries,  also  (but  not  only)  with  a  view  to  expanding  the  market 
portfolio. In this respect, as highlighted in §5.5.5.2, the EU seems to be lagging behind compared to some 
competitors (Chile, in particular), who show a more dynamic behaviour. In the hypothesis that exchange 
rates between the Euro and other currencies  will remain at current levels, and in view of an increase in 
market  turbulence,  this  delay  translates  into  a  potentially  increasing  competitive  disadvantage  for  EU 
wines. Therefore: 

It would be desirable to speed up / start up bilateral agreements between the  EU and partner countries 
concerning (also) wine. The partners should not only be the traditional ones with which agreements still 
are  not  in  place (e.g.  China,  Russia)  or  negotiations are  currently  ongoing  (e.g.  Japan,  USA), but also 
other  non-traditional  markets (e.g.  Philippines).  In  this  sense, it  would  be  desirable for a  stronger link 
between institutional and economic partners, in order to achieve coherence between public and private 
initiatives (in essence, creation of a system). 

3.  The  third  level  is  access  to  distribution  channels,  and  therefore  it  regards  influencial  key  factors  of 
competitiveness  for  which  action  may  be  to  some  extent stimulated by  the  public  authority91.  We  have 
identified “Intensity of PR activities with importers, buyers, etc.” and “Size of the supplier”. We recall 
that, considered together, these two key factors of competitiveness influence (directly or indirectly) other 
important factors, specifically:  

  Appropriate advertising, promotion and comunication activities directed to consumers;  

  Correct price/quality positioning;  

  Price. 

In addition, they also have some influence (direct or indirect) on the following dependent factors:  

  Brand / Image of the product;  

  Encourage the importer to present the wines in specialised magazines;  

  Consistency in the price/quality ratio. 

90  We  have  information  of  strongly  export-oriented  wineries  who,  given  the  constraints  to  production  potential,  covered  the  gap 
between  demand  (fast-growing)  and  supply  (constrained)  through  partial  relocation  of  agricultural  production  in  North  African 
countries.  

91 Here we do not consider, among the key factors for market access (identified in Theme 2), those that depend only on the degree of 

responsiveness of firms, which we could only address by recommending adjustments in their individual behaviours.  

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With regard to the  first  key  factor  (i.e.  Intensity  of  PR  activities  with importers,  buyers,  etc.),  in  principle 
Public  Relations  may  be  included  among  the  activities  allowed  under  the  Promotion  measure,  which  then 
becomes  functional  to  create  the  conditions  for  a  more  effective  response  to  this  key  factor  of 
competitiveness. 

However,  it  would  be  desirable  to  encourage,  through  appropriate  adaptation  of  the  selection  criteria 
(scores),  the  submission  of  promotional  plans  that  include  incoming  activities  (i.e.  organisation  of 
customer visits at wineries), deemed as important, in particular, in Russia, Japan, USA and Germany. 

Concerning  the  “Size  of  the  supplier”,  the  small  size  of  European  businesses  represents  a  not  easily 
overcome  constraint  in  the  short-  to  medium-term.  In  order  to  overcome  barriers  to  market  access  and 
negative  effects  on  other  key  factors,  the  possibility  of  solving  the  structural  size  problem  through  an 
organizational solution could be explored, so as to allow organized groups of small businesses to implement 
appropriate marketing strategies (in terms of effectiveness and efficiency of invested resources). Therefore: 

It would be desirable to develop public initiatives to facilitate the establishment of aggregate business 
forms and an organised system of collaborative marketing, able to overcome the ‘size’ barrier, allowing 
at the same time to reach a critical mass in terms of number of products and of wider / deeper product 
portfolio as demanded by distributors/retailers (in particular, the Off-trade). This would be desirable for 
all case study markets, but especially the UK and USA. 

4.  The  fourth  level  regards  wine  businesses  cost  structure  and  the  possibility  to  grant  higher  margins  to 
distributors. This directly leads to the possibility (in some markets, and only for wines positioned in the 
Super and Ultra premium segments) to transfer wine in flexitank and to relocate bottling operations in the 
consumption  markets. The  adoption  of  bulk  transportation  in flexitank  could  help  European  companies 
extend  trade  beyond  nearby  markets,  therefore  implement  strategies  for  expansion  in  new  markets. 
However,  this  possibility  implies  overcoming  the  resistance  to  change  (embedded  in  the  culture)  that 
characterises  the  conservative  structure  of  organisations  managing  PDO-PGI  labels.  This  resistance, 
which already is an element of competitive disadvantage at present, will hinder EU wines competitiveness 
even more in the future, especially wines positioned in the segments mentioned above. In addition, wine 
transfer in flexitank would require a change in the logistics and operational organisation of EU suppliers 
in export countries, in order to relocate bottling activities. Therefore: 

There  is  a  need  to  overcome  the  self-imposed  constraints  of  many  production  protocols  of  European 
PDO and PGI wines (i.e. obligation to bottle wines within the production area), at least for wines other 
than those in the Top range.  

In addition, ways should be found to encourage technological adaptation, as well as the organisation of 
logistics  in  the  country  of  arrival,  required  to  relocate  bottling  operations.  For  this  purpose,  the 
possibility of extending the scope of the investment measures provided for in the wine CMO could be 
considered,  acknowledging,  however,  that  this  would  generate  complex  problems  of  implementation 
under current EU rules. 

7.6.2  The decision-making process of economic actors  

The analysis suggests that in the future wine demand will probably be more complex and sophisticated than 
at  present  in  the  various  country-markets,  and  that  increased  market  turbulence  will  lead  to  more  intense 
rivalry between producers of wines of different origins. The ability of European wine businesses to react and 
adapt to changes in the competitive environment foreseeable to the horizon 2025 also entails an improvement 
of the conditions that facilitate the decision-making process of the actors.  

This is needed, in particular, to better respond to key factors  of competitiveness related to positioning and 
communication  (specifically,  “Correct  price/quality  positioning”  and  “Appropriate  advertising,  promotion 
and communication activities directed to consumers” in each segment). 

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In this respect, the improvement of the level of knowledge of  market developments and of the competitive 
environment  that  can  encourage  “Reactive  adaptation  of  the  product  to  customers’  demand”  is  a  critical 
aspect. This gives rise to two needs:  

  Improved knowledge of the various consumer target profiles and of consumer behaviours as a function 
of  “local  culture”  and  of their  evolution (i.e.  changes  in  lifestyles, emulation  of  consumption  patterns 
other than local traditional ones, etc.)  

  Improved knowledge of competitors’ behaviour, in order to identify their moves (attack strategies) and 
countermoves  (defence  strategies),  both  direct  and  indirect,  implemented  to  achieve  competitive 
advantage.  

Therefore: 

It would be appropriate to develop a market intelligence system able to convey to European businesses 
along  the  supply  chain  adequate  information  about  changes  occurring  in  the  markets  and  in  the 
behaviour of competitors.  

However,  wine  businesses  should  develop  the  ability  to  translate  this  information  into  business  decisions. 
This may be most effectively achieved through the improvement of skills relating to effective use of business 
tools92. Therefore: 

It  would  be  appropriate  to  encourage  the  implementation  of  training  activities  in  export  business 
targeted to the industry, for example within Measure 1 - Knowledge transfer and information actions of 
2014-2020  RDPs,  through  the  involvement  of  already  existing  local  organisations  (e.g.,  chambers  of 
commerce, chambers of agriculture, etc.) 

7.6.3  Product adaptation to markets 

This problem-area leads directly to the issue of strategic decisions concerning the product on the different 
markets. In turn, this involves different and politically sensitive aspects, which can be explained as follows.  

A  first  strategic  aspect  concerns  the  identification  of  the  market  segments  that  should  be  developed  (e.g. 
global niche of excellence, premium wines, wines for the mass-market) and which labels are more effective 
for marketing to the consumer (in particular, on foreign markets). Specifically:  

a.  Regarding European PDO/PGI wines, the analysis has highlighted low level of knowledge, but above all 
lack  of  use  of  these  labels  by  distributors/retailers  for  communication.  One  important  reason  is  the 
generation of confusion:  European GI wines appear on foreign markets with a multitude of acronyms 
depending  on  the  language  of  the  Member  State  of  origin  (AOP,  DOP,  PGI,  etc.)  In  addition,  the 
confusion  for  non-expert  consumers  (but  not  only)  further  increases  due  to  the  co-existence  of  new 
definitions and relative acronyms (i.e. PDO/PGI) with the old ones (DOC-DOCG wines in Italy, AOC 
in  France,  etc.).  Finally,  a  further  critical  point  is  the  preservation  of  the  difference  between  terroir 
(PDO wines) and territoire (PGI wines). Although the difference is clear in the regulations, it is not as 
clear  for  non-expert  consumers,  thus  generating  confusion.  It  is,  therefore,  no  coincidence  that  major 
retail  chains  (in third countries, but also  in  Member  States  who are  not  wine  producers)  do  not  place 
much value on these labels, choosing instead the geographical origin (i.e. the country and the region of 
production) as a factor of communication/information/orientation of consumers’ purchase decisions. In 
essence,  the  very  articulated  regulations  concerning  GI  labels  seem  to  be  in  place  more  to  meet  the 
needs  of  producers  oriented  to  the  internal  market  (i.e.  the  market  of  wine  producer  countries)  rather 
than  to  satisfy  the  information  needs  of  consumers  in  non-producer  countries  (who  demand  more 
simplified information, especially concerning premium wines).  

Finally, it is important to remember that the market development strategies adopted by some of the most 
aggressive EU competitors aim to add value to the geographical indication of their wines, in the sense 
desired by retail chains (i.e. indication of the production region). Therefore: 

92 Wine exports involve a wide range of actors: wholesalers, exporters, co-operatives but also farmers who are also wine makers, who 

may not necessarily have developed these skills.  

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With regard to PDO and PGI labels of wines positioned in the Top range and Ultra premium segments 
(intended for a more experienced consumer target), it would be appropriate to combine the acronyms 
used  by  different  Member  States  in  a  single  acronym  to  be  used  worldwide,  associated  with  a 
mandatory  logo  (as  developed  for  the  organic  sector).  For  these  wines  it  would  be  appropriate  to 
continue  with  information  and  promotion  activities,  as  “PDO-PGI  popularity”  emerges  from  the 
analysis as a key factor of competitiveness for wines in the higher price/quality ranges.  

With regard to wines that enter the Commercial and Super premium segments, for which the “Origin of 
the product” is more important than PDO-PGI labels (consumers who may not be very experienced, but 
are  sensitive  to  the  history,  culture  and  image  of  the  country  of  origin),  it  would  be  appropriate  to 
introduce into EU regulations the indication of the country/region of origin (for example, an umbrella 
brand covering wines of a member country - e.g. Italy - or region - e.g. Tuscany).  

It would thus be appropriate to extend the financing of activities envisaged by the Promotion measure 
of the wine CMO to this type of wines. 

b.  With  regard  to  European  varietal  wines,  the  analysis  shows  that  they  have  not  been  successful.  The 
incidence of these wines on total EU exports is marginal and exports did not pick up over time. It seems 
clear, therefore, that this is not a strategy for which European producers show much interest, and that it 
is not favoured by the governments of the producing Member States. However, this lack of success may 
be partly due to the restrictions adopted in some Member States on eligible varieties, which may play 
against foreign market development in countries where the mention of grape variety is considered as a 
factor of competitiveness (e.g. USA and UK). 

c.  With regard to wines in the lower price/quality ranges, the analysis has shown the existence of foreign 
markets (e.g. Angola, Côte d'Ivoire) and EU markets (e.g. Germany) that demand large volumes of wine 
in these segments. While these wines do not enjoy an image of prestige, low margins applied to large 
volumes  are  economically  attractive  for  European  companies,  in  particular  for  large  cooperatives.  On 
the  other  hand,  the  experience  of  other  (industrial)  sectors  teaches  us  that  a  great  production  power 
(such as the EU) produces goods to cover all market segments, whereas focusing on specialist segments 
is  a  strategy  typically  adopted  by  small  producer  countries  (such  as,  for  example,  New  Zealand). 
Therefore: 

Taking into account the increasing complexity of segmentation expected in the future, it does not seem 
prudent  to  focus  only  on  high  quality  wines  (PDO-PGI),  neglecting  wines  in  the  lower  ranges  for 
everyday consumption by lower-income families. 

The adaptation of wine products to market demand also entails exploring the possibility to develop products 
for  which  there  is  demand  potential  (still  not  met)  expressed  by  certain  target  segments,  but  a  developed 
market does not yet exist. This could be, for example, the demand for wines with low or zero alcohol content 
by  particular  target  groups  who  currently  are  excluded  from  wine  consumption  (drivers,  consumers  with 
health problems, pregnant women, etc.) However, as for all innovative products on the market, it would be 
necessary to have in place a definite regulatory framework. Therefore: 

Considering the demand potential for low or zero alcohol wines, it would be beneficial to ensure a clear 
legal framework for such products. 

A  third  more  operational  aspect  concerns  the  adaptation  of  product  presentation  to  meet  local  preferences 
(“Type and quality of the packaging” is a key factor of competitiveness growing in importance everywhere). 
Suggestions for this aspect could result from better knowledge of individual markets (therefore, through the 
development  of  a  market  intelligence  system),  but  also  through  intensification  of  “PR  activities  with 
importers,  buyers,  etc.”.  However,  implementation  would  depend  on  the  ability  of  wine  companies  to 
develop and manage innovations demanded by the market. Therefore: 

It would be desirable to encourage the investments needed to develop and implement the innovations 
demanded by different markets. For this purpose, it may be beneficial to use RDP measures (EAFRD) 
and the investment measures of the wine CMO (EAGF), through appropriate definition of selection 
criteria (scores). 

STUDY ON THE COMPETITIVENESS OF EUROPEAN WINES  

 146 

 
 
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doi: 10.2762/56910