October 7th 2007 Poland: Roads to market by Tomasz Prange-Barczynski

Compared to the mature markets of Western Europe, the Polish wine scene is still relatively young. After years under the state monopoly, the market is developing modern distribution channels. [pic]
As young as the Polish market is, so too are the wine-drinking habits of most Poles. The difference between the early years after the fall of communism and now is merely that back then it was the importers and distributors who created those habits. Today, the consumer's desires are shaping the portfolio of the distributors.

While the costs of wine imports in Poland are still high, consumption is low, resulting in the steepest shelf prices in Europe, which does not favour consumption. Further, wine advertising is forbidden, which limits exposure. Last but not least, although wine sales are rising, Poles are traditionally vodka and beer drinkers.

Where to buy wine in Poland
Wine sales in Poland are dominated by the off-trade (77%), with the main distribution channels being hypermarkets (21.9% market share) and supermarkets (25.9%), where together nearly half of all imported wine is sold. While common in western Europe, large outlets and shopping malls are still a novelty. They have, however, especially in the larger cities, already become the trendiest places to shop. Today, every third Pole buys only in super- and hypermarkets.

In total, there are slightly over 200 hypermarkets in Poland. The largest chain in the country is the British Tesco, with more than 50 hypermarkets. The French Carrefour boasts slightly more than 30 hypermarkets and a large chain of supermarkets under the Champion brand. The Casino Group, third in rank in 2006, was recently purchased jointly by Tesco and AG Metro, which already owned the wholesaler Makro and hypermarket chain Real. In the larger cities, significant volumes of wines are also being sold by the French hypermarkets Auchan and Leclerc.

The discount market is dominated by the Portuguese group Jeronimo Martins, with its chain Biedronka, followed by the Schwarz Gruppe with Lidl and Tengelmann with Plus.

The range of wines available
In the mid 1990s, when the first French hypermarkets appeared on the Polish market, it was possible to find a large selection of inexpensive wines from Bulgaria, Spain, France and the New World for under €4 ($5.55) as well as Grand Cru Classé clarets at lofty prices.

Today, the average price for a bottle of wine in supermarkets is around €5 to €7. Often, though, those same wines would cost only €2 to €4 in western Europe. Some of the hypermarkets, like the Carrefour selection, do their own imports. Most of them sell well-known international brands from the major importers, such as the Californian Gallo, whose Carlo Rosso is one of the most successful brands on Polish market. Sutterhome, the French Castel Frères Group and Bongeronde also do well, although in smaller quantities, as do international brands like Trivento, San Pedro or Jacob's Creek.

On the other hand, Polish supermarkets are still full of anonymous own brands at €2 to €4, from the New World, less prestigious Spanish regions or the Languedoc region. Given the historical connection, cheap Bulgarian and Hungarian wines are also always present on the shelf. The best known and most widely distributed brands are Sofia and Egribikaver.

Smaller, but more prestigious chains of gourmet supermarkets operate in cities such as Warszawa, Kraków, Poznan´ or Wrocław, selling both gourmet delicacies and premium wines. In chains like Alma, Piotr i Paweł or Bomi, high-end bottles from Italy and France can be found alongside the less expensive stuff that is also available in regular hypermarkets.

Smaller grocery stores are still responsible for 46.7% of the sales of all table wines in Poland. In fact, wine is now available in nearly two thirds of such shops, which means close to 70,000 outlets. However, only the cheapest brands are generally represented in such grocery stores and the upper price limit for a bottle ends at €4 to €5. There are, however, a growing number of specialised wine boutiques in Poland. Even if only some 5.7% of all wine is sold in such shops today, the value of those bottles is significantly higher. Prices in such shops also start at the €4 to €5 level, but the most significant range is between €5 and €25. Most of the finest specialised shops belong to wine importers. One of the biggest chains, La Passion du Vin, is owned by Seneclauze, a well established company. The outlets are usually located in shopping malls in the major cities. The other chain, Fine Wine and Spirits, belongs to one of the largest premium wines distributors in Poland, Piwnica Wybornych Win, which is owned by Carey Agri. His own chain of wine shops boasts another big market player, Centrum Wina, owned by Ambra, which is in turn owned by Schloss Wachenheim.

On the other hand, a major role in promoting wine culture and selling interesting premium brands, even if the turnover is still relatively low, is played by shops owned by small, specialised wine importers like Robert Mielžyn´ski in Warszawa, whose international portfolio includes Breuer, Foradori, Hoffstätter, Meryvale and Felluga.

Atlantika, also in Warszawa, specialises in Portuguese wines, including brands like Niepoort, Quinta da Alorna, Herdade do Esporão. Festus in Gdan´sk, Tre Bicchieri in Poznan´, Burgundia in Katowice and Vinoteka 13 in Kraków also offer their clients an interesting selection of wines not seen elsewhere. Probably the most successful chain of small and unostentatious wine shops was created by half-Pole, half-Dane Peter Puławski. The idea behind Grand Cru, as he calls them, combines an extremely modest design with the direct import of value for money wines. Today, Puławski's Grand Cru has over a dozen outlets and succeeds in attracting a host of loyal clients.

No month goes by without the opening of a new wine shop somewhere in Poland. Only a couple of years ago, the only successful places to establish wine business were the major cities. Today, there are numerous tiny boutiques in smaller cities like Krosno or Tarnów. These shops often play the crucial role of wine education centres in each of the regions, disseminating knowledge to the interested. Some 16% of all wine in Poland is distributed through hotels, restaurants and catering channels. Wine was, and often still is, treated by restaurant owners as a difficult drink to manage. There is a noticeable lack of educated staff. Very few restaurants employ a sommelier and the turnover of staff is so high that it makes little sense to invest in training. The result is a vicious circle, where wine sales are low and prices high. Mark ups of 300% do not encourage consumption. Further, even in most of the famous restaurants, selection is poor. However, as wine becomes a more prestigious drink, often even a status symbol, the situation has improved over the last two years, In addition, there are a growing number of trendy wine bars offering a wider selection of better wine by glass.

Other wine channels
Although there is no reliable data about Internet wine sales in Poland, this channel of distribution seems to be growing as it is the only way for many consumers to buy the premium wines from the small, quality-oriented importers. Most of them treat Internet sales as an appendix to their classical business, but there are a couple of successful projects that are based only on the web. The best example is that of 101win.pl, the first Internet-only wine shop in Poland. It is based in Szczecin and owned by the enthusiast Marek Popielski, who imports a wide range of both good value and rare wines from Germany.

While direct sales, including the sale of wine by importers directly to final consumers, represent 7% of Polish distribution, that figure seems to be decreasing as the number of specialised wine shops grows. Further, the door to door sales that work so well in some markets are also on the wane.

The wine structure matures
After more than ten years of development, the modern wine market in Poland is consolidating. The best example is the growth of Ambra, the owner of one of the biggest premium wine importers. The company was established in 1994 with a 25% holding of the German Sektkellerei Schloss Wachenhei and concentrated on sparkling wine production. In only ten years, Ambra became the leading sparkling wine company in Poland, with 25% of the market. In 2004, Wachenheim took full ownership. In 1999, Ambra established Centrum Wina, a separate company responsible for the import and distribution of premium wines including Antinori, Gaja, Beringer, Lindemans, Casa Lapostolle, Santa Carolina and Trapiche. Five years later, Ambra bought 51% of Vinex, the leading importer of Bulgarian wines, and thereafter 50% of TIM, which specialises in serving a wide range of supermarket wines, and then 47% of Seneclauze, the premium wine importer with the largest chain of wine shops in shopping malls in all of Poland. Finally, Ambra bought the Wine House, which also owns an important chain of wine outlets in various shopping malls in Warszawa.

Ambra's main competitor on the market of premium wines is Central European Distribution Corp., the largest (in value) producer of internationally known vodkas Žubrówka and Soplica and owner of Carey Agri, which under the name of Piwnica Wybornych Win imports the wines of Torres, Mondavi, Concha y Toro, Frescobaldi and brands like Mouton Cadet.

At the entry level price point, Bartex, which also produces wines from imported must, is the leading company. However, in the past few years it has extended its portfolio to include brands in the middle-price range, like Australia's Angove's. An important part of the Polish wine market is serviced by medium-sized companies, trying to survive by importing and selling premium wines. Mielžyn´ski or Atlantika have already been mentioned. Other major players of this league are, among many others, Dom Wina, Bodega Marques, Wine 4 You, Wineria, Skarbnica Winnic and Vininova. While the consolidation among the major players was in progress, the last three years have also seen a plethora of smaller companies emerge. These have often been founded by wine enthusiasts with significant financial background in other activities, who import smaller amounts of premium wines almost as a hobby. Their distribution channels are mostly through the internet or small wine boutiques.

Poland is still an emerging market. As wine has never been the national drink, nor obviously present on Polish tables, it is not an easy country to penetrate; but with a population of 38m and economic growth of 7%, it is a place of great potential.