Eastern Europe heading in the right direction

17 May, 2013

The mass migration of more than a million eastern Europeans to Britain since Poland and seven neighbouring countries joined the EU in 2004 has heralded the one of the greatest cultural shifts our nation has seen since the Norman Conquest.

Our economy, cuisine and outlook has been changed indelibly, with some lauding the positive impact on our GDP and delighting in the odd goulash, and others turning to anti-immigration party UKIP as a conduit for protest votes.

The prospect of a further 250,000 Romanian and Bulgarian nationals heading to our shores when those countries join the EU proper in December has led UKIP leader Nigel Farage to reach for the crucifix.

The party took a record 22% of the popular vote in this month’s local elections, but there is nothing it, nor the Eurosceptic Conservative MPs pressuring David Cameron to push forward a referendum on Britain’s EU membership, can do to halt December’s wave of eastern European migrants.

The latest Home Office figures show 175,000 Bulgarians and Romanians have already hit our shores, armed with National Insurance numbers and short-term contracts that will last until the floodgates are opened in December.

As they trickled in during 2011 and 2012, the popularity of wine from those nations soared in the UK.

A year ago Romania was the fastest growing country in the off-trade, with sales up 128% in value and 117% in volume compared to the previous year (Nielsen MAT to 27/4/12).

Bulgaria showed more modest gains, up 0.9% in value and 6.1% in volume.

A lot of it had to do with price – these wines muscled bottles from more established countries off shelves by undercutting them, attracting recession-hit consumers – but immigration and a growing familiarity with eastern European culture can only help. 

But out of nowhere, eastern European wine is in crisis.

Sales of Romanian wine dropped 22.8% in volume and 18.4% in value over the past year (Nielsen MAT to 27/4/13), and Bulgaria fared even worse, down 41.5% in value and 47.2% in volume.

Neighbouring Hungary is also in freefall, down 24.5% in volume and 20.2% in value, following similar drops the previous year.

It could be due to shorter harvests pushing up prices – resulting in consumers returning to their old favourites – or it could have something to do with the backlash against eastern Europe that UKIP is cashing in on.

Nielsen senior service manager Natasha Kendall believes a trend that is seeing consumers abandoning the cheapest wines is causing problems for eastern European suppliers.

She says: “They tend to sit at the cheaper, sub-£4 end of the scale and this segment of the market has been declining rapidly due to supermarkets stopping three-for-£10 deals and duty and tax increases leading manufacturers and retailers to attempt to preserve margin.  

“There has also been a glut of cheap-ish – around £4-5 – Spanish and Italian wine around over the last few years which have been the strongest performers in the market and have tended to have visibility in store in terms of promotions.”

Either way, suppliers from beyond the former Iron Curtain know they have to be creative to arrest the decline.

One of the major difficulties the region faces is selling Brits varietals they struggle to pronounce – like Fetească Neagră and Gewürztraminer – so Halewood Romania is pushing Romanian Pinot Noir, a varietal UK consumers are familiar with.

Matt Johnson, business unit controller, says: “The campaign is already engaging the trade and consumer through social media and tastings, and we’re successfully demonstrating that Romania is a serious producer of Pinot Noir.  

“We’ve just launched a new Romanian range developed in partnership with Laithwaite’s Wine, called Paris Street. At its inaugural tasting, Paris Street Pinot Noir was one of the best selling wines of the night. Other new distribution gains have come from Waitrose, The Wine Society and cash and carries.”

Ehrmanns is also pushing the international varietals Bulgaria offers.

Buying executive Richard Dennis says: “Essentially, Bulgaria is still an emerging region and consumers need convincing that it can offer good quality European wine, without the traditional old world viticultural heritage.
“Working with our partners Domaine Boyar we developed Deer Point, a range of value single varietal wines from the Thracian Valley, which have proved extremely popular in the independent sector, where we’ve seen sales increase significantly over the last year.

“We’ve also developed a number of new single varietal wines for multiple channels that reflect the terroir of the Thracian Lowlands.
“Other emerging regions are also offering outstanding quality entry-level wines and there is increasing competition to offer the best value to quality ratio.

“Although Bulgaria’s 2012 harvest was 30% lower than the previous year, exports have increased 16% showing an increasing demand and therefore increasing awareness and understanding of what Bulgaria can offer.”

The next step is to introduce more indigenous varieties to allow consumers to further discover regions that offer a treasure chest of wines that offer diversity, a strong connection to the land and 2,000 years of viticultural history.

Halewood’s Johnson says: “Last month we launched two indigenous wines into Waitrose, a Fetească Neagră and a Sauvignon Blanc Feteasca Alba blend.  The Wine Society has also just launched Halewood’s Viognier Tămâioasă Romaneasca blend –testament to the consumer demand for discovering new wines.”

A Romanian Winegrowers spokesman adds: “Over the last three years, Romanian Winegrowers has invested heavily in land, viticulture and machinery to improve every part of the grape to table process. Evidently, sales in Romanian wine are considerably higher than they were two years ago and are set to continue to grow.”

Karen Hardwick, who heads the specialist division at PLB, believes the region’s future lies in more expensive wines.

She says: “When I was a student, if you went to a party you would take a bottle of Hungarian or Romanian wine because it was the cheapest. It’s not about that any more.

“At entry level now it’s cheaper to go to South Africa, Chile and especially Spain.

“The price on eastern European wine is going up and we are getting fewer but better wines.

“It offers good value for money – not at entry level but at the next tier up, at £6-8.

“We are getting some very good Pinot Grigio from Hungary, that is punching above its weight.

“We are looking at increasing our range – particularly from Hungary, but also Romania and Bulgaria. I think it will be the independent and specialist stores that push it. At supermarkets you would have to put it at half price to get any traction and that’s not what they are about.”

Smaller retailers could hold the key to the future of eastern European wine in the UK: if they can educate their customers about its value for money, everyone will benefit.

And if that doesn’t work, hundreds of thousands of thirsty Romanians and Bulgarians will soon arrive, and they will have no problems with pronouncing the wines or drinking the varietals their ancestors have enjoyed since biblical times.

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