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Austria has No Kangaroos but Veltliners

Posted: Tuesday, 15 May 2012 18:15

Austria has No Kangaroos but Veltliners

Austria is often mistaken for Australia; it has no kangaroos, but plenty of the signature Grüner Veltliner and other white wines, with the share of reds and some outstanding wines increasing, writes Willi Klinger from Austria as he gives a peep into the working of Austrian Wine Marketing Board he heads, their plans and the marketing strategy.

Austria, with less than 1% of world production in wine has no similarity to Australia as often mistaken by people. It has no kangaroos but a decent amount of high quality wine; thanks to 6,600 quality wine bottlers, 20,000 grape growers cultivating 46,000 hA of vines. All nine federal states produce wine, but Lower Austria (Niederösterreich), Burgenland, Styria and Vienna are major areas of grape cultivation, with two- third production being white wine. Grüner Veltliner is the main grape variety while red wine production has doubled to 30% over the last 15 years. There are also some outstanding sweet wines.

About 72% of production is still consumed in the domestic market. Exports are growing steadily but more in value than in quantity. This is mainly because bulk wine exports have been coming down constantly and have been reduced to practically nil. Highest bulk wine exports of over 60 million litres was recorded in 2003. It went down to 17 million litres in 2010 when bottled wine exports reached a record high of 43 million litres. The 2011 harvest was slightly better than average and another year of record export in value is in sight.

Not like Australia but New Zealand

Austrians prefer to emulate the Australia’s neighbour New Zealand in the business performance which has been overwhelming thus far. The grape cultivation tripled from 10,000 hA in 2000 to 32,000 hA in 2009. Austria used to have a lot more wine than they could sell so they had to resort to bulk wine export earlier. But with higher labour costs and social changes, bulk wine exports are being forced to come down.

Wine and Culture

This becomes clear the first time you go out of the European context where everyone knows Austria. It is difficult it is to sell wine when people don’t even know the country or confuse it with Australia. It is perceived as a new wine country. Therefore it becomes important to showcase that the culture, music and wine are a part of Austria.

Wine Market

Germany is the biggest wine market for Austria, followed by Switzerland. USA is the newly created, third biggest market which started merely 20 years ago. The export strategy is to invite journalists and sommeliers who help understand and communicate to   knowledgeable people about these wines. This is where the Grüner (Green) Veltliner comes in handy. A famous sommelier used to ask his New York customers: “What do you want to drink, red, white or green?” Green, of course referred to Grüner “Veltliner, haven’t you tasted it?” would be his response. The next five years will see Austrian Wine Marketing Board (AWMB) focus on bringing Grüner Veltliner on the radar of opinion makers.

Marketing based on varietals alone could be dangerous as it may not fetch the right price points, as has happened with Sauvignon Blanc which from Styria can never match the prices from the New World countries. Therefore despite is popularity Grüner Veltliner would still be bundled with other varietals with the specific appellation of origin.

Branding Wines

Austria has several micro-brands. There are only 19 Austrian producers making over a million bottles-another 18 produce 0.5 -1 million. These are the only ones selling to supermarkets, mainly in Austria and Germany. Then there are family businesses making from 50,000 to 500,000 litres. If they make high quality wines, like many of the Austrian top producers, then it's a good, profitable business.

There are a few big companies with potential to be more visible in the market. But there is a potential problem when thousands are exporting with a lot of brands. So the consolidation process is going on, unknown to outside countries. From 48,000 growers in 1988, the number has come down to 20,000. It means a lot of wineries have significantly more wine stocks to sell now than 10 years ago and can serve wider markets. But we will hardly show up in the big supermarkets outside the German speaking world.

Reasonable amount of bulk market is necessary with the internal structure of Austria, because there are many people buying grapes or wine from contracted partners but the export of bulk wine for as low as 30 cents a litre will disappear.

Social Media for marketing

Social media has become very important to get intelligent people around the world talking about Austrian wine, creating rumour, interest, passion and enthusiasm. Besides redesigning the website, the official site of AWMB that includes photo archives, a new tool which is an app for wine tourism is in the process of being designed. The tasting lists will be soon online and downloadable in several formats. Facebook and Twitter are of course already in use. Austria hosted the third edition of European Wine Bloggers Conference with the same objective.

Austria also has a worldwide network of Trade Commissions with some countries even having wine enthusiasts as trade commissioners. Similarly, the marketing efforts are coordinated with various Tourist offices. Even embassies and trade commissions are improving their wine selections. The Austrian glass company Riedel also pitches in for promotions.

Constant change but no industrialisation

Knowing that people want changes constantly, Austria has not stayed only with Grüner that might make Veltliner a flash fashion. Austria projects itself as one of the Riesling stars in the world. It has been difficult to convince sommeliers about the great Sauvignons Blanc which has always been marketed as a cool climate true terroir wine. The key issue is not to industrialise wines produced in the country.

Genesis of AWMB

The painful Austrian wine scandal of 1985 was instrumental in forming the Board. Every producer could be obliged to pay in order to fund the organisation at such a critical juncture, thus making it a stable entity. Bureaucracy is the main danger when the body is generic. The Board gets €8m from the wine industry and the regions. EU funds another €1 m that might increase to €1.5 m this year. Our main concern is that the bureaucracy should not overwhelm to suppress the creativity.

One of the creative challenges is guerrilla marketing in reaching the market. The next thing is to realise that every market has people who want to buy fine wine. Brazil and China are growing fast, even for Austria. A judicious time has to be allocated for the mature markets like Germany, Switzerland, parts of the USA and the Netherlands, where the initial objective of achieving distribution has already been reached. 

Mass market is not sustainable for Austrian economy. One doesn’t expect selling Austrian wine for €1.49 in a German supermarket in the new paradigm. Bulk wine will be substituted by bottled wine, so we will have millions of litres of reasonable wine left for reasonable prices. In the future, it may not be possible to sell Austrian wine below €3.00.

Challenges and goals

Austrian has also been working to defining regions and appellations as it wants to avoid the trap in which Italy with 360 DOCs in a few years and over 50 DOCG got into.  The four federal states which produce significant amounts of wine and the specific regions would be profiled.

Our target is to export 70-80 million litres, depending on the vintage, at an average of  €3.00 per litre. This would mean doubling the present income but still staying at half of the New Zealand producers. After these targets are reached, Austria will get ready to set another goal of 105m litres at €5.50. Starting from the price of €1 a few years ago it reached €2 in 2010.It’s time to set a new one.

Willi Klinger

Willi Klinger is the dynamic President of Austrian Wine Marketing Board that has evolved innovative marketing strategies to continue to increase the market share of Austrian wines, especially in value.


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