EU-27 Annual Wine Report 2009; Consumption to Fall Due to Economic Downturn(14)

U.S. and competitors’ promotional activities in the EU
In the UK, the promotion of US wine is spear-headed by the Wine Institute of California’s UK
office. Their strategy is to demonstrate the quality and diversity of California wines at all
price levels, but they have a particular emphasis on the $10-20 sector. California is widely
recognized by the trade as a reliable supplier of well-supported brands and bulk wine, and at
the other end of the spectrum as notable suppliers of expensive boutique wines. Promotion
of quality and value attributes within the middle range is a good long term strategy to ward
off associations with being too cheap or too expensive. The Napa Valley Vintners’ trade body
has a promotional program in the UK, administered through a Public Relations agency –
Emma Wellings PR. In addition, the Washington Wine Coalition and Oregon Wine Board are
represented in the UK by a trade consultant – Hilltop Wines. Outreach efforts by the latter
have generated real interest in these lesser-known wines. Competitor countries with sizeable
marketing efforts in the UK include Australia, France, Spain, Germany, South Africa, Chile
and Argentina.
The retail sector (or off-trade as it is known in the UK) accounts for 80 percent of UK wine
sales, and with the economic downturn price discounting or multi-buy offers are dominating
marketing activity. Consumers are increasingly looking for brands, rather than country of
origin when making purchasing decisions. Nearly all major brands are frequently found on
promotion and most consumers appear content with the variety offered by their local
supermarket. Consumer education to impart a greater understanding and appreciation of
different wines and grape varietals will remain key to encouraging growth. The “on-trade” or
hotel and restaurant sector have historically accounted for around 50 percent of total value
sales. However, this trade is being affected by the UK’s current economic climate with a
sharp increase in the number of restaurant and bar closures, and a marked decrease in sales
value as outlets decrease prices or offer lesser quality wines.
American wines have an excellent reputation with German consumers. However, the price
seems to have become a leading factor for the competition between New World suppliers.
Another important factor for success is the branding of the product. Imported wine is
increasingly represented through the brand and the grape variety. According to the wine
GAIN Report - E49021 Page 15 of 15
UNCLASSIFIED USDA Foreign Agricultural Service

GAIN Report - E49021 Page 15 of 15
UNCLASSIFIED USDA Foreign Agricultural Service
press, importers are also increasingly demanding that the taste impression needs to be
typical for the labeled grape variety.
Most American wines sold in France are Cabernet Sauvignon, Chardonnay, Zinfandel and
Pinot Noir from California, and are purchased by restaurants. U.S. wines in France face
strong competition from domestic producers, leading EU suppliers, as well as Chile, Australia,
South Africa and Morocco. Central and eastern European wine producers are potential
competitors. E&J Gallo wine has been sold in France since 1998 and they have contracts
with major French retailers (Carrefour, Auchan, etc.). Gallo also sells to restaurants and
wine stores. Mondavi wines have been sold in France since 2000.
Excises and other taxes
Details on wine excises and Value Added Tax (VAT) in the different EU countries can be found
in the following document:
http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_du
ties/alcoholic_beverages/rates/excise_duties-part_I_alcohol-en.pdf
Excise taxes vary considerably among member countries, ranging between zero in many
producing countries to different levels in the non-producing countries. VAT rate (ad valorem)
rates also vary among the different countries, with a maximum rate of 25 percent in
Denmark and Sweden.