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The Netherlands WINE MARKETS THE NETHERLANDS Prepared by: Carlos Marques, Dr. Paulo Lopes and Richard Sagala Table of contents 1. Introduction .................................................................................................... 1 2. Economic environment ................................................................................. 3 2.1 Quick facts ............................................................................................................... 4 2.2 Macroeconomic overview: GDP, Domestic Consumption, International Trade, Inflation, Unemployment ........................................................................................................ 5 2.3 Political and social situation ................................................................................... 12 2.4 Demographics........................................................................................................ 13 2.5 Wine sector ............................................................................................................ 15 2.5.1 Quick overview ............................................................................................................15 2.5.2 Regulations..................................................................................................................17 3. Production .................................................................................................... 19 3.1 Historical facts........................................................................................................ 19 3.2 Vineyards, wine, firms and structure...................................................................... 19 4. Consumption................................................................................................ 24 4.1 Volume per capita and evolution............................................................................ 24 4.2 Wine and other alcoholic beverages...................................................................... 25 4.3 Profile of wine consumers...................................................................................... 26 4.4 Consumption according to the price ...................................................................... 30 4.5 Consumption according to the type of wine ........................................................... 32 4.6 Image and reputation of different wines................................................................. 34 5. Imports and exports..................................................................................... 39 5.1 Market landscape................................................................................................... 39 5.1.1 Imports by country of origin .........................................................................................40 5.1.2 Exports by countries ....................................................................................................41 5.2 Competitive environment ....................................................................................... 42 6. Distribution................................................................................................... 43 6.1 Market structure ..................................................................................................... 43 6.1.1 Off-trade – Supermarkets’ ...........................................................................................45 6.1.2 Off-trade – Liquor stores..............................................................................................48 6.1.3 On-trade - restaurants, bars, hotels.............................................................................50 6.1.4 Direct mail / e-commerce.............................................................................................52 7. Market segmentation ................................................................................... 53 7.1 Sales per type of wine............................................................................................ 53 7.2 Sales by country of origin....................................................................................... 55 7.3 Sales per grape variety .......................................................................................... 56 7.4 Packaging .............................................................................................................. 57 7.5 Prices ..................................................................................................................... 58 8. Conclusion.................................................................................................... 60 9. List of references ......................................................................................... 64 Appendices............................................................................................................ 65 1. INTRODUCTION When one thinks about the Netherlands, good things come to mind; some may think of picturesque cities (and canals), a highly educated and open-minded population, beautiful people and a stable socioeconomic environment. The purpose of this economic study though, is to assess the contemporary Dutch wine market. Although a small country in territorial terms, the Netherlands has played the economic game consistently well for a long time, being today a relevant market for the European wine business. Firstly, because of its geographical location and trade history (way back to its colonial activities and the Dutch East Indian Company in the 17th century), the Netherlands was and still is an important hub for Europe in terms of goods’ distribution, making the port of Rotterdam the busiest in Europe. It is in the history, location and nature of the Netherlands to trade, and, not surprisingly, trade is indeed one of the most important economic activities in the Netherlands. In such respect, the figure 1, indicating average prices in consumer products in different countries, shows the Dutch vocation for making trade and purporting competition and low prices. Also welcoming to businesses is the Dutch tax system, with low corporate taxation rates, especially on multinational holdings, making the country nearly a “European tax heaven”. The upsides are obvious, in terms of attracting financial flows, increasing public revenues and 1 generating direct jobs. The downside, not so often mentioned, is the shift of the tax burden to other sources (such as labor), a reduced competing ability of smaller local companies and the possible attraction of companies with dubious reputation and/or interested in money laundering. Figure 1. Average price index in consumer products. Source: AC Nielsen (2010) Wine wise, the Netherlands is typically a non-producing country (see figure 2 and more details in this report), which, however, does not prevent it from intense wine business activities. Indeed, the Dutch people form a mature yet evolving market, with high consumption per head and increasing competition, as well as serve a trading hub for the European market. 2 Figure 2. Producing and Non-producing Countries in Europe. Throughout this work we will approach several key aspects of the Netherlands as a wine market. More specifically, Carlos put together this introduction and will continue by building up an overview of the Netherlands as a country and of the Dutch economic environment, and how it interacts with the local wine scenario. This will be followed by Paulo with a close look on the wine production and imports, as well as on its distribution and exports. Amidst that, Richard will approach with depth the situation regarding consumption of wine in the Netherlands Finally, both Richard and Carlos will go over the price structures and segmentation of the Dutch wine market. At last, the three group members contributed to a concluding wrap-up of our study on the Dutch wine market, also indicating which are the main questions and trends posed for the future. The list of references, of course, will also be a result of the efforts of the three group members. Acknowledgements: The group would like to thank Theo Mellenbergh (Wijngaardeniersgilde); Annette Badenhorst and Andre Morgenthal (WOSA, Wines from South Africa); Willem Siebelink (Huinck & Co BV / EDC NV) and Tony Battaglene (Winemakers’ Federation of Australia) for all the information on different aspects of Dutch wine market 3 2. ECONOMIC ENVIRONMENT 2.1 Quick facts The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with parts in the Caribbean. The Netherlands are an independent monarchy since 1813 and it is currently, since 1848, a parliamentary democratic constitutional monarchy, with a centre-right wing government formed by multi-parties’ coalitions. The capital is Amsterdam and the seat of government is in The Hague. The Dutch Parliament (or Staten Generaal) consists of two chambers – one, with 75 members, indirectly elected and with limited powers, and the other being directly elected. Curiously, the Netherlands in its entirety is often referred to as Holland, even by Dutch people sometimes. Strictly speaking, however, Holland is only the central-western region of the country comprising two of its twelve provinces – North Holland and South Holland (figure 3). Linguistically thus, it is similar to the frequent reference to Russia as the (former) Soviet Union, and to England as the United Kingdom. Figure 3. The Netherlands territory and representation of the Holland region. The Netherlands was one
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