German wine

German wines are world class but they are predominately white and the world wants red. It is a niche player in terms of volume, so how is it doing, asks Christian Davis

THE EBULLIENT HEAD of the Vinexpo exhibition company was recently dismissive of white wines, saying that the world and, more crucially, the huge emerging Chinese market, wants red wines.

Robert Beynat was speaking at a briefing in London regarding the forthcoming Vinexpo Asia Pacific show in Hong Kong. To promote the importance and selling potential of the exhibition and to get editorial coverage he commissions the IWSR (International Wine & Spirits Research) to research global markets for wine and spirits.

In an off the-cuff-remark, Beynat says: “White wine is declining everywhere – not Burgundy though. People drink more wine with food. White wine is more an aperitif and people drink vodka instead.”

Speaking specifically about China, he went on to smash the conception that white wine (and many would say German white wine in particular) is perfectly suited to Asian food. He says: “Not true. They prefer red. Château Lafite is red and that is the most well-known wine in China.”

Beynat says chefs in China had demonstrated that red wine perfectly accompanies their cuisines. He also added that it is women in China who buy the wine.

With this feature on German wine looming, Beynat’s remarks, albeit off the cuff, were ringing in my ears.

The position

Where does that leave a predominately white wine producer such as Germany? Well, it seems to be in a good place. Although a long-established, world-class wine producer, it is small and of the less sexy Old World (Beynat dismissed the Old and New World descriptors, calling for the wine world to be redefined with China and India as the new New World producers). But small can be beautiful, particularly in global wine.

A small harvest in 2010 (7.1 million hectolitres, the lowest in 25 years) meant prices rose and German wines lost some shelf space in multiple retailers. Not good, but hardly a disaster.

Steffen Schindler, marketing director, Deutsches Weininstitut (German Wine Institute) says: “The 2011 vintage is coming in at around 9m hl, which is average. It is the best thing we can ask for. We hope to keep the slightly higher prices but would like to win back some of the lost shelf space. We are steadily pulling out of lower price brackets.

“We are back on track in the US after the high price of the euro was a problem,” he adds.

Schindler touches on the sensitive underbelly of German wine. While the institute and most of the major export players have been heavily promoting Germany’s world-class Rieslings and latterly Pinot Noirs (see panel), there are still a lot of down-market 1.5-litre flagons of Liebraumilch and Hock in old markets such as the UK. They represent significant volumes but are extremely low margin bottom-shelf supermarket ‘lubricants’, essentially for ageing drinkers or students who are looking for something unchallenging, cheap and cheerful to drink.

Dirk Gennrich, export director of Mosel-based producer ZGM, summed it up: “One of the main challenges we are facing in the UK market is the antiquated image of German wine and the lack of consumer interest in Pinot Noir, Pinot Grigio and Rivaner from Germany.

“The key to putting this right lies in the promotion of modern-style wines such as our Rivaner/Pinot Grigio, as a opposed to Liebfraumilch and Hock, which will help us to gain back market share in the UK.”

But let us not dwell on the substrata ‘oil’ that keeps the wheels of the German wine industry turning. The institute rightly concentrates its efforts primarily on the country’s world-class Rieslings, a variety lauded by such Masters of Wine as Jancis Robinson, who regard it as the noblest of white wine grape varieties, capable of long-term ageing.

Marian Kopp managing director of the co-operative Niederkirchener Weinmacher, which recently merged with another co-operative, Deutsches Weintor, to create a “new German wine powerhouse”, sees German wines falling into three brackets:  low end, former ‘Liebfraumilch’ category; premium segment, ‘modern Germany’: Rieslings, dry to off-dry with innovative packaging on the levels of New World branding; premium segment with high ‘pull’ from US and Asian markets (VDP wineries, ultra-premium and noble late harvest).

Kopp used to head up Racke and recently returned from the US where he led a joint venture between Racke and South African producer KWV. He tells Drinks International: “German wines are being reinvented now at the very top level with some great sales successes.”

He says Niederkirchener Weinmacher has been active for some years in the premium segment (US $10 consumer) with its brand Blue Fish Original Riesling. He sees ‘modern Germany’ as the key driver.

Schindler says: “For many years our marketing strategy on foreign markets was very much focused on Riesling. We used Riesling to re-position Germany as a producer of world-class white wines and to overcome stereotypes. This strategy has definitely paid off, at least when it comes to people in the trade, sommeliers, journalists, but it may take a little more time to filter down to every typical consumer in some of our markets. 

“For a few years now we have included Spätburgunder, or Pinot Noir as a second ‘message’ in our marketing activities. On one hand this seems an ever greater task than the re-positioning of Riesling because nobody thought of Germany as a red wine country in the first place, but on the other hand there is the advantage that the overall image of German wine has improved dramatically over the past decade and that Pinot Noir can profit from a growing interest in German wine. 

“It certainly helps that Germany is the third biggest producer of Pinot Noir in the world and that many wine writers have endorsed our major red variety in recent years.” (See panel again.)

Ernst Loosen, the outspoken and mercurial owner of Dr Loosen, rejoins: “In the German home market, the three Pinot varieties (Gris, Blanc and Noir) and domestic red blends are becoming very popular. But for the international market, Riesling is still the king of German wine. The international export market is very important for us, and we think there is still enormous potential for growth with German wines. The focus for German wines internationally clearly needs to remain with Riesling. This is the variety that defines Germany as a wine-producing nation.

He adds: “There is a trend towards well-balanced, drier styles. Improved viticulture, better cellar practices and, to be perfectly honest, the warming climate, have made balanced, full-bodied dry Rieslings much more possible in Germany, even in very cool regions such as the Mosel.”

Loosen reports that an international coalition of Riesling producers will host major Riesling events around the world each year. The next event is the Frankland Estate International Riesling Tasting in Sydney, Australia (February 6-7). In July 2013, Dr. Loosen will co-host the fourth Riesling Rendezvous in Washington, with Chateau Ste. Michelle. Loosen’s other coalition partner, Weingut Robert Weil in the Rheingau, will host the International Riesling Symposium in Germany in November 2014.

Germany’s key markets remain the usual suspects: US, UK and the Netherlands. Despite what Beynat says, China, including Hong Kong, is coming up fast. 

Schindler says there isn’t an institute outpost yet but they have produced a brochure on wine and Asian cuisines (bad luck), a booklet explaining the wine and there is a website in the making.

Niche player

Armin Wagner, export director, at Langguth, owner of the Blue Nun brand, says proudly: “There has been a lot of hype but we have been in China for 15 years so it is not new to us  and we have been in Thailand and Japan for 30 years.

“We are seeing Merlot, Cabinet Sauvignon and Dornfelder taking on almost an equal role to the whites. We have to accept that the German category is a niche player. internationally. Nine million hectolitres by its nature is niche compared to our near neighbours. We are not mass market, we cannot be. We have to work on concepts and look for upgrades. It is an ongoing challenge. We have to act as a niche player but not be defensive.

“We must concentrate on specialities and excellent quality as our costs are high anyway. German competence is primarily with white wine but Pinot Noir is a positive aspect.”

To that end Langguth last year relaunched four wines – its Blue Nun Riesling, Pinot Noir, Dornfelder rosé and Pinot Grigio. The original Blue Nun in its fluted blue bottle is now exclusively from the Rivaner grape.

Langguth’s key markets are Scandinavia, UK and the Americas as well as Asia, he says: “And then there is eastern Europe where we have been doing business for 20 years.”

The other big German brand is Black Tower, owned by Reh Kendermann. Joint managing director Nik Schritz tells Drinks International that he wants to “be in the main field”,  but acknowledges that the likes of Silvaner, Dornfelder and Pinot Noir are niche varieties compared to the global palate busters of Chardonnay, Sauvignon Blanc, Pinot Grigio, Cabernet Sauvignon and Merlot, with a little bit of Tempranillo.

Schritz says the company is pushing Riesling where there is a demand for it. He says it is “like pushing water uphill in the UK”, whereas in the US, the Nordics and China it chimes.

Norway is interesting. It is Germany’s fourth biggest market and its best performing. Every third litre of white wine consumed is German. How come? Is it just that there is a buyer in the monopoly that loves German wine? Schindler puts it down to two things. Firstly, the Norwegians eat a lot of fish. Secondly, he thinks the Norwegians are influenced heavily by some British wine writers who have eulogised about German Rieslings.

Wagner at Langguth points to another trend he describes as a “longer burn”, which is German wines’ natural low alcohol. He says: “There is more talk about it than the consumer asking for it but certainly the trend it will become more important.”

He undoubtedly has a point and, ironically, at the time of writing Langguth has just announced the launch of Blue Nun Delicate, a range of four 5.5% wine-based drinks made with “full-bodied, aromatic wine and fruit flavours, claiming to bring a different and exciting addition to the category”.

Lower alcohol

Maybe not something for the purists but, with the likes of Eisberg – the non-alcoholic wine made in Germany – Germany is seen as the home of lower-alcohol wines and wine-based drinks. Supermarket buyers, conscious of media and government pressures, are increasingly looking to offer low alcohol products. 

Germany maybe niche and its expertise predominately in white wine, but its industry is highly organised and totally focused. It knows what it is good at so it plays to its strengths. Germany also knows that the wine trade and wine drinkers like to play and dabble, so they a have aces up their sleeves with Pinot Noir and alternative white grape varieties. On top of that, as long as the climate does not continue to warm (and that throws up other opportunities as southern France, Spain and Italy become semi-deserts), they can offer refreshing lower-alcohol wines to health conscious drinkers.

International, niche, can be nice.