The German Wine Market: A Comprehensive Strategic and Economic Analysis

Abstract

Even though it is famous for beer, Germany offers one of the most attractive wine markets, exemplified by being the fourth biggest wine consumption market and a world champion in sparkling wine consumption as well as in wine imports. Still, fragmentation, intensive competition, lack of growth, and a changing environment speak to a challenging market for suppliers. In the absence of a comprehensive investigation on the market, this article aspires to deliver an economic and strategic market analysis. The statistical data is therefore complemented by the primary market research, notably online surveys on strategy and innovation, a proprietary database on wineries’ reputation, and an international expert survey on export success factors. The following market study aims to provide a concise overview covering the relevant market data, and to disclose strategic information about the German wine industry beyond pure market statistics. The German wine market, in the stable wine volume sold, shows dynamism underneath “the tip of the iceberg”, with industry specific environmental forces. Indeed, as the wine industry deals with agricultural products of a high emotional utility, players need to address the world of commodities and of differentiation. Structural changes are visible in the drive-out of players. Moreover, diverse and even restricting environmental factors motivate supplier´s innovation. The key is the changing consumer. Adaptive and innovative suppliers seize market opportunities and expand, despite a lack of market growth. Although the overall price level of wine in the German market is comparatively low, a voluminous premium market exists, where consumers search for experience. Sustainability has been gaining ground, and in cases of appealing offerings and strategic profiling, wineries outperform intensive rivalries and are not limited by missing growth perspectives. Expenditures for marketing will further increase, and cost management is indispensable. Success in the German wine business requires an in-depth knowledge of the complex market and its evolution.