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Exporting wine to the Polish market

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For a long time Poland was one of the least developed wine markets in Europe. However, stimulated by economic growth, wine sales have strongly increased over the past years and are expected to continue to do so in the future. Although large retail chains and discounters dominate the Polish wine market, small importers and specialist retailers are on the rise. This provides opportunities for developing country exporters in both the high and low-volume segments as consumers are less prejudiced towards wine from New World origins.

1. Product Description

Wine is defined as: ‘The product obtained exclusively from the total or partial alcoholic fermentation of fresh grapes, whether or not crushed’. Please refer to Table 1 for the Harmonised System (HS) codes for wine.

Table 1: HS codes of wine

Type of wine

HS Code

Sparkling wine

220410

Wine in containers < 2 litres

220421

Wine in containers > 2 litres

220429

Labelling

The European Union has set compulsory labelling particulars for wine; labels should include the following information.

  • The name of the Protected Denomination of Origin (PDO)/ Protected geographical Indication (PGI) or Wine of ‘producing country’/Produced in ‘producing country’/Product of ‘producing country’
  • Actual Alcoholic strength (AAS)
  • Nominal volume
  • Lot number
  • Importer details
  • Allergenic ingredients

The information on allergenic ingredients should include the following.

  • All wines containing over 10 milligrams of sulphite per litre must be labelled with the indication ‘Contains sulphites’. This information is crucial for individuals who are sensitive to sulphites and experience problems such as shortness of breath, coughing, and wheezing. If your wine contains only a few mg or no sulphites, you can mention this on the label to accommodate these consumers.
  • Egg and milk derivatives must also be mentioned on the label.
  • Allergens must be mentioned in the language of the target market.
  • Sugar content (for sparkling wines) must be given.

Tips:

  • Legislation does not require the exact composition of a blend on the label. However, rising interest of consumers in the composition of wines increases the need to include such information on the label.
  • If you target educated consumers, it is worth mentioning the grape variety and vintage. This can have a positive effect on consumer perception of your product’s quality.
  • The use of the term ‘Reserve’ or even ‘Grand Reserve’ can help to convince consumers of the high quality of your wine. Ensure compliance with the wine law in your country concerning the use of such terms. Educated wine consumers, however, will be less receptive to this kind of marketing.
  • The Food Standards Agency of the United Kingdom provides useful guidance on more detailed labelling requirements for the United Kingdom, which are also applicable to the Polish wine market.

Packaging

Bottled and boxed wine

  • In Poland, glass bottles are the most common type of wine packaging. Glass bottles are usually coloured to reduce the effect of UV light and typically contain 0.75 litre, but there is a growing trend in Poland toward sales of wine in one-litre bottles.
  • Bag-in-Box (BiB) packaging is hardly used for premium wine in Poland, as consumers associate Bag-In-Box with bulk wine. Until now, the bag-in-box concept for premium wine has only had some success in the on-trade.
  • In Poland, screw caps are still associated with cheap alcoholic beverages (e.g. vodka) and therefore not preferred by most Polish wine consumers. Traditional corked bottles are most common, especially in the premium wine segment.
  • Bottles for sparkling wines need to be strong enough to withstand the pressure resulting from the high CO2 levels. Although there are no legally binding requirements, the International Technical Centre for Bottling and Related Packaging (CETIE) has published standards that are internationally recognised.

Tip:

Bulk wine

Packaging-related quality problems with bulk wine hampered development of bulk wine trade for a long time. Recent improvements in storage technology, handling facilities, and quality protocols have contributed to better-quality preservation. These developments have caused an explosive growth in the trade of bulk wines, especially among the international brands. Please refer to our study on bulk wine in Europe for more information.

Different types of packaging are available for the transport of bulk wine. The two most common are:

  • Flexi-tanks – disposable plastic bags intended for installation in a standard 20-ft shipping container.
  • ISO tanks – reusable steel tanks, which need to be cleaned between shipments. ISO tanks offer all the advantages of flexi-tanks, but are more polluting and expensive in transport due to higher weight. One advantage of an ISO tank is its reliability; they have a lower risk of defects compared to flexi-tanks.

Defective seals or the use of permeable material can lead to oxidation, which will degrade the wine. This can result in negative taste alterations and a shorter shelf life.

2. What makes Poland an interesting wine market?

Poland is only a small wine market in Europe and due to negligible domestic production, almost all wines are imported.

Insignificant domestic wine production

There is a very limited wine production in Poland. In 2014, wine production in Poland amounted to 13.4 million litres only, making Polish wine a niche. Presently the number of legally registered wineries is 78, compared to 49 in 2013, cultivating about 700 hectares of vineyards.

Wine is a growth market

Compared to the rest of Europe, wine consumption in Poland is still small. However, Poland is perceived as growth market. Total wine consumption increased by an average of 0.7% annually between 2011 and 2015, amounting to 798 thousand hectolitre (hl) in 2015. Per capita wine consumption in 2015 was 2.1 litres which is below the European average of 23.9 litres. However, despite low wine consumption, wine is becoming increasingly popular in Poland.

Largest wine importer in eastern Europe

Poland is a small wine importer compared to large western European countries such as the United Kingdom and Germany. However, Poland is the largest wine importer in eastern Europe, with wine imports amounting to €212 million in 2015, showing an average annual increase of 1.7% since 2011. Since there is no significant domestic wine production in Poland, wine consumption mainly consists of imported wines.

Source: Eurostat, 2016

Although the Polish wine market is open to wines of various origins, the largest suppliers are the traditional wine-producing European countries. Germany is the leading importer with imports amounting to €53.4 million (25.2% of total imports) in 2015. Together, the traditional European wine-producing countries have acquired a strong market position, accounting for 62.9% of total imports.

Wine imports from developing countries amounted to €28.2 million of total wine imports in Poland in 2015 (13.3% of total imports), showing an average annual increase of 5.3% since 2011. Chile is the largest developing country supplying the Polish wine market, followed by Argentina and South Africa. They accounted for respectively 6.3%, 1.0% and 0.7% of total imports in 2015.

There is are also substantial imports coming from Central and eastern European countries due to historic ties. Major suppliers in eastern Europe are: Bulgaria (5.4% of total imports), Moldova (3.3%), Hungary (1.8%) and the Czech Republic (1.7%). More recently, wine imports from Georgia have been increasing, currently amounting to 1.7% of total imports.

Tips:

  • Do not attempt to compete with the traditional wine-producing European countries as this will be too difficult.
  • Develop a Unique Selling Point (USP) around such matters as your (authentic or native) grape variety, sustainability or production process to market your wine in the relatively open Polish wine market.
  • If you are an eastern European supplier, benefit from historic ties by referring to these ties in your product’s story.
  • If you are a Business Support Organisation outside (eastern) Europe, use the unique qualities of your country to brand the country and establish it as an interesting origin.

Wine exports are very limited

Poland is a minor exporter of wine and export quantities and values are very low. Domestic production primarily aims at the domestic wine market. Wine exports from Poland amounted to €5.1 million in 2015, showing an average decrease of 6.9% since 2011. The largest export markets for wine from Poland are its neighbouring eastern European countries, with Ukraine being the most dominant export market, accounting for 61% of all exports. 

The wine market in Poland is still in its infancy but is expected to grow rapidly in the coming years. As a result wine exports from Poland are expected to increase in the future. However, wine exports will remain very small in the long term compared to other European countries.

Source: Eurostat, 2016

Tip:

Young urban professionals are very influential

Since Poland’s accession to the European Union in 2004, wine availability has improved. Between 2004 and 2013, wine sales in Poland increased by 56%. The country’s wine association expects this growth to continue in the coming years.

The Polish market traditionally consists of sweet and semi-dry wines. These wines are particularly popular amongst a large group of elderly women. However, the growing group of young urban professionals prefers semi-dry and dry wines and seem to favour red wine over white or rosé wine. These young urban professionals are currently driving the development of the emerging Polish wine market. They travel a lot to other wine-consuming countries, copy drinking patterns of those countries and associate wine with Western lifestyles.

Tips:

  • Aim for young urban professionals by aligning your marketing strategy to the needs of this consumer group.
  • If you supply sweet or semi-dry wine, target elderly women by tailoring your marketing strategy to their needs.

Consumers switching from vodka to wine

Traditionally, the Polish market for alcoholic beverages was dominated by vodka. Currently, vodka is regarded as a cheap drink, which is not associated with the sophisticated lifestyle that many Polish consumers strive to lead. As a result, vodka consumption is declining, except for on traditional occasions. Beer and wine are the main replacements. Growing health-consciousness particularly stimulates the switch to wine, as moderate wine consumption is considered to be healthy.

Tips:

  • If you supply branded wine, ensure that your brand is associated with a sophisticated lifestyle.
  • If you supply a low-alcohol wine, Poland may not yet be your best target market.

Emergence of white wine and innovative wine drinks

Red wine currently dominates the Polish wine market. Young urban professionals, who account for most sales, prefer red wine. White wine, rosé and especially innovative wine drinks (for example aromatic wine drinks or wine cocktails) are currently not very popular. In 2013, red wine accounted for 32.1% of total wine sales in Poland. White wine (28%) came second, followed by sparkling wine and champagne (20.5%). Rosé only accounted for 1.8%.

However, the Polish market shows signs of change. The slight increase in consumption of wines other than red wine is largely a spillover effect from trends in western European countries. As many Polish consumers want a lifestyle similar to that of western Europeans and the latter are increasingly drinking white wine, rosé and innovative wine drinks, Polish consumption patterns are expected to change in the long term.

Tip:

  • Polish consumers tend to be more conservative compared to western European consumers. As a result, wine drinks are not very popular in Poland; there is no clear sign yet that Polish consumers will embrace these drinks on the short term.

Following innovation trends

There is a time lag between developments in western European markets and developments in Poland. Fashion trends, such as many aromatic wines and wine cocktails, are not expected to have a significant effect on the Polish market in the near future. The time lag and the small size of the market prevent the rapid adoption of new products. Therefore, innovative packaging such as cans, PET bottles and screw caps are not very popular. Bag-in-box wine only has had some success in the on-trade.

Tips:

  • Use traditional packaging (i.e. classic bottle, labelling and cork) for promotion as they are preferred by the Polish consumer.
  • Look for trends in western European market, providing a preview of new trends that might be adopted by the Polish wine market.

Wine prices are decreasing

Polish consumers have relatively low purchasing power and wine is expensive. Therefore, wine consumption is still limited to young urban professionals which have a higher purchasing power. These consumers are prepared to pay more for their wines than similar consumers in other countries. However, this mainly applies to red wines as Polish consumers are not willing to pay higher prices for white wines.

The high prices of wine are strongly related to the lack of scale in the Polish wine market, complicating efficient distribution. However, current growth in the wine market, and especially the emergence of discounters in wine retailing, should enable scale increases. As prices go down, wine consumption is expected to spread from young urban professionals to a much wider group. This will enable more scale increases and accelerate market growth.

Tips:

  • If you supply a wine for the middle or premium segment, you may benefit from a growing number of consumers who can afford these wines.
  • If you supply a wine for the entry level, you may benefit from rapid growth in consumption of table wine.

Sustainability remains less relevant

Despite the rapid development of the Polish economy, the wine market is still far from developed. Whereas sustainability has become a niche market in western Europe, the Polish wine market is not at all concerned about sustainability. As an illustration, most consumers are not aware of organic or Fairtrade wine.

Tips:

  • Do not invest in organic or Fairtrade certification if you aim to enter the Polish market. The demand is very low.
  • Focus on cost reduction or branding of your product to position it as a sophisticated product.

4. With which requirements should wine comply to be allowed on the European market?

You can only export your wine to Europe if you comply with buyer requirements for wine.

With which legal and non-legal requirements must my product comply?

Buyer requirements for wine can be divided into legal and non-legal requirements, both of which your product must comply with if you want to sell to Europe. This includes the following points.

Tips:

  • Check whether your current practices comply with the European requirements for winemaking.
  • Ensure compliance with European legislation on hygiene of foodstuffs (HACCP: hazard analysis and critical control points).

Which additional requirements do buyers often have?

Besides the legally binding requirements, you also have to comply with the following non-legal requirements in order to be able to find a buyer.

  • Food safety certification: Many importers of wine require the implementation of a food-safety management system. Examples of internationally acknowledged systems are HACCP, BRC, IFS, FSSC 22000 and SQF.
  • Corporate social responsibility: Several larger retailers participate in initiatives such as the Ethical Trading Initiative (ETI), or the Business Social Compliance Initiative (BSCI). These initiatives focus on improving social conditions in their members’ supply chains. This implies that you, as a supplier, are also required to act in compliance with their principles.
  • Buyers generally prefer low sulphite levels (e.g. < 100 mg/l for white wine). However, sulphite is a preservative and lower sulphite levels may lead to off-tastes and reduced shelf life.

Tip:

  • Suppliers can apply a basic HACCP system. However, many buyers appreciate certified food-safety management systems recognised by the Global Food Safety Initiative, such as ISO22000, BRC or IFS: Food Safety Management Systems.

What are the requirements for niche markets?

In addition to the requirements you have to comply with to be allowed on the European market or to find a buyer, complying with the following additional requirements could offer you a competitive advantage and make finding a buyer easier.

  • Fair-trade certification: A niche market is the market for wine produced with extra focus on the social conditions in the producing areas. Having your wine Fairtrade certified is the most convincing way to prove your business performance for social conditions in your supply chain.
  • Organic niche market: To market organic wine in the European Union, grapes must be grown using organic production methods which are laid down in European legislation, and the grapes and the wine production facilities must be audited by an accredited certifier. Only then may you put the European organic logo on your products, as well as the logo of the standard holder (e.g. Soil Association in the United Kingdom).

Tip:

5. What competition will you be facing on the Polish wine market?

What are the opportunities and barriers when trying to enter the Polish market?

Growing economic prosperity creates opportunities for new entrants

The high growth rate of the wine market in Poland, 56% between 2004 and 2013, attracts many new suppliers who seek to benefit from the increased demand for wine. Strong market activity in terms of mergers and acquisitions confirms the high expectations for market growth in Poland.

High acceptance of wine from developing countries

The Polish wine market is currently dominated by European suppliers. Up to 85% of imported wine in Poland comes from European countries. However, the lack of a strong domestic wine culture lowers entry barriers for new entrants from less traditional wine sources. Consumers are less prejudiced towards wine qualities from traditional and New World origins. New World wine imports already play an important role. The dominant sources of New World wines are the United States and Chile.

High listing fees complicate entry

Supermarkets in Poland charge relatively high listing fees. The payment of these fees can give suppliers access to supermarket shelves, which can be a profitable business. However, current listing fees in Poland are relatively high in comparison to the amount of sales.

Tips:

  • Aim for long-term contracts and stable trade relationships to prevent your buyer from switching to a new entrant.
  • Use branding and your reputation to ensure stable sales to regular buyers.
  • If you aim for supermarkets, but your brand is not strong enough, find a buyer who already supplies supermarkets and partner up to sell your wine under their brand.

What are substitute products?

Declining popularity of fruit wines

Due to a declining demand for fruit wines in the past decade, most domestic producers have gone bankrupt or been acquired by other companies. Today fruit wines are largely exported to other countries and regions, such as Germany, Austria, Switzerland, Scandinavia and the Far East.

Wine over vodka

Although beer and vodka still account for the highest market shares in Poland, wine is the fastest growing category. The retail volume of wine was projected to grow by 14% between 2013 and 2015, beer by 4%, and vodka to decrease by 6% (KPMG 2014). Although vodka is cheap and remains important for many occasions, wine is increasing in popularity.

The growing popularity of wine may open up the market to developing country producers. Developing country wine producers should keep in mind that wine is considered to be a more sophisticated drink, associated with Western lifestyles. That is why Polish consumers are willing to pay higher prices for wine than for traditional Polish drinks, such as vodka. New entrants from developing countries have better opportunities in the higher price segments.

No threat from innovative drinks

Innovative drinks are not very popular in Poland and do not pose any threat of competing with wine. The Polish market is expected to adopt the trends seen in other countries eventually, but this transition will be slow. However, certain types of wine, including white and rosé, are slowly gaining popularity as Polish consumers are adopting a more Western lifestyle. Rosé wine sales grew quickly last year and rosé is expected to become more important. Sparkling wine sales have remained stable but still account for over 20% of total wine sales.

Tip:

  • The promotion of wine, as a better alternative to other alcoholic drinks, is not feasible for individual companies. Promotion of wine in general requires a sector-wide effort. Instead, focus your promotion on Unique Selling Points compared to other wines.

Low excise duties on wine

Poland applies a relatively low excise duty on both still and sparkling wine (€37.21 per hl). Moreover, the government does not apply reduced rates to wines with a low alcohol percentage.

Tips:

  • Benefit from the absence of excise duties when supplying still wine to Poland.
  • There is no need for developing country wine producers to lower alcohol percentages to evade excise duties, as the tax system does not favour lower alcohol percentages.

How much power do I have as a supplier when negotiating with buyers?

Insignificance of domestic production

Domestic wine production is very low and offers only limited competition in local off-trade. However, with the wine market growing rapidly, domestic production is expected to increase as well, resulting in more competition in the future.

Increasing rivalry with existing suppliers

The openness of the Polish market and the westernisation in the way of living have started altering the preferences of Polish consumers when it comes to wine origins. Consumers are moving away from the traditional fruit wines and eastern European wines towards New World wines from such countries as the United States and Chile. The large multinational Gallo from the USA has become a particularly strong player. This company and other existing suppliers are in a good position to rapidly expand their business in Poland as the market grows.

Tip:

  • Determine your Unique Selling Point compared to existing suppliers and use it in your marketing strategy.

Increasing diversity

In the next few years, consumer demand for more exclusive products is expected to increase. This will affect all price segments. Although some existing suppliers will expand their current offer, there will be a particularly large increase in supplies from new entrants with unique wines. The latter development could be beneficial for developing country exporters if their products possess Unique Selling Points.

Tips:

  • Participate in wine tasting events to gain recognition for your wine which you can use for marketing purposes.
  • If you have an interesting story to tell about your wine production or origin, use it for branding.

A small group dictates the high volume market

Even though the wine market in Poland is a relatively young market, concentration of buyers is high and increasing. Due to the small market size, only a few players have been able to develop into major buyers. Especially in the high-volume segment, only a few large players are involved in trade, such as Ambra Group, Bartex-Bartol and CEDC (distributor of Gallo Vineyards). Many of these players operate on an international level. These players will increasingly face competition from large western European retail chains, such as Auchan.

These retail chains are gaining ground in Poland and import large amounts of wine directly from origin. In the long term, more global sourcing is expected to once again improve the position of buyers. For more information on global sourcing, please read our study on trends in the European wine market.

Tips:

  • If you are able to supply large volumes of wine at low costs, focus on the high-volume segment. Aim for long-term agreements with high-volume buyers in order to split risks and profit more equally. Consider to supply the retail chains through an importer, as the latter are in a good position to meet the strict logistical requirements of retail chains, such as short-notice deliveries.
  • Be a reliable business partner; make sure that you supply the quality and volumes agreed upon. Especially retail chains need long-term trade partners. When they have to go elsewhere they usually do not return.

Who are my rivals?

Competition from other countries

Main competitors in the Polish wine market are suppliers from traditional winemaking countries: Germany, Italy, France and Spain. However, New World countries such as the United States and Chile and eastern European countries such as Bulgaria and Moldova have also established a market position. Since the Polish wine market is a growing market, there are opportunities for new suppliers.

Tip:

  • Wines from southern European countries have acquired a strong market position in the Polish wine market. However, due to the growing wine market, there are opportunities on the Polish market. You either need to be able to supply bulk wine at low costs or emphasise your Unique Selling Point to enter the Polish wine market.

6. Which channels can you use to put wine on the Polish market?

Trade channels

This section provides information about the marketing channels through which wine is marketed in Poland. The trade channels for wine are presented in Figure 3.

Figure 3: Trade channels for wine in Poland

trade_channels_for_wine_in_poland.png

Off-trade is the most important market channel

The majority of Polish wine sales are made via the off-trade, accounting for an estimated 96% of the wine sold. Within the off-trade, supermarkets, hypermarkets and discounters have the largest market share, with 81% of wine sales, and their market share continues to increase. The leading supermarkets are foreign-owned multinationals: Biedronka (Portuguese), Tesco (British), Carrefour (French) and Auchan (French).

Discounters (such as Lidl) are also growing strongly in importance and account for a high volume of lower-priced wine sales. It is expected that direct imports of hypermarkets and supermarkets will increase strongly in the long term. The growth in sales of supermarkets is at the expense of small grocers. Although these small grocers still account for a significant share of table wine sales, they are losing market share. Wine continues to struggle in the on-trade, in part because it is much more expensive than other options.

Tips:

  • Although direct sales are growing, importers are likely to be your best market entry point in Poland since you will be able to profit from the sales growth in supermarkets and specialist retailers. They are also in a good position to meet the strict logistical requirements of retail chains, such as short-notice deliveries.
  • Only target supermarkets directly if you have significant experience in exports and are able to guarantee high volumes at a low price.

Specialist outlets are growing

Specialist retailers comprise wine boutiques and chains of delicatessen stores, such as Alma, Bomi and Piotr & Pawel. The number of such outlets has been growing, selling wines in the higher price segments. As knowledge on wine and demand for these segments are growing, their sales are expected to increase in the short term.

Re-emergence of small importers

Despite the dominance of supermarkets, hypermarkets and discounters in the Polish off-trade channel, the number of wine importers continues to grow and is now estimated at over 800. Most of these operate on a very small scale and often simply drive to the wine-producing countries in Europe and bring back a car or truckload of wine. They focus on importing quality wine and are competitors of the large importers in that segment. They are able to provide a different kind of drinking experience compared to these large competitors.

Tip:

  • Develop a Unique Selling Point, such as unusual origins, varieties, wine show medals, a Geographical Indication, and production or region stories to gain access to this channel.

Online wine sales

When it comes to online wine sales Poland lags behind western European markets: an estimated 1% of wine sales are online. To make things worse, this channel is deemed illegal by some officials, resulting in administrative hassle for internet wine shops. Nonetheless, a few are successful, including Winezja, Wina.pl and Marek Kondrat.

Online sales are expected to grow overall. In Poland, online shops are primarily used for promotion and marketing instead of a significant sales channel. Although the future of online wine sales in Poland depends on how the current legal issues are resolved, prospects for a future online wine market are positive.

Tips:

  • Online shops are particularly interesting retail channels for premium wines from developing countries, as they have room to provide product information, such as a story about the history of the winery.
  • Although the online channel is currently very limited, this could change in the future. Growth in online sales would be particularly interesting for suppliers of premium wines. Please read our study on online wine sales in Europe for more information.

Segmentation of the wine market

The segmentation of the Polish wine market is presented in Figure 4.

Figure 4: Market segments for wine in Poland, including indication of share in sales per segment

market_segments_wine_poland.png

Demand for bulk is growing in Poland

As Poland still has a small wine market, its bottling capacity is also small. This limits opportunities for bulk imports. Nonetheless, bulk wine imports will increase in the coming years, as growing demand for wine is stimulating the development of bottling capacity. Europe’s dedication to environmental sustainability also encourages bulk wine imports, as transport of wine in bulk packaging produces less CO2 than the transport of bottled wine. The low-end segment is the most suitable segment for suppliers of bulk wine to Poland.

Product appreciation in the Polish wine market

Table 2 provides some insight into which product options are appreciated in the Polish wine market. High volume and low volume refers to matching target segments to your export capacity. For more detailed information on specific segments, please read our studies on sustainable wine and bulk wine in Europe.

Table 2: Appreciation for product options in the Polish wine market

 

Organic

Fairtrade

QMS

CSR

Screw cap

Bag-in-Box

Bulk wine

Online sales

High-volume segment

-

-

+

-

+

+

++

-

Low-volume segment

-

-

+

-

-

-

-

+

7. What are the end-market prices for wine?

Average Polish consumer price indications for wine are presented for on-trade and off-trade in Table 3. The large price difference between the segments is mainly due to the price calculation in the on-trade channel which also has to cover exploitation costs of the hospitality facility.

Table 3: Average consumer prices per trade channel

Trade channel

Price indications per bottle

Off-trade

 

Small grocers

€4.00

Supermarkets and hypermarkets

€3.50

Specialist retailers

€6.00

On-trade

€17.50

Please review our market information disclaimer

 

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