LANDSCAPES October 2018 Report

Poland © Intelligence 20181 Landscapes Copyright © Wine Intelligence 2018

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India 2 Landscapes Introduction to the Poland Landscapes 2018 Report Deliverables

Insights to help your business flourish

The Poland Landscapes 2018 report includes:

• Report with the latest information regarding the • User-friendly data table with all the measures from Vinitrac Polish wine market, supported by: showing significances, cross tabbed with: • Wine Intelligence Vinitrac® Poland • All Polish semi-annual wine drinkers in 2018 • Wine Intelligence market experience • Gender groups • Secondary sources • Age groups • Trade interviews • Regions • Tracking data vs. 2015

Poland 3 Landscapes POLAND - MARKET OVERVIEW

Poland has been strong economically over recent years and is no longer ranked by FTSE Russell as an ‘Emerging Market’, having been re-classified as a ‘Developed Market’. With a population of 38 million, Poland is the largest single market among the newer EU states and has risen to be the EU’s sixth largest economy in terms of GDP.

Since joining the EU in 2004, free movement of trade has led to importation of goods becoming easier, with sales of wine in Poland having grown nearly 60% since then. As Poland relies primarily on imports, it has capitalised on the access to EU .

With increasing consumer confidence, the Polish population are more willing to spend on non- essentials such as wine, which is considered a ‘luxury’ good.

Poland Consumer Confidence Although Poland’s GDP per capita continues to catch up to other Western European countries, their average disposable income remains less than the EU average.

Index PointsIndex Nonetheless, Poland has seen a rise of young professionals who are enjoying increased wages and both traveling and spending more. Influences from neighbouring wine-loving Western European countries are transforming Poland’s traditional culture and thus the wine market is showing promising growth, which is expected to continue.

Source: TradingEconomics.com, Central Statistical Office of Poland (GUS)

Poland Source: Statista Market Directory, www.statista.com/ Poland Market Overview (2018);https://www.export.gov/ 4 Landscapes Poland to Switch from Emerging to Developed Market by September 2018, https://emerging-europe.com/ Management Summary KEY FINDINGS IN THE POLISH WINE MARKET

1. GROWING MARKET FOR STILL WINE, WITH INCREASING VOLUME AND CONSUMPTION FREQUENCY ▪ Poland has evolved from an ‘Emerging’ market to a ‘Growth’ market, according to the Wine Intelligence Global Compass market classification ▪ Per capita consumption of still wines has steadily increased with a growing consumption frequency, shifting from ‘once every 2-3 times’ to ‘1-3 times a month’ when compared with 2015

2. CONSUMERS ARE BECOMING MORE ENGAGED IN THE CATEGORY WITH INCREASED KNOWLEDGE AND CONFIDENCE WITH WINE ▪ Compared to 2015, wine drinkers in Poland have become increasingly engaged with the category of wine ▪ There is an evident increase in knowledge, confidence and interest, with more factors being considered as important in the wine buying decision-making process

3. MILLENNIALS SEEM TO BE DRIVING THE GROWTH ▪ The wine consumption culture in Poland has undergone a visible change over recent years, and Millennials are largely accountable for these changes ▪ Wine is becoming more established with and embraced by younger consumers in Poland ▪ As younger Polish drinkers travel the world, they become more exposed to a broader range of varietals and wine styles, creating a demand for more European imports in the Polish wine market

Poland 5 Landscapes Management Summary KEY FINDINGS IN THE POLISH WINE MARKET

4. FEWER WINE BRANDS ARE BROADLY KNOWN IN POLAND ▪ Brand awareness is not particularly strong in the Polish market, with only a handful of brands taking precedence ▪ Despite Carlo Rossi being the most well-known and consumed brand, California ranks low compared with other wine- producing countries for awareness and purchase ▪ Younger consumers are more influenced by label design than older drinkers

5. PROMOTIONAL ACTIVITY A STRONG DRIVER OF CONSUMPTION TRENDS ▪ The wine choices of Polish drinkers are strongly influenced by promotional activities such as sales promotions within popular wine buying channels or informative events ▪ The popularity of is significantly influenced by its availability, being heavily stocked at the Portuguese- owned company Biedronka; the largest discount supermarket chain in Poland ▪ Brands from a larger, broader range of wine producers and more premium wine brands are therefore less readily available in Poland

6. ONLINE PURCHASING IS TECHNICALLY ILLEGAL IN POLAND, YET YOUNGER CONSUMERS INCREASINGLY REPORT PURCHASING WINE THIS WAY ▪ Online wine sales are very limited in Poland due to government regulations that prohibits the selling of alcohol without a valid license ▪ Nonetheless, this channel has grown since 2015 and is more prominently used by young buyers aged between 18-34 years

Poland 6 Landscapes Management Summary 1. GROWING MARKET FOR STILL WINE, WITH INCREASING VOLUME AND CONSUMPTION FREQUENCY

▪ Formally considered an ‘Emerging’ market, Poland is now categorised as a ‘Growth’ market according the Wine Intelligence Global Compass market classification

▪ The wine market in Poland has experienced steady growth in the volume of wine consumed volume between 2013 and 2017, with wines from the US displaying the fastest growth in terms of volume

▪ Per capita consumption of still wine increased from 3 litres per annum in 2013 to 3.5 litres per annum in 2017. This is in line with the increasing consumption frequency stated by consumers, with a shift from drinking wine ‘once every 2 to 3 months’ to ‘1-3 times a month’ compared to 2015

Still wine volumes and share (total and by country of origin)

Retail price per 0.75L Thousands of 9 CAGR CAGR Market 2013 2014 2015 2016 2017 CAGR CAGR litre cases 13-17 16-17 share 2017 (US$) 13-17 16-17 Total 10,530 10,950 11,400 11,745 12,225 4% 4% 100% 5.55 0% -1% Domestic 8 10 11 17 25 33% 47% 0% 20.19 4% -3% Imported 10,522 10,940 11,389 11,728 12,200 4% 4% 100% 5.52 0% -1% International* 3,575 3,798 3,813 3,737 3,821 2% 2% 31% 3.86 -1% -3% US 1,175 1,250 1,395 1,555 1,701 10% 9% 14% 5.02 -2% -1% Italian 900 920 925 940 948 1% 1% 8% 8.84 1% 0% Chilean 630 610 720 785 857 8% 9% 7% 6.81 0% -2% French 690 710 719 785 802 4% 2% 7% 9.35 2% 0% Bulgarian 705 700 695 690 714 0% 3% 6% 3.77 3% 2% * Note: ‘International’ includes wines that are difficult to trace the country of origin; for example, El Sol is multi-origin so this would accountMoldovan for a fair share 585 of ‘International’ 600 volume/share 630 650 671 3% 3% 5% 5.31 -1% -1% Spanish 582 585 597 631 665 3% 5% 5% 6.18 2% -1% Portuguese 525 560 595 601 613 4% 2% 5% 4.89 0% 0% PolandHungarian 280 300 325 355 380 8% 7% 3% 3.88 2% 1% 7 LandscapesGeorgian Source:90 Wine Intelligence,100 Vinitrac 134 ® Poland, Mar'15150 n=1,000 171 and Mar'18 & Jul'1817% n=2,000 Polish14% semi-annual1% wine drinkers 9.55 2% 2% Greek 135 140 148 160 169 6% 5% 1% 3.46 0% 0% Australian 150 150 147 150 166 3% 11% 1% 7.25 0% 1% South African 136 144 143 138 121 -3% -12% 1% 6.27 0% -2% German 109 117 130 125 120 2% -4% 1% 7.15 0% 1% Argentinian 100 94 105 98 101 0% 3% 0.8% 10.20 0% -2% Management Summary 2. CONSUMERS ARE BECOMING MORE ENGAGED IN THE CATEGORY WITH INCREASED KNOWLEDGE AND CONFIDENCE WITH WINE

▪ Compared to 2015, there is an increase in the knowledge and confidence levels of Polish wine drinkers

▪ Consumers’ knowledge about wine, reflected in the number of wine-producing countries, regions and wine brands they know, has significantly increased since 2015. More consumers are able to recall the varietals they have drunk than they did in 2015

▪ Wine drinkers in Poland have also become more confident in the wine category, with a significantly higher proportion of wine drinkers feeling competent about their wine knowledge

▪ More Polish drinkers state that they have a strong interest in wine compared to 2015, and the decision process of wine buying has become more important. More factors are considered important by consumers when they buy wine, such as region of origin, grape variety, bottle / label design, and medal / award

Wine involvement statements % who ‘agree’ or ‘strongly agree’ with the following statements Base = All Polish semi-annual wine drinkers (n≥1,000) Wine involvement statements 2015 2018 Trend Sample size n= 1,000 2,000 Deciding which wine to buy is an important decision 58% 63%  Generally speaking, wine is reasonably priced 53% 58%  I have a strong interest in wine 34% 39%  I feel competent about my knowledge of wine 18% 24% 

Poland /  Statistically significantly higher / lower than 2015 at a 95% confidence level 8 Landscapes Source: Wine Intelligence, Vinitrac® Poland, Mar'15 n=1,000 and Mar'18 & Jul'18 n=2,000 Polish semi-annual wine drinkers Management Summary 3. MILLENNIALS SEEM TO BE DRIVING THE GROWTH

▪ Wine is becoming more established with, and embraced by younger consumers We can observe a really big desire for development and in Poland. learning in the younger people. That is why we do regular workshops and wine-tastings Distributor ▪ As younger Polish drinkers travel the world, they have become more exposed to a broader range of varietals and wine styles. This increase in wine interest is Young people are more willing to experiment and reach being supported through a variety of experiential events such as tastings, for dry wines. Mature people about 50 years + have parties and trips to vineyards constant tastes and preferences Sommelier

Younger consumers are probably driving the wine ▪ While older drinkers tend to stick with what they know (70% aged 55 and category rather than the older consumers, but they tend above), younger people are more adventurous and willing to experiment with to go for easy and cheap styles of wine that they can labels they are unfamiliar with afford PR Agency Director

▪ Older drinkers consume wine less frequently - 35% drink weekly vs. 46% amongst 18-34 year olds who drink wine weekly. Younger drinkers have a broader repertoire, being more likely to drink sparkling wine types such as and Prosecco

Prosecco consumption by age (2015-2018)

18-34 35-44 45-54 55 and over

2015 2018 2015 2018 2015 2018 2015 2018 Prosecco 8% 22% 7% 21% 9% 12% 6% 8%   % who have drunk Prosecco in the past 12 months

Poland Red / Blue: Statistically significantly higher / lower than all Polish semi-annual wine drinkers at a 95% confidence level Source: Wine Intelligence, Vinitrac® Poland, Mar'15 n=1,000 and Mar'18 & Jul'18 n=2,000 Polish semi-annual wine drinkers, 9 Landscapes Source: Wine Intelligence trade interviews, September 2018 Management Summary 4. FEWER WINE BRANDS ARE BROADLY KNOWN IN POLAND

▪ The Polish market is dominated by a handful of brands in terms of awareness and purchase Wine brands are still not as important in Poland as they are in other markets. Polish people will look for wine, but ▪ Californian wine brand, Carlo Rossi, is the market leader, followed by not differentiate by brand PR Agency Director the Bulgarian brand, Kadarka

There are more colourful, friendly, eye-catching labels, ▪ Despite Carlo Rossi being the most well-known and consumed brand, which are marketing-tailored to the less-experienced California ranks low, compared with other wine-producing countries for recipient. It works for young people aged 28-40 years old awareness and purchase. While knowledge of wine is growing in PR Agency Director Poland, Polish consumers are relatively less experienced with wine

Consumers are probably associating Carlo Rossi with Italy, although this is a wine from California ▪ Younger consumers are more influenced by label design than older Retailer drinkers, with successful brands producing more distinctive, yet straightforward brands

Choice cues by age % who consider the following “important” or “very important” when buying wine All Polish semi- 55 and annual wine 18-34 35-44 45-54 over drinkers Sample size n= 2,000 772 370 366 492 A brand I am aware of 81% 77% 81% 82% 85% Appeal of the bottle and/or label design 44% 49% 45% 45% 34%

Poland Source: Wine Intelligence, Vinitrac® Poland, Mar'15 n=1,000 and Mar'18 & Jul'18 n=2,000 Polish semi-annual wine drinkers, 10 Landscapes Source: Wine Intelligence trade interviews, September 2018 Management Summary 5. PROMOTIONAL ACTIVITY A STRONG DRIVER OF CONSUMPTION TRENDS

▪ The wine choices of Polish drinkers are strongly influenced by promotional activities such as sales promotions within popular wine buying channels or One of the most active countries in promotion is informative organised events in collaboration with restaurants and wine Germany during ‘ weeks’. The Portuguese are also active and treat Poland as a potentially very retailers, such as the promotion event, ‘Riesling Weeks’ important market. Tejo is a region that is actively showing tastings and presentations Wine Blogger ▪ Biedronka, the largest discount supermarket chain in Poland, is the most commonly used retailer for wine purchasing. Owned by a Portuguese company, Biedronka not only sells local Polish products but also Portuguese-made Distribution in channels such as discount stores; that are products, including wine. This significantly influences the wine choices of Polish reluctant to reach famous brands, is a challenge for large drinkers and the popularity of Portuguese wine importers such as CEDC Wine Writer, Trade Expert and Wine Educator

▪ Lidl is the second most popular retailer for purchasing wine; the discount supermarket chain from Germany Portuguese wine gained popularity because of Biedronka, although recently, other events for Portuguese wines have been happening PR Agency Director ▪ Brands from a larger, broader range of wine producers and more premium wine brands are therefore less readily available in Poland Wine marketing in Poland is in its infancy. It is often mistaken for advertising that is not permitted Top 3 - Retailer usage for buying wine Wine Writer, Trade Expert and Wine Educator % who have bought wine at the following retailers in the past 6 months Base = All Polish semi-annual wine drinkers (n=2,000)

Poland Source: Wine Intelligence, Vinitrac® Poland, Mar'18 & Jul'18 n=2,000 Polish semi-annual wine drinkers, 11 Landscapes Wine Intelligence trade interviews, September 2018 Management Summary 6. ONLINE PURCHASING IS TECHNICALLY ILLEGAL IN POLAND, YET YOUNGER CONSUMERS INCREASINGLY REPORT PURCHASING WINE THIS WAY

The sale of wine via the Internet is hindered by legislative and administrative factors. It is not explicitly forbidden, but a lot is said about the fact that such sale is inconsistent within the law Wine Writer, Trade Expert and Wine Educator

A few years ago, online sales was a promising form of trade, but now the state administration has stopped it and there are no prospects for change Wine Blogger

▪ Online wine sales in Poland are very limited due to government regulations ▪ The current law, Act on Upbringing in Sobriety and Counteracting Alcoholism, was adopted in 1982 and does not mention online sales – however, the common legal interpretation is that online sales are technically prohibited. While alcohol can only be sold on the premises of a seller with a valid license, there is disagreement over how this applies to online sellers ▪ Nonetheless, wine purchasing online still exists and is showing signs of growth; 8% usage compared with 3% in 2015. This channel of purchase is more prominent among younger buyers aged between 18 and 34 years

Red / Blue: Statistically significantly higher / lower than 2015 at 95% confidence level Poland Source: Wine Intelligence, Vinitrac® Poland, Mar'15 n=1,000 and Mar'18 & Jul'18 n=2,000 Polish semi-annual wine drinkers, Wine Intelligence trade interviews, September 2018 12 Landscapes CBI Market Channels and Segments: Wines in Poland 2016, www.cbi.eu Wine Intelligence Ltd Terms and Conditions of Licence for Syndicated Research 2.. Copyright Products – key sections 2.1 The Copyright in the Syndicated Research Report(s) shall at all times vest with WI. The copyright in all artwork, data and copy for each element of the report created and assembled by WI shall at all times Definitions and Interpretation remain the property of WI. 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