Wine Analysis

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Belgium

Market Analysis

Belgium is located in North West Europe. It has a population of 11.24 million people. The legal age limit to consume wine is 16 years of age. 84% of the population is over 16 years of age.

The Belgian wine market is mature and saturated. It is changing from a traditional market where old world wines dominated the market. Wines from new world countries are growing their market share year on year. 20% of all wine sold in Belgium is new world wine. As with Germany these figures differ depending on which part of the country you are located. In the French speaking part old world wines like French wines dominate the market. However in the Flanders region consumers tend to be willing to experiment with unknown wines. The growth in new world wines has largely been driven by the fact that these wines tend to be sold below the average price of an old world wine. Another major factor is that Belgian consumers attach more value to the grape variety than to the country of origin. Belgium has a mature wine market consisting of well-educated consumers who have a knowledge of the various aspects of wine and wine production.

Lighter wines, like in other European countries are seeing strong growth. Healthier diet trends mean people are moving away from red meat and red wine to a lighter option. There is also a huge growth in sparkling wine consumption in Belgium. It comprises of almost 17% of all wine consumed. With sparkling wine, consumers tend to think less about the country of origin. Competition is fierce in this area but with its high growth rates it may be worth focusing on the segment.

Belgian consumers are increasingly opting for new trendy and fashionable packaging. Bag-in-Box wine is well established in the Belgian market. Over 20% of all wine sold is packaged as Bag-in-Box. Wine in a can is also popular with younger customers. This trend means there is always a need for new and exciting packaging to attract new customers.

There are some market entry barriers. Excise duty on wine in Belgium is quite high. This duty is relatively new and has seen prices increase for the consumer. However as of yet there has been no major shift by consumers to other alcoholic beverages. Instead this rise in price has led to consumers seeking more affordable decent quality wines.

Belgian supermarkets have often well-developed relationships with suppliers and are apprehensive about developing a trade relationship with a new unknown supplier. They also reserve very little shelf space for new world wines. This means consumers who buy wine from supermarkets tend to buy old world wines. They also have such a large variety of wines that they charge high fees in order to gain shelf space. Supermarkets also like to have exclusivity of a wine which limits the amount of consumers. It is a good idea to use an established importer to sell to these supermarkets. 70% of wine is sold in supermarkets so it is important to have your wine on sale in these outlets.

There is little or no competition from domestically produced wine in Belgium. However competition among wines is fierce. This is especially true among new world wines where consumers tend to substitute one wine for another ad hoc.

In the report commissioned by the Wine Institute of California into brand awareness and image of Californian wine I Europe we are given an insight into the consumers thoughts and behaviours in each of the three countries we have analysed.

Californian wine as a brand is the second best known of the new world wines in Europe and it is actually the best known wine in Germany. This gives a distinct advantage to any new Californian wine producer going into the market. Although only an average 10% of people bought and consumed Californian wine recently, awareness of the brand is high. This is a good starting point for entering the market. Across Germany, Belgium and Denmark Californian wine is rated as low value for money. These countries rate the quality of the wine quite highly but pricing will be an issue.

Of the 3 countries Belgium seems to be the country in which Californian wine struggles to make an impact. Aided awareness of the brand is over 80% in both Germany and Denmark but it is as low as 64% in Belgium and that drops to 25% for spontaneous awareness.

Wine consumption in all 3 countries is high. It is higher than the European average. This makes Belgium, Denmark and Germany attractive markets to enter. We see that Californian wine is only the most popular choice of wine with an average of 2% of people across the three countries. However due to the image of Californian wines being of good quality this gives scope for improvement especially when we see the number of people who have bought Californian wine in the last month is at 15% in Germany, 17% in Denmark and 7% in Belgium. For those who do drink Californian wine they rarely drink another new world wine. This indicates customer loyalty.

Wine drinkers in Germany and Denmark purchase Californian wine at least once a year. 33% and 37% respectively buy Californian wine often or regularly. This does drop to 20% when we look at the Belgian market with 3% admitted to having never bought Californian wine at all.

These are the key points to have come out of this report. They show that overall consumption of Californian wine is low across all three countries but with consumption of wine as a whole being quite high there is room for a new entrant to the market. Awareness of Californian wine is also quite high especially in Germany and Denmark which means a new entrant can gain use this awareness to boost the profile of its own wine.

Using the information I have gathered so far, the market I would recommend entering first is Denmark. I believe this market is the perfect stepping stone into Europe for a new entrant. It has the smallest population of the three countries but it is the fifth highest consumer of wine per capita in the world. Denmark has no wine production of its own. There is no domestic wine producers as competitors. Denmark also has no affiliation or tradition with any major wine producing country either through geography or language. When we look at the French speaking part of Belgium, French wines dominate this market. In Germany, home produced wines from the southern wine producing region of Germany also hold a large market share. Denmark’s wine market has not yet reached mature stage. It is relatively new and consumers in this country have not yet developed traditions and habits which would be hard for a Californian wine to break.

Wines from new world countries like California are penetrating the market at