How discount stores are conquering Poland’s rapidly growing wine market with quality imports at rock-bottom prices
By Jacek Ciesnowski
Walk into a Polish discount store these days and you might be surprised at a particular dissonance: next to oversized bags of potato chips and generic energy drinks sit bottles of some of the world’s best wines encased in wooden boxes and accompanied by information on serving temperatures and complementary dishes. Westerners might be used to paying top dollar for quality wines, but in Poland, where alcohol consumption is falling but wine-drinking is rising, the phenomenon is part of a trend by which just about everybody is looking to get on the great grape gravy train.
Discount stores such as Germany-based Lidl and Portuguese-owned Biedronka are taking over the wine sector by storm. According to various studies, the discount chains sell between 30 and 40 percent of wines on the Polish market, worth some PLN 2 billion. Biedronka is in the lead with about a 15 percent share of the market, with Lidl in second place at 10 percent. Soon, every other bottle of wine sold in Poland will be purchased at a discount store.
A thirst for wine
International Wine & Spirit Research predicts that in the coming years, the sales of alcohol products in Poland will actually drop slightly (0.5 percent per year until 2018). But that won’t affect wine importers and producers – wine sales are set to rise by some 4-5 percent, the research firm has found.
“The growth will depend on the economic conditions in Poland and other European markets,” said Piotr Poznański, senior analyst at IWSR. “Nevertheless, the average annual growth rate of 4.5 percent over the past five years is likely to remain unchanged during the next five-year period thanks to the growing popularity of wines, a wider selection of wines, as well as tastings and promotions.”
This presents an opportunity for discount stores, which have the ability to import large quantities of wine directly and sell it at low prices.
Lidl and Biedronka have a similar approach to marketing their wines. They have both hired well-known Polish sommeliers and regularly present new wine lists. Every few weeks the offer rotates: Lidl might feature French wines while Biedronka has a special offer on Portuguese vintages one week, while the next week the stores could have a special on wines from South America and Italy.
To boost their sales, the chains are also trying to educate their clients in wine etiquette, which is still lacking in Poland. According to a TNS Polska poll, only 25 percent of Poles drink wine with a meal, 60 percent don’t know why white-wine glasses differ from red-wine glasses and only 5 percent can name a grape variety from which wines are made.
Both chains also invite bloggers to tasting events or send the bottles to them with the hope that they will post favorable reviews.
The wine market is huge: there are so many brands, vintages and grape varieties that it seems only an expert could know which wine deserves his money and attention. And wine sellers – not only discount stores – will use the customer’s lack of knowledge to their advantage. Recently Biedronka promoted the Monasterio de las Viñas wine from Spain, whose bottles featured a large sticker proclaiming that the wine had received 89 points on the famous 100-point Robert Parker scale.
Check the label
At a price point of just PLN 17, the deal seemed too good to be true. Indeed, most wine critics were disappointed with its taste, and no wonder: wines that earn between 80-89 points are, according to Parker, only “barely above average.”
There was more confusion when Biedronka recently promoted a number of wines in its offer that had been awarded various medals. A Polish wine blog investigated, finding that some of the wines had indeed won medals, but under different brand names. In some cases, the wines had been awarded, but for a completely different vintage.
Another reason why good wines can be bought in Poland at lower prices than elsewhere is that the discount stores buy in bulk. With orders much larger than those of other importers, they can negotiate a better price. And rebranding the wine can benefit both the retailer and the producer: the retailer can sell it cheaply while the producer doesn’t risk hurting its brand’s reputation as a budget product.
Low price, high quality?
While Biedronka mostly sells wines below PLN 30, Lidl has a slightly different approach. While it also sells many bottles within that price range, it has also recently introduced three that cost PLN 199 each. This is mostly a marketing tool – the company doesn’t expect to sell many such bottles, but it sends a message to customers that they will sometimes have to shell out more than PLN 30 for a good wine. The average price for a wine in Lidl this past November was PLN 44 (PLN 36 if you exclude those PLN 199 wines), while in Biedronka the average price was PLN 18.
But can such cheap wines really be good? Tomasz Budyta, a wine expert who runs the Mondovino restaurant and wine shop in Warsaw claims they can, but he also warns that they won’t be anything extraordinary.
“You can find some good wines for everyday use in discount stores – simple wines for simple tastes, for customers that aren’t looking for anything special,” he said. “More exceptional wines won’t be sold there, because the customers won’t buy them. Even if Biedronka was selling Pinot noir from Burgundy for PLN 25 per bottle, no one would buy it because it wouldn’t fit the average customer’s taste.” Pinot noir is considered one of the best varieties in the world, but can taste sour.
Budyta isn’t worried about discount stores moving in on his turf. He thinks that both specialist wine stores and discount stores have their place in the market, though he believes change is coming.
“Traditional wholesalers are becoming a thing of the past,” he said. “To compete on price, restaurants and wine shops often import wines on their own. Prices in Germany can be 30 percent lower than in Polish distribution chains, so many are cutting out the middle man.”
Budyta expects that most importers will open their own wine shops to offload stock, and that producers will begin selling the same wine under two different brands: one for discount retailers and one for specialist shops. But his confidence is not shared by others. According to market research company Dun & Bradstreet, 46 percent of Polish wine sellers are in poor financial condition. In the wholesale sector the figure is similar, at 44.6 percent.
Discount stores’ strategy to educate customers seems to be working – the rise in wine consumption in Poland over the last few years has been significant. Even in 2009 the majority of wines sold in the country were low-cost fruit wines bought by poorer consumers looking for cheap alcohol. Now the trend has switched, with Poles buying more still, grape wines, that can be bought at competitive prices (the average Pole spends PLN 16 on a bottle of wine).
The change in drinking habits can be seen in the wine’s origin. In 2001, 20 percent of wine sold in Poland was imported from Bulgaria, while now the most popular wines are from the US (over 9 million liters sold per year). Most other popular wine countries, such as France, Italy and Chile sell around 5 million liters annually each (out of some 90 million liters combined).