Jan 15, 2013

Consumers and wine - fresh information from 2012 monopoly sales

The Finnish wine monopoly Alko has just released its most recent sales information on 2012 wine consumption and it is time to take a fresh look at what Finns, a Nordic nation of 5.4 million, are drinking.

Wines in the price range of under 8 euros per bottle continue to dominate the market with a 65 % and 77% share of all red and white wines sold, respectively, down from 68 % and 81% in 2011 (all prices being scaled to the usual 0.75 litre bottle size). The statistic is very much influenced by tax increase in 2012 as well as sales of bag-in-box wines (BiB) which represent 39% of all wines sold in Finland,  mostly priced under 8 euros.

Picture: Alko
It is encouraging to learn that wine continued growing as % of total alcohol consumption in 2012. And bulk wines naturally lead this trend as newbies to wine and new generations are more and more willing to try wine and make their initiations on the entry level products, i.e. the lower priced wines.

So why not study this trend and enjoy popular wines from the named price range, i.e. "St. Elmo Village", a Californian medium dry (12% abv) which was the 4th most popular white wine sold in 2012, and a red "Caballo de Mendoza" from Argentina's largest wine producing area (13% abv), on the 5th place among reds. 

Both wines are imported by Altia Denmark where the wines were also bottled, then further sold in Finland by Altia. The decision to bottle bulk wines in Europe rather than in the country of origin leads to a significantly more efficient logistical operation, leading to cost efficiency as well as being environmental friendly, factors which usually go unnoticed however are appreciated by the consumer if they were aware of them. The wine labels do not carry vintage information.

Picture: Alko
* ...While writing this, notes of grapefruit and flowers emerge from the St. Elmo Village, combined with a surprisingly round mouth-feel and nice acidity in the medium-dry finish. While St. Elmo Village is suited to be enjoyed with food as well as over a social setting, the red Caballo we had with minced meat soup at dinner was well suited to the carefully spiced dish. Notes of blackberry and ripe cherry in a fruity, smoky and spicy charcoal-made-barbecue style emerge after the bottle has been open for 2 hours *

... Back to the subject. Now consider this anomaly which would definitely not exist in a free market situation for wines. While wines over 17 eur in Alko represent only 1.5% and 0.5% of all sold red and white wines, respectively, the wine monopoly carried a whopping 826 and 323 items for these categories in 2012. Now compare those numbers with 285 and 217 items for wines under 8 euros, respectively. Needless to say, if there was no wine monopoly, Alko simply could not carry this amount of non-moving goods on its lists, as it is on a business sense plainly unrealistic. For those offering critique on wine monopolies, in this sense, Alko does a nice job in keeping available nation-wide a large number of extremely slow-moving wines, four times the amount of items compared to best seller wines. 

Similar information can be found from Swedish wine monopoly Systembolaget's statistics, however with a significantly larger spread among price groups. Wines under 8 eur (69 SEK) represent only 42% of wines sold while 78% of all wines are priced under the next threshold,  under 10 eur. Explaining the significant difference between the two Nordic countries, in Sweden the more pricey old world producers Italy and Sout Africa are the largest countries of origin while Chile dominates the Finnish market being twice the size of the next largest country, Spain. 

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