An expert's thoughts on the German market

Wednesday, 18. January 2017 - 15:45
Originally created as a vehicle for promoting French food and wine culture internationally, Sopexa became a fully private entity in 2008. Since then, it has grown into a major communications and marketing agency that specialises in food, wine, lifestyle and luxury, with offices in 26 countries. Sylvain Rouchy is managing director of Northern Europe.
Meininger's: Sopexa has a broad vision of the international wine market. What is unique about Germany? 
Rouchy: With its federal structure, the German market is relatively complex and time-consuming to deal with. It is known for its price sensitivity and the strength of the discounters. And yet it was the German market which remained solid throughout the crisis, with stability and increasing values instead of BOGOFs and crash prices. For years we have observed a slow and yet continuous trading up in all sales channels. Even if the market is relatively concentrated and saturated, it still offers numerous niches and exciting new concepts – whether in the off-trade, on-trade or the independents – where space is available for specialties and premium products. This environment offers interesting promotion and communication opportunities, which we analyse and profitably use for our clients.
Meininger's: One of the tools Sopexa offers is its Wine Trade Monitor. How does it work?
Rouchy:  The Wine Trade Monitor is an annual international online survey of wine professionals, which we launched in 2009. With it, we want to determine current market trends and capture the image and potential of the most relevant wine-growing countries and regions. The recently released 2016 results focus on the most important non-European markets in comparison to Germany, the biggest importer of wine worldwide. One thousand one hundred wine experts – importers, wholesalers and wine dealers, from the USA, Canada, Russia, China, Hong Kong, Japan, South Korea, as well as over 300 German professionals – gave us forecasts for the development of the still wine market to 2018.
Spain is clearly in the lead, particularly in the non-European markets, where five of seven countries give it the greatest potential for growth. In Germany, 42% also forecast an increase in Spain’s sales volumes, but the wine experts see an even better chance for wines from Germany (67%), France (55%) and Italy (54%). We asked which wine categories were most likely to develop best. The unanimous opinion in all markets was wines with designation of origin. We noted the growing thirst for rosé, particularly in the USA and Canada, and the high importance of organic, biodynamic and natural wines in Japan in comparison to China and Russia, where this doesn’t seem to have any importance yet. A third of German wine professionals think that organic wines will soon be more successful than entry-level wines. 
Meininger's: How does a company succeed in Germany?
Rouchy:  An important basic rule is to understand market and distribution structures as well as the consumer preferences and trends. The competitive pressure is high from other countries. It is therefore even more important to offer the right product to the right target group through the right distribution channel. In preparation for their entry into the market we, for instance, offer our clients joint workshops, store checks or product analysis in order to develop a targeted market strategy for Germany. Patience and a long-term approach also pay off. Germany is not a spot market. Suppliers, who prove to be reliable, flexible and solution-oriented partners have great chances of enjoying successful, long-term relationships. Speaking generally, reliability, professionalism, logistical skills, flexibility and of course value for money are of great importance. Speaking German is a great advantage, and without that skill, English is a must. Packaging is becoming more relevant. In times of nostalgia and increasing consumer uncertainty, values like tradition and heritage are on the rise. Wines with stories and exciting winegrower personalities especially offer the specialised trade a plus. Digital marketing offers new opportunities. Whilst traditional tastings remain a central element our clients are benefiting from original wine events, experiential promotions, word-of-mouth and creative digital activities. 
Meininger's: Which international market is the most similar to the German market? 
Rouchy:  As the managing director for Northern Europe, I am also responsible for Austria, Switzerland, Belgium, the Netherlands, Sweden, Denmark, Great Britain and Ireland. Even though the Scandinavian countries and the Netherlands have structures of their own, I can observe some parallels — attitudes to sustainability, the environment, individuality, gastronomy trends all maybe add up to a ‘northern attitude’ that we can also find in Germany. Looking at price sensitivity, I see parallels with Denmark and the Netherlands.
Meininger's: Sopexa is often seen as belonging to the French government. Is this a handicap when talking to non-French clients? 
Rouchy:  Sopexa was never a French state-owned enterprise. We were founded by the French Ministry of Agriculture, which remained a major shareholder for a long time, during which we exclusively managed products from France. Since 2008 Sopexa has been a 100% private business. Our main shareholders today are Comexposium and the Hopscotch Group, which offer us new perspectives in the fields of expertise and customer portfolio. In many minds, however, the image of  ‘Agency of the French’ survives. We work on it every day to convince potential customers that more than 50 years of wine and food expertise as well as market contacts are a valuable USP for all wine producers, whether as brands or a generic body. The path is long but we already work in various countries for Italian, Spanish, German, Argentine and Chilean wine as well as French. Besides the wine industry, producers of Mexican avocados, Italian cheese and German marketers of food ingredients have all confided their trust in us. 
Meininger's: How do you see the position of French wines in Germany? And what changes have you seen in recent years? 
Rouchy:  After German wines, wines from France still have the largest market share, together with those of Italy. Volumes of bulk wine from Spain may have increased, but when we look at value growth, that has been in bottled wine. This is a development that reflects and benefits from a quality-focused marketing strategy from all French regions. An enormous range of offers with wide availability, further development of taste profiles, and consistent quality, are just a few of the aspects that contribute to France’s strong position in Germany. 
French wines are, however, still perceived as complicated by many consumers and mostly considered wines for special occasions. This image is still to be worked on, so that France does not miss out on current trends or the demands of a growing generation of wine drinkers who look for fun and uncomplicated enjoyment. 
Meininger's: And how is France perceived in other international markets?
Rouchy: For our 2016 Wine Trade Monitor, we asked about the image of different wine regions, based on criteria such as product diversity, sustainability, good business relations, price levels and logistical capacities. France has the best overall performance in the non-European markets, and the lead is particularly significant in Asia. German professionals mostly rated their country’s wines most highly, but even here, a third said that France had the best overall performance as a wine country.
Meininger's: How are you connected with Sopexa offices around the world?
Rouchy: A special feature of our agency is its large, organically-grown network. Over decades we have built up have 26 independent agencies worldwide as well as partnerships with other agencies, so we can become active in more than 60 countries. Our 280 employees work together closely, and we regularly exchange information on current trends and issues in communities. Sopexa DACH is a part of the Northern Europe region, and has enhanced coordination in the development of creative concepts and the expansion of synergies in multi-country campaigns. The focus is on maximum efficiency and added value for the client. Working with our new shareholder, the Hopscotch Group, should also further strengthen our network. 
Sascha Speicher
This article first appeared in Issue 6, 2016 of Meininger's Wine Business International.