The Polish wine market, though still relatively small in size at 213.5m litres, has been steadily growing over the past 25 years. Generally viewed as a conservative market, it has traditionally been Eurocentric, with just two non-European countries, the US and Chile, among the top 10 wine origins. Moreover, that trend was scheduled to deepen as the fastest-growing origins earlier this decade were France, Italy, Portugal and Spain, fuelled largely by the dynamic hard discounters.
Unexpectedly for many, the past two years have seen a reversal, with Italy and Portugal stagnating while New World countries, especially New Zealand, Chile and the USA are now leading the growth. What exactly is happening?
In 2016, New World wines have grown more dynamically than the entire market, and that growth is across all origins, with the exception of Argentina. More interestingly on a price-driven market like Poland — where the average retail price is a mere 16 PLN ($4.40) and there is a real race to the bottom among discounters — average price levels are increasing. Europe is also growing, if less dynamically, so it is a matter of New World wines harnessing additional growth rather than switching consumer preferences.
Two reservations should be made about that surprising trend. First, some categories are growing from a very small base, such as New Zealand and Australia, responsible for 342,000 and 1.4m litres respectively (all data from IWSR, a London-based analyst). However, as with all New World sales stats, this is distorted by a large volume of indirect imports via Germany and the UK, which aren’t included.
Secondly, the growth is not homogeneous. Globally, California and Chile grew by double digits, but have actually lost sales in the sub-16 PLN ($4.40) bracket. Australia looks healthy below 30 PLN but is struggling at 48 to 60 PLN ($13.00 to $16.30), which is incidentally where Chile performs best.
Anecdotal evidence from many Polish distributors supports the big data. Tomasz Macewicz, buyer for Kondrat Wina Wybrane, Poland’s online wine sales leader, confirms a +20% growth across New World origins, with even faster growth in the 50+ PLN category, and plans to expand his range accordingly. Maciej Korzeniowski of Endorwina, a New World specialist, sees dynamic growth and average price increases for South Africa in mid-range.
Winners and losers
Who exactly is growing? New Zealand is the hero of the day, registering a staggering +58% average five-year growth. “There is a New Zealand craze,” confirms Korzeniowski. Piotr Wyszomirski of Vinissimo adds: “Fruity Sauvignon Blanc styles are flying out the door.”
California has, surprisingly, maintained a steady +10% growth over the past decade, largely thanks to Gallo’s Carlo Rossi, Poland’s leading still wine brand, with 10% of the market. Carlo Rossi and similarly positioned Barefoot have grown above the market in 2016, but Agnieszka Wojtowicz-Jach, director of California Wines Poland, sees even more dynamic increases in higher price brackets: “Ridge has become a bestseller in the ultra-premium bracket and above 48 PLN wines have grown by +70%.”
Chile has enjoyed a strong position for two decades, but mostly at the lower end. Data for 2016 is emblematic of the recent trend twist: higher price brackets have outperformed lower ones, with no less than +26% in the 48 to 60 PLN band. Nearly all leading brands have grown healthily, with record results for brands such as Cono Sur and Luís Felipe Edwards.
Australia offers a somewhat different picture. After dynamic growth earlier this decade, it is now back to single-digit growth and struggles in the mid-range. Wyszomirski, who founded Wines United, an Australian and New Zealand specialist in 2009 (now merged with Vinissimo) and has done more than anyone else to raise the country’s image, says: “Oaked Chardonnay and Shiraz first soared then stagnated as the style became overfamiliar.”
Australia’s penetration is still weak and many of its leading brands are absent from the market.
Two countries that lag behind at the moment are South Africa and Argentina. The former suffers from a lack of availability at the lower end, though there are signs of movement in premium wines, says Maciej Korzeniowski, who pioneered quality South African wines earlier this decade and now reports an encouraging +8% rise in average price: “South African wines offer the best value on this planet and customers are acknowledging this.” More promotion is needed to get the message across, as the country is not well known.
Argentina is a more puzzling story. Its top sales of 1.6m L in 2007 have halved since, despite good brand awareness for Malbec. All price segments were stagnant or decreasing in 2016, with the deepest dip in the key 20 to 30 PLN ($5.40 to $8.20) bracket, responsible for two-thirds of the country’s sales.
A two-pronged market
More than 50% of the retail market is controlled by two discounters: Biedronka, owned by Portugal’s Jerónimo Martins, and Lidl. Overall, supermarkets sell over 80% of all wine in Poland. For several years, this has been considered a liability for New World wines, as discounters have focused on direct imports predominantly from Europe.
Europe still dominates supermarket shelves, which could explain why Chile or California are growing faster at higher price levels, which are mostly sold through other channels. But over time, discounters have also embraced the New World, with an immediate impact on the statistics. Carlo Rossi has secured an entry into Biedronka, consolidating its number one position on the market. Other Californian brands have also performed well, with Wojtowicz-Jach saying: “We are leaders in the supermarket segment, thanks to ongoing price promotion and marketing efforts.”
Jacob’s Creek is benefiting from active marketing with a +15% growth across multiple retailers in 2016. And then there is Poland’s insatiable appetite for Kiwi Sauvignon Blanc, which Biedronka and Lidl have been forced to tap into, introducing propriety brands and thus channelling further growth.
But the most interesting things are happening at the other end. Piotr Wyszomirski observes the highest growth above 60 PLN, while “mid-range is paradoxically stuck”. This is surprising, because super-premium wines are notoriously hard to sell in Polish retail wine shops. Restaurants too have long given New World wines the cold shoulder: their super-fruity style does not match with Polish cuisine, it was said, with its sour, salty and savoury cool-climate flavours. Uneducated consumers with deeper pockets cherished the perceived prestige of France or Italy.
That is quickly changing. “I’m surprised how much Argentine red we can move now, at prices equal to high-end Italy,” says Bartosz Kośmider, sales manager at Vininova, a Poznań-based fine wine distributor to the on-trade. He cites steakhouses as the most dynamic channel for that wine style, while Poland’s big current fashion, artisanal burgers, is another strong source of growth for big fruity styles such as Malbec, Carménère or Zinfandel.
Łukasz Bogumił of Wineonline, an online retailer with seven actual shops around Warsaw, echoes this: “After years of Italian-oriented food, the scene is much more diverse now. Asian cuisines are the talk of the day.” This gives bolder-flavoured New World white wines an edge over Soave or Pinot Grigio.
Artur Zarzycki of Vive le Vin, who imports boutique wines from the southern hemisphere (95% for the on-trade), also cites the booming fine-dining scene as a helper in selling ultra-premium wines, though he sees a glass ceiling, too: “Chile and Australia don’t enjoy the prestige of top Bordeaux or Italiy [wines].” Wyszomirski disagrees: “My allocations of icon brands such as Torbreck, Clarendon Hills or Felton Road are tiny, just a few cases, but people have realised these wines can stand up perfectly to top Burgundy or Châteauneuf-du-Pape.”
The building blocks of the Polish wine market are changing, but is there a deeper dynamic underneath? Two factors have arguably combined in the New World’s favour. Polish consumers are rapidly closing the education gap. There are wine classes running in all major cities, offered by four WSET-approved providers, as well as wine magazines and many importers. Gone are the times when wine was white or (preferably) red; core customers now have a first-hand experience not only of the major regional styles but often of more unusual ones, such as Aussie Sémillon or Chilean Carignan.
This has coincided with a stylistic revolution in several New World countries. Zarzycki claims: “The wines are now generally more drinkable and balanced than before, with less oak and less overt sweet fruit. The winemaking has become more precise also at lower price points. Consumers are powerfully attracted to those terroir-driven wines.” It wouldn’t be a uniquely Polish paradox that upmarket Chile and Australia took off after reinventing themselves in a fresher, more “European” style.
But the big factor is also the growing diversity of New World wines. While at the mid-market retail level, Macewicz sees the biggest growth for typical country/grape variety combinations such as New Zealand Sauvignon Blanc, Argentine Malbec and Chilean Carménère, Zarzycki and Wyszomirski report interest in more innovative categories. These include New Zealand Gewürztraminer, Chilean Carignan and Pinot Noir from Chile, Argentina and Australia. “Kiwi Sauvignon exploded about four years ago; I can sense the tide passing now,” says Zarzycki.
As the Polish market matures, there are growth opportunities in all price segments and niches. But in a highly competitive environment, staying on top requires unique selling points and sustained communication effort. It is no coincidence that Wines of California, Wine Australia, and ProChile have organised vibrant yearly wine events for consumers, whereas French and Italian producers are stymied by their inert bureaucracies. Especially at the higher end, New World producers are demonstrating real innovation, offering new varietals and flavour profiles. These modernised contemporary wines tell engaging stories, and Polish consumers are responding.
POLAND AT A GLANCE (2016)
Total wine market in Poland: 213.5m L
Imported still wine: 126m L
USA: 14% market share, 10-year CAGR +8.8%
Chile: 7% share, +5.2%
Australia: 1.25% share, +1.9%
South Africa: 1% share, +3.9%
Argentina: <1% share, –4.6%
New Zealand: <1% share, +58.1%