An Evaluation of Online Wine Merchants That Are Successful in the German Market

Master's Thesis, 2019

103 Pages, Grade: 1,3


Table of Content





1.1 Research Question and Objective
1.2 Research Methodology
1.3 Structure of the Thesis

2.1 Definition of success
2.2 Millennial generations
2.3 Consumption Behaviors
2.4 Competitive analysis models

3.1 Entry Barriers
3.2 Determinants of Supplier Power
3.3 Determinants of Substitution Threat
3.4 Determinants of Buyer Power
3.4.1 Consumption Behaviors
3.5 Rivalry Determinants
3.6 Competitive Summary

4.1 Framework
4.2 Challenges
4.2.1 Product and website related challenges
4.2.2 Financial and time uncertainty
4.2.3 Privacy Policies
4.2.4 Information asymmetry
4.3 Market Trends
4.4 Online Selling Strategies (Best Practices)

5.1 Discussion of Quantitative and Qualitative methods
5.3 Conducting the Interviews
5.4 Interview Data Analysis
5.4.1 Interview characteristics
5.4.2 Definition of Success
5.4.3 German Wine Market
5.4.4 Online Shops
5.4.5 Trends
5.4.6 Best Practices


7.1 Evaluation and Managerial Implications
7.2 Limitations and Further Research Possibilities


9.1 Interview Guide
9.2 Questionnaire Transcript
9.2.1 Interview #1
9.2.2 Interview #2
9.2.3 Interview #3

List of Figures

Figure 1: Wine market distribution: Go to market

Figure 2: Wine consumption frequency in Germany by age

Figure 3: Competitive Forces Summary

Figure 4: Personalized Label as Best Practice Marketing Strategy

Figure 5: Influencer Wine Campaign

Figure 6: Wine in Black Newsletter Campaign


Abbildung in dieser Leseprobe nicht enthalten


The objective of this paper is to identify which elements that make online wine merchants successful in the German market are. The identified factors will give guidance to companies to take managerial actions to improve their business model and marketing investment actions.

The qualitative method used to identify elements that contribute to the success of online wine merchants was a semi-structured interview, which gathered insights from companies of the industry. Moreover, secondary sources were used to make an evaluation and to link with the results from the interviews. The findings obtained from the interviews show that the term success relates to having customers returning to the store. Moreover, other factors such as pricing, product accessibility, product information asymmetry, customer support, trust, and shipping times play a critical role in the customers purchasing decision.

The conclusions of this paper sustain that online wine merchants should follow a multi-channel selling strategy. Moreover, it is essential to provide excellent customer service that generates trust. Also, customers feedback plays a vital role for companies to help improve processes as the need to create a positive word of mouth between wine consumers is critical nowadays.

Ziel dieser Arbeit ist herauszufinden, welche Elemente Online-Weinhändler auf dem deutschen Markt erfolgreich machen. Die identifizierten Faktoren geben den Unternehmen Orientierung, um Managementmaßnahmen zur Verbesserung ihres Geschäftsmodells und ihrer Marketinginvestitionen zu ergreifen.

Die qualitative Methode, die zur Identifizierung von Elementen, die zum Erfolg von Online-Weinhändlern beitragen, genutzt wurde, war ein halbstrukturiertes Interview, das Erkenntnisse von Akteuren der Branche zusammentrug. Darüber hinaus wurde wissenschaftliche Literatur verwendet, um die wissenschaftlichen Informationen mit den Ergebnissen der Interviews zu verknüpfen. Die Ergebnisse der Interviews zeigen, dass der Begriff Erfolg damit zusammenhängt, dass Kunden in den Laden zurückkehren. Darüber hinaus spielen andere Faktoren wie Preisgestaltung, Produktzugänglichkeit, Asymmetrie von Produktinformationen, Kundensupport, Vertrauen und Versandzeiten eine entscheidende Rolle bei der Kaufentscheidung der Kunden.

Die Schlussfolgerungen dieses Papiers bestätigen, dass Online-Weinhändler einer Multi-Channel-Verkaufsstrategie folgen sollten. Darüber hinaus ist es wichtig, einen exzellenten Kundenservice zu bieten, der Vertrauen schafft. Auch das Feedback der Kunden spielt für Unternehmen eine entscheidende Rolle bei der Verbesserung von Prozessen, da die Notwendigkeit einer positiven Mundpropaganda zwischen Weinkonsumenten heutzutage von entscheidender Bedeutung ist.

1 Introduction

Nowadays, the e-commerce sector is gaining more relevance and companies are demanded to operate in a multichannel market as consumers are switching to the online market. The e-commerce opens new opportunities for companies. Online wine merchants can foresee the benefits of global customer access, unlimited product portfolio, and low operational costs.1 Also, there is no need for a physical store, and online sales give merchants the ability to adapt their marketing strategy.2 These are sufficient reasons for online wine merchants to seek new opportunities in this distribution channel.3 However, the online market creates barriers and challenges for companies which end up in a highly competitive market. The evolution of new technologies and the methods that companies use to collect information tend to be more sophisticated, gathering more sensitive data.4 As a consequence, consumers are more skeptical about their privacy and the safeguard of their personal information.5 This issue of distrust is essential to be overcome by online merchants to guarantee the viability of the e-commerce environment and future development.6 Therefore, it is critical for online merchants to determine what those opportunities and challenges are and how they can adapt to new market dynamics to be economically sustainable in the long run.

The German wine market is one of the largest wine markets in the world with a dynamic surrounding, saturated growth, fierce competition, and high fragmentation, which imposes higher pressure on merchants to stay profitable.7 However, besides the level of competition and market dynamics, it has been proved that wine merchants can devise opportunities by creating added value to sustain a long-lasting benefit.8 On the other hand, the dynamics and the vast abundance of preferences and tastes of the wine consumption habits pose even more challenges to merchants.9 Consumers preferences are a dynamic factor, as wine preferences vary according to age, economic situation, city, region and also gender.10 Therefore, finding the right customer segmentation is not an easy task. This thesis aims to provide elements to help online wine merchants in identifying what those preferences to be successful in the market are.

1.1 Research Question and Objective

The main research question is to evaluate what the key elements that make online wine merchants successful in the German market are.

Based on the initial research question, this thesis aims to make an evaluation of the German wine market and to facilitate online merchants to find critical aspects that would contribute to a successful business model in the long term. Recommendations and conclusions on those key elements will be illustrated based on market data information, academic information, and insights from online wine merchants that have been interviewed.

To assess the main question on what the key elements are that makes an online wine merchant successful, the following set of four sub-questions needs to be analyzed:

a) What elements drive the consumer's wine purchasing decision?
b) What are the challenges of selling wine online?
c) What are the differentiation factors for companies to be successful in the German wine market?
d) How can companies react to changes?

1.2 Research Methodology

This thesis looks at different market data sources, books, academic research papers and specific magazines from the wine industry. Moreover, an expert group was selected to drive a semi-structured interview. The selected group is composed of three wine merchants that operate in different channels and with different business models. The reason why this project based the analysis on a semi-structured interview in comparison to other methods available is to give a more profound and technical insight of the market which will be explained in chapter 5. The semi-structured interview was conducted through the telephone in English as well as recorded. The reason why the interview is recorded and further transcribed is to have a more in-depth analysis of the interviewee responses.

1.3 Structure of the Thesis

This work has seven chapters, including this introduction. The second chapter will look at the literature review by discussing the main contributions of different authors that give elements to address the initial research question. This chapter includes the definition of the critical term "success" in the context of online wine merchants as well as of what makes an online merchant successful and how successfulness will be measured.

The third chapter shows a closer insight into the German wine market by driving a competitive analysis. To this end, Porter's five forces are used as a framework. Firstly, the analysis will give an overview of the market structure, and it will look at the entry barriers. This analysis will show the challenges of new companies trying to access the market. Secondly, the determinants of supplier power will be relevant to understand what and who the key players of the market are and the power of negotiation and leverage they have. Thirdly, the thesis will illustrate the determinants of substitution products and the easiness for consumers and traders to switch. Furthermore, determinants of buyer power will show how the market behaves and where consumers buy the wine according to their demographic situation and what the behaviors that drive their purchasing decision are. Finally, rivalry determinants will give an overview of the market competition intensity, followed by a competitive analysis summary.

The fourth chapter will go deeper into the wine e-commerce by analyzing the online market. The general framework and the challenges that profoundly affect the online market dynamics will also be explained, to understand some of the barriers that companies face. Also, the impact that Millennials has on the online market to shape new trends will be discussed, to give an understanding of how companies can react to changes and what the latest trends are. At the end of this chapter, best practices in the online market will be shown to guide companies to adopt and adapt further strategies.

The fifth chapter deals with the methodology used to address the initial research question. Therefore, a short discussion about the quantitative and qualitative methods will be illustrated. Afterward, a validation of the method used (semi- structured interview) will be driven, followed by the interview process and the interview analysis.

The sixth chapter illustrates the conclusions based on the complete evaluation and methodology used to answer the initial and subsequent questions on what the key elements that make online wine merchants successful in the German market are.

The final chapter provides a critical review of the whole thesis with managerial guidance for which steps companies should follow to overcome challenges and how they can foresee future changes in the market. To conclude, limitations and further research possibilities will be presented.

2 Literature Review

2.1 Definition of success

It is essential to define the term "success" to be able to apply it to the context of wine merchants. Some authors consider success as a final goal.11 If someone would like to measure success, starting from the end, this would be the right approach.12 For example, if someone would want to lose a certain amount of kilos, the conventional thinking would be to measure the weight of the person at the beginning and then periodically until he or she had lost more than the expected amount of kilos, then success could be claimed.13 The author Klubeck argues that this kind of thinking would be wrong because success will not be measured accurately.14 Even though the person was successful in achieving the desired target weight, the person did not sustain it in the long term.15 Having successful steps along the way does not mean that someone is successful, the goals need to be long-lasting and sustainable during the time.16 Success means accomplishments but long lasting and not necessarily monetary.17

Other authors like Dyke et al. (2006) explain in their studies that there is a significant difference in what success is for men and women.18 Women consider success by finding a balance in life while putting a higher emphasis on personal relationships.19 On the other hand, men consider success from the material side of financial reward. Also, relationships are for men essential but on a smaller scale than women.20 The authors discuss the term "subjective success" which is related to personal feelings about accomplishments, and the authors argue that the ways of measuring success are based on personal criteria.21 Other writers have standardized the method of measuring success on the personal level to six specific dimensions: status/wealth, contribution to society, family relationships, personal fulfillment, professional fulfillment, and security.22

On the company level, the foundation to measure success is linked to the intention of the individual or that the company has and their vision.23 Those two elements, purpose and vision, need to coexist as they are the foundations to measure success.24 Klubeck explains that success needs to be measured before performance because performance indicates, whether a company is economically sustainable or healthy.25 However, if a company is economically sustainable does not mean it is successful.26 For the objective of this thesis, the term success for online wine merchants will be related to customer repurchase. In other words, to have recurring customers accessing the online store and converting into sales.

2.2 Millennial generations

The fast-moving speed of the wine market and the different consumption patterns of new generations make it critical for companies to understand Millennials as a new consumer target audience.27 Companies need to have a deep insight into this consumer audience patterns to address successful commercial and marketing efforts.28

Millennials are those that were born between the years 1981 and 1995.29 The main characteristic of this generational group is that they were born without any advanced technological devices, such as smartphones.30 Millennials have accompanied the rapid technological changes throughout their youthful life.31 However, most of the current technological changes are driven by Millennials. Therefore, this generation has a high affinity with new technologies and changes in comparison to other generations.32

Some authors such as Barber et al. (2008) analyze in their studies the consumption patterns and interest of Millennials, who are confident, self-reliant and eager for challenges.33 However, they still look for guidance and validation from others.34 On the other hand, Generation X is more independent with a high self-assurance level.35 Other authors like Higgins et al. (2016) in their paper "Wine on Facebook: A Look at Millennials Wine Information Search" also agree with the statement, that Millennials are open to getting feedback as well as to gain wine experience and to learn.36 They also say that they are open to new experiences, in the case of wine most Millennials are open to purchasing non- traditional wine packaging and different bottle sizes.37

2.3 Consumption Behaviors

Another relevant aspect to take into consideration is customer consumption behaviors. Bruwer et al. (2005) discuss the influence of atmospheric elements and the significance of providing an excellent service, which are elements that have a high impact on consumer purchasing decisions.38 Moreover, the authors discuss the main five reasons why consumers purchase online. They define in this context: convenience, the capacity to purchase at any time, the easiness of comparing prices and features, the broad access of products and the ease of the online purchasing process.39 The author also mentions the recognized risk of online retailing as well as the importance of creating trust and how this trust directly influences the consumer purchasing behavior.40

Other authors like Cho et al. (2014) introduce other recognized risks that impact the consumer purchasing decision.41 The study results mention the relevance of the information and the service quality but highlight the sensory barrier that wine has.42 Wine cannot be experienced before buying online, which increases the recognized risk for the consumers and the concern of disappointment.43 The recommendations of the study suggest introducing online information about the experiences of other consumers.44 Examples include tasting notes, wine reviews, and comment sections, that generate more trust and reduce the sensory obstacles they face.45

Consumption behaviors are influenced by word of mouth and marketing actions. The author Burger (2013) explains the process of word of mouth and how marketing ideas can expand.46 The author describes that six principles need to take place to create viral marketing ideas.47 The six principles analyzed by the author are social currency, triggers, emotion, public, practical value, and stories.48 The social currency principle is the idea that a product needs to be trendy and "cool".49 The second principle, triggers, relates to keywords that people usually link to someone or something when they hear them.50 The third principle relates to emotion and the way to create messages and ideas and the need to develop emotional communication.51 The next principle is the public principle which is the idea that other people need to see what others are doing or following. As evidence of this, the author mentions the popular saying "Monkey sees, monkey does."52 The fifth principle is the practical value where people need to see the usefulness and how a specific product will improve their lives.53 The final principle is based on the idea that the product needs to tell a story which people would like to share.54 By following these principles and adopting a wine product or developing a business model that fulfills those principles, online wine merchants can have better chances to be successful in the long term.

2.4 Competitive analysis models

This thesis will take Michael Porter's five forces approach to drive a competitive analysis model. The objective of formulating a competitive strategy is to relate a company to its environment.55 Even though the surrounding of the company is extensive and accompanies economic and social forces, the central aspect of its surrounding is the market in which it competes.56 The framework of the industry has a powerful influence in defining the principles of behavior of the competitors as well as the capabilities accessible to the company.57 The outside forces of the industry frequently influence all firms and the crucial aspect for the firm is to find different abilities or resources to deal with those external forces.58

The luck factor does not influence the fierce competitive struggle level of companies within a specific industry.59 This competitive struggle comes from the elemental economic framework and goes beyond the limits of the competitor's activity.60 The five competitive forces determine the level of competition of an industry: entry barriers, determinants of supplier power, determinants of substitution threat, determinants of buyer power and rivalry determinants.61 These forces show that the level of competition in an industry goes past the limits of the player's scope.62 Customers, suppliers, substitutes and potential entrants are all competitors to the company in the industry.63 Competition, as a whole, is shown and explained under the term "rivalry determinants."64 All forces together will determine the level of the industry competition and profitability.65 The stronger the force is, the more crucial to devise a strategy for the organization is.66 These forces will be further analyzed in detail in the following chapters.

Other authors like Hisrich suggest that it is essential to conduct an environmental analysis to identify flows that alter newcomers or already established companies.67 To perform the environmental analysis, firms need to take a look at the economy, to understand facts such as unemployment or disposable income.68 Moreover, culture gives elements to drive conclusions on trends or shifts in consumption patterns.69 Technology is challenging to anticipate, but it will have an impact on the choices of marketing investment. This could depend on how rapidly technology develops in the short or long term.70 Legal concerns will have a direct effect on any promotional activity as well as safety regulations.71 Moreover, aspects such as industry demand help to understand whether the market is growing or declining.72 The number of new competitors will give guidance on the market distribution and fragmentation.73 Changes in consumer needs will open opportunities to companies for new trends and product diversification.74 The final element is competition, which creates awareness of the potential threats of other companies and how to face them.75

3 Competitive analysis of the German Wine Market

People in Germany consumes more than 2 billion liters of wine per year.76 40% of the consumed wine is German wine, whereas the rest of 60% is imported wine.77 Italy, France, and Spain are accountable for 15% each of the total 60% of the imported wine.78 The rest is composed of wine from overseas as well as some close by countries such as Austria, Portugal, Macedonia, Hungary, and Greece.79

As figure 1 shows, 84% of Germans consume mostly non-sparkling wines, but sparkling wines such as champagne, prosecco, cava, among others, still represent 16% of the consumption taste, which is a relevant number.80 Looking at the places of wine consumption there is a primary division between off- premise or off-trade of 85% of German wine consumption.81 This is the wine that is consumed at home.82 On the other hand, on-premise or on-trade represents the amount of wine that is not consumed at home, which represents 15% of the consumption.83 When considering the food retail market structure, there is the central division between the two groups. On the one hand, the discounters: Aldi Süd and Aldi Nord, Netto, Norma, and Penny.84 On the other hand, the supermarkets: Rewe, Edeka and the Metro Group.85

Figure 1: Wine market distribution: Go to market

Abbildung in dieser Leseprobe nicht enthalten

Own illustration based on Dressler (2018): p. 12

The discounters are accountable for 35% of the wine sales in Germany, while the supermarkets represent 27%.86 These two main groups make up 62% of the total sales. The rest is split between wineries which make up 13% of direct sales, wine specialist retailers which account for 7%, direct or online channel up to 3%.87 On the on-premise or on-trade side, restaurants and bars are accountable for 15% of the total wine consumed.88

The following sub-chapters will analyze Michael Porter's five forces to understand the competitive intensity of the German wine market and its structure.

3.1 Entry Barriers

The German wine market has grown marginally in the last years. This situation discourages new entrants to access the market.89 The apparent market concentration of supermarkets and discounters can be perceived as an oligopoly. More than 85% of the imported wine is sold throughout these two channels and with one of the discounter's chains accountable for more than 27% of the total wine sold in the indirect channel.90

Moreover, there are other factors perceived by producers such as the increased bureaucracy and the demand to provide higher quality standards.91 Along with these demands producers also need to guarantee sustainable production which in some cases is difficult to fulfill and makes it a challenge for new companies trying to access the market.92

3.2 Determinants of Supplier Power

Germany is one of the most relevant wine markets in the world. However, it is not a simple place to do business because the market is fragmented, and the consumer is always looking for value.93 A reason for the low-price search from consumers could be the continuous price promotion that an oligopoly of supermarkets and discounters foster by pushing wine prices in the low tier.

Big winery companies often source grapes from independent growers. There are numerous independent suppliers, mostly with small infrastructure.94 However, those suppliers do not only rely on the big wineries to sell the grapes, but they can also sell the grapes to grape juice producers.95 This situation gives smaller suppliers a negotiation dominance against big companies.96

On the distribution level, there are major companies such as "Mack & Schühle", "Schenk", and "Tophi", that focus exclusively on Italian wines.97 Another list of big market players which have different units and operate in various fields are: "Eggers & Franke", "Schlumberger", and "Heinz Eggert", which also have a high dependency on the sales of spirits.98 On the other hand, "Bernard-Massard" and "Schlumberger" are players that, besides having a large distribution on the market, also have their own sparkling production.99 Some other companies such as "Mack & Schühle" and "Schenk" even operate their vineyards abroad.100

The following evaluation will assess the leading distributors and retailers in the market:

- "Hawesko Holding": Is the market leader and one of the biggest wine firms in the world.101 The group's revenue takes 5.18% of the whole market share in Germany, which represents more than 364 million Euros. The company is organized into three main segments: First, direct sales through a company called "Hanseatisches Wein und Sekt Kontor" (; secondly, "Jacque's Wein-Depot", the most prominent wine retailer in the country; and third, a leading wholesaler company called "Wein Wolf" and "CWD Champagner und Wein- Distributiongesellschaft".102

The wholesale unit of Hawesko in 2016 sold 26 million bottles for an estimated of 172 million Euros, where Italian wines lead with 38%, French wines 22%, Spanish wines 12% and German wines 10%.103 On the retail segment, the brand "Jacque's Wein-Depot", which works as a franchise system and has 293 franchises, generates annual revenue of 500,000 Euros per store.104 The e-commerce sector is only accountable for 3% of the total revenue.105 In 2016, "Jacque's" was responsible for 146 million Euros of the Hawesko group.106 The managing director of the group, Alexander Borwitzky, stated in an interview to Meiningers magazine that: "The solid growth in sales through the expansion of the retail space, online acceleration, and improved customer service will continue [...] "107 This statement clearly shows the relevance and resources that big companies are allocating to the development of the online channel.

Another son company of the Hawesko group is "Wein & Vinos GmbH" responsible for contributing with 46 million Euros of sales.108 Their website ( handles the majority of the business despite having only seven stores.109

- "WIV Wein International": Is one of the world's largest direct sales wine companies.110 The selling channels go from selling at trade fairs, hotels to private tastings at home.111 The company also distributes wines and has a retail unit and an online shop. Most of the sales come from Europe (77%), of which Germany is accountable for 38%.112

A son company of "WIV Wein International" is "Vino Weine und Ideen," which is a specialist retail subsidiary, established in 2000. They try to follow "Jacque's Wein-Depot" model, and they recently started to work on a franchise system whereas before the subsidiaries were wholly owned.113 The average turnover per store is 950,000 Euros, twice as high as "Jacque's Wein-Depot" stores.114

"Mövenpick Wein Deutschland": Is a Swiss company which is also well known in other fields such as the hotel and ice cream sector. The company focuses on premium wines with an average price of 12.14 Euros per bottle, twice as high as the top five companies.115 The annual turnover is 17.6 million Euros.116 The Mövenpick Group has a revenue of 1.7 billion Euros which shows the small percentage that wines in Germany represent in their business unit portfolio (1.17%).117 However, the business unit showed positive and steady growth according to their CEO Christoph Schikora.118 The company also competes in the online sector with companies like Amazon by offering delivery service in the area in 90 minutes, a differentiation aspect to their competitors.119

- "Rindchen's Weinkontor": The company has 12 stores which are mainly situated in the Hamburg area.120 Recently, the company opened through a franchise model three more stores in the area of Leipzig, Mainz, and Munich.121 The company has a revenue of 19.5 million Euros and is a multichannel company, selling through wholesale, retail channels and e- commerce.122 The wine that is sold directly to the end consumer represents revenue of 10.6 million Euros.123

- "Ludwig von Kapff": The subsidiary belongs to "Eggers & Franke" and has nine stores and a wine bar.124 In 2016, the company reported 10.9 million Euros of revenue.125 This subsidiary was initially created to diversify "Ludwig von Kapff" into a multichannel company through this son company. They first started as an exclusive mail order company and then it developed by incorporating the stores. Currently, the stores are accountable for one-third of the sales.126

- "Pinard de Picard": The company is based in Saarland, and their main core is mail order selling.127 In 2016 they reported 6.96 million Euros in sales.128 The company focuses mainly on European wines. German wines represent 42% and French wines 39% of their portfolio.129

-"Kölner Weinkeller": Belongs to the REWE Group and offers more than 3,000 wines.130 The company has an estimated yearly turnaround of 6.8 million Euros and the focus is on online and mail-orders selling with a share of 60%.131

-"Weinkeller der BASF": The BASF Group has a turnover of 70 billion Euros, and their Weinkeller only represents 6.3 million Euros.132 The head of the company, Bernhard Wolff, said to Meininger's magazine that they would like to put stronger emphasis into the online selling.133

- Wine-in-Black: Wine-in-Black GmbH is one of the leading wine e­commerce companies with a portfolio of more than 200 wines and with an average selling price of 15 Euros per bottle.134 The company is present in France, Netherlands, Austria, and Switzerland. Also, it is financed by different investor groups such as the Otto group.135

All in all, the supplier power can be evaluated as moderate.136 This channel also shows similarities to the supermarket and discounter channel where a few companies mainly dominate the market. However, these large companies tend to operate into different distribution channels, operating as multichannel players and in various fields. Moreover, some companies even have control over the whole production chain as they not only distribute the wine but also produce it. This fact clearly shows the power and infrastructure that those companies have and how deep their operations are set up over the market. This makes it even harder for smaller companies to compete against the big players.

3.3 Determinants of Substitution Threat

The main substitutes for wine are other alcoholic beverages such as spirits and beer. The average expenditure on alcoholic drinks in Germany represents 2.52% of the total of the ordinary income.137 Beer is responsible for 80% of the total income spent whereas wine accounts for 18%.138 This fact clearly shows the relevance that beer has for German consumers. Nevertheless, wine is the second most consumed alcoholic drink. The retailers or on-trade establishments could change to substitute products without high additional costs.139 However, in the case of beer switching might be more expensive due to cooling storage costs.140 On the other hand, switching to spirits might imply an additional charge per liter but saves storage space, and implies better returns on a price per storage ratio in the supermarket shelve or the warehouse. The wine industry is having the same effect that the beer industry for an extended period had by struggling with the influence of non-alcoholic drinks, which are gaining market share.141

A phenomenon can be observed in all price segments that are linked to brand loyalty and influence the substitution threats products.142 A phenomenon which is driven by a small number of people who drink wine infrequently but purchase in either the lower price tier or, the higher price tier, but in both ways extremes.143 Consumers usually have a brand of choice which they tend to follow. However, the brand loyalty level is low, and they are willing to switch for different wines, brands, and styles.144

Altogether, there is a substantial threat to substitutes from the merchant side as well as from the consumer side mainly driven by beer and non-alcoholic drinks.145

3.4 Determinants of Buyer Power

The German wine market is price driven, and consumers are sensitive to price variances where 75% of the wine sold costs less than 3 Euros per bottle.146 The average price paid in the food retail sector, including the discounters was 2.97 Euros per liter in 2015/2016.147 When consumers buy directly from the winery, the average price is 6.23 Euros per liter, and the prices for specialist wine shops are even higher.148

German wine production is falling, and the offer cannot meet the demand of the population.149 This fact contributes to making Germany one of the top wine importers regarding volume with around 16 million hL per year.150 The estimated consumption per capita is up to 24 liters per year (21 liters of still wine and 3 liters of sparkling wine), which is around two billion liters per year and speaks for 8% of the world production.151 152 It is more than the Spanish, US American, and British population per capita drinks but less than the French, Italian, Belgian, and Swiss people per capita drink.153

3.4.1 Consumption Behaviors

The German wine market is segmented on a regional level, and the consumption habits and styles vary according to each city.154 Sophisticated and wealthy places such as Hamburg tend to buy premium wines instead of extremely cheap wines.155 Moreover, Frankfurt and Munich will also buy premium wines, but they will lean towards their regional neighbors, wines from Italy and Austria.156

The traditional point of view of wine consumers dictates that consumers progress from table wines or cheap wines by climbing up the ladder of quality to end up and stay in nothing but luxury wines. Even though some wine drinkers follow this pattern, most drinkers do not.157 It is shown that people who tend to drink higher quantities lean towards lower price wines in comparison to people that drink less wine. This enables them to drink more at a reasonable price.158 The income of the consumer is linked directly to the quality of the wine preferred.159

Another study made by Palma, Cornejo, et al. (2014) relates the motivation of wine consumption to four main factors: social cohesion, sophistication, self­indulgence, and tradition.160 The social cohesion is the moment where the drinking activity takes place and the surrounding.161 The second factor, sophistication, is the desire that the individuals have of being unique and of distinguishing themselves from others.162 The third factor, self-indulgence, is the habit to self-gratification.163 The last factor is tradition, and it is linked to socio­cultural influences which come from family and close relationships.164

Age plays an essential role in the behavior of wine consumption according to figure 2, which shows the frequency of consumption by age in Germany. Taking into account the average of the sum of all ages, the figure shows that 40% never drink wine, 24% less than once a month, 12% two or three times a month, 10% once a month, 8% once a week and 6% many times per week. More than 50% of consumers in the age range of 16-29 years never drink wine. The reason for this has different backgrounds which is a lack of wine drinking tradition in the family or their surroundings.165 Also, the fact that most of their friends do not drink wine can influence this behavior.166

Figure 2: Wine consumption frequency in Germany by age

Abbildung in dieser Leseprobe nicht enthalten

Own illustration based on Szolnoki; Loose (2016): p. 34

Moreover, the price for these consumers has been perceived as a barrier as well as their lack of experience towards wine.167 The differences in the age according to the tasting preferences in sweetness and style of wine vary. Concerning the wine origin, the groups of 16 to 29 years and from 50 to 56 years have similar consumption patterns where both prefer domestic rather than imported wine.168 Wine drinkers in the age range of 30 to 49 years are more open-minded, in comparison to other age groups and 53% lean toward imported wines. In contrast, consumers over the age of 65 have a stronger preference for domestic wine.169 The youngest and oldest generations prefer to drink white wine, while middle generation groups tend to drink more red wine. The choice for sweet wines changes through the ages. Younger generations prefer sweeter wines while older generations would rather have dry wines.170

A survey conducted over a sample of 1,940 people in Germany driven by Szolnoki et al. (2014) segments the wine consumers into two main clusters.


1 Cf. Cho et al. 2014, p. 108.

2 Cf. Cho et al. 2014, p. 108.

3 Cf. Cho et al. 2014, p. 108.

4 Cf. Farah and Higby 2001, p. 304.

5 Cf. Farah and Higby 2001, pp. 304-305.

6 Cf. Lee et al. 2018, pp. 1-2.

7 Cf. Dressler 2018, p. 1.

8 Cf. Dressler 2018, p. 8.

9 Cf. Lapsley 2014, p. 14.

10 Cf. Lapsley 2014, p. 16.

11 Cf. Klubeck 2017, p. 2.

12 Cf. Klubeck 2017, p. 2.

13 Cf. Klubeck 2017, p. 2.

14 Cf. Klubeck 2017, p. 2.

15 Cf. Klubeck 2017, p. 2.

16 Cf. Klubeck 2017, p. 2.

17 Cf. Klubeck 2017, p. 2.

18 Cf. Dyke and Murphy 2006, p. 357.

19 Cf. Dyke and Murphy 2006, p. 361.

20 Cf. Dyke and Murphy 2006, p. 363.

21 Cf. Dyke and Murphy 2006, p. 359.

22 Cf. Dyke and Murphy 2006, p. 359.

23 Cf. Klubeck 2017, p. 19.

24 Cf. Klubeck 2017, p. 19.

25 Cf. Klubeck 2017, p. 26.

26 Cf. Klubeck 2017, p. 26.

27 Cf. Castellini and Samoggia 2018, p. 128.

28 Cf. Castellini and Samoggia 2018, p. 128.

29 Cf. Madara et al. 2018, p. 1.

30 Cf. Madara et al. 2018, p. 1.

31 Cf. Madara et al. 2018, p. 1.

32 Cf. Madara et al. 2018, p. 1.

33 Cf. Barber et al. 2008, p. 124.

34 Cf. Barber et al. 2008, p. 124.

35 Cf. Barber et al. 2008, p. 124.

36 Cf. Higgins et al. 2016, p. 16.

37 Cf. Higgins et al. 2016, p. 23.

38 Cf. Bruwer and Wood 2005, p. 195.

39 Cf. Bruwer and Wood 2005, p. 196.

40 Cf. Bruwer and Wood 2005, p. 197.

41 Cf. Cho et al. 2014, p. 117.

42 Cf. Cho et al. 2014, p. 117.

43 Cf. Cho et al. 2014, p. 117.

44 Cf. Cho et al. 2014, p. 118.

45 Cf. Cho et al. 2014, p. 118.

46 Cf. Berger 2013, pp. 22-24.

47 Cf. Berger 2013, pp. 22-24.

48 Cf. Berger 2013, pp. 22-24.

49 Cf. Berger 2013, pp. 22-24.

50 Cf. Berger 2013, pp. 22-24.

51 Cf. Berger 2013, pp. 22-24.

52 Cf. Berger 2013, pp. 22-24.

53 Cf. Berger 2013, pp. 22-24.

54 Cf. Berger 2013, pp. 22-24.

55 Cf. Porter 1998, p. 3.

56 Cf. Porter 1998, p. 3.

57 Cf. Porter 1998, p. 3.

58 Cf. Porter 1998, p. 3.

59 Cf. Porter 1998, p. 3.

60 Cf. Porter 1998, p. 3.

61 Cf. Porter 1998, p. 3.

62 Cf. Porter 1998, p. 6.

63 Cf. Porter 1998, p. 6.

64 Cf. Porter 1998, p. 6.

65 Cf. Porter 1998, p. 6.

66 Cf. Porter 1998, p. 6.

67 Cf. Hisrich et al. 2017, p. 197.

68 Cf. Hisrich et al. 2017, p. 197.

69 Cf. Hisrich et al. 2017, p. 197.

70 Cf. Hisrich et al. 2017, pp. 197-198.

71 Cf. Hisrich et al. 2017, pp. 197-198.

72 Cf. Hisrich et al. 2017, pp. 197-198.

73 Cf. Hisrich et al. 2017, pp. 197-198.

74 Cf. Hisrich et al. 2017, pp. 197-198.

75 Cf. Hisrich et al. 2017, pp. 197-198.

76 Cf. Dressler 2018, p. 12.

77 Cf. Hermann 2016, p. 37.

78 Cf. Hermann 2016, p. 37.

79 Cf. Hermann 2016, p. 37.

80 Cf. Dressler 2018, p. 12.

81 Cf. Dressler 2018, p. 12.

82 Cf. Dressler 2018, p. 12.

83 Cf. Dressler 2018, p. 12.

84 Cf. Hermann 2016, p. 37.

85 Cf. Hermann 2016, p. 37.

86 Cf. Hermann 2016, p. 37.

87 Cf. Carter 2018, p. 69.

88 Cf. Dressler 2018, p. 12.

89 Cf. MarketLine 2014, p. 19.

90 Cf. Dressler 2018, p. 12.

91 Cf. Dressler 2018, pp. 9-10.

92 Cf. Dressler 2018, pp. 9-10.

93 Cf. Speicher 2017, p. 42.

94 Cf. Speicher 2017, p. 42.

95 Cf. Speicher 2017, p. 42.

96 Cf. Speicher 2017, p. 42.

97 Cf. Speicher 2017, p. 42.

98 Cf. Speicher 2017, p. 42.

99 Cf. Speicher 2017, p. 42.

100 Cf. Speicher 2017, p. 42.

101 Cf. Speicher 2017, p. 42.

102 Cf. Speicher 2017, p. 42.

103 Cf. Speicher 2017, p. 42.

104 Cf. Clemens 2017, p. 44.

105 Cf. Clemens 2017, p. 44.

106 Cf. Clemens 2017, p. 44.

107 Clemens 2017, p. 44.

108 Cf. Clemens 2017, p. 44.

109 Cf. Clemens 2017, p. 44.

110 Cf. Clemens 2017, p. 44.

111 Cf. Clemens 2017, p. 44.

112 Cf. Clemens 2017, p. 44.

113 Cf. Clemens 2017, p. 44.

114 Cf. Clemens 2017, p. 44.

115 Cf. Clemens 2017, p. 44.

116 Cf. Clemens 2017, p. 44.

117 Cf. Clemens 2017, p. 44.

118 Cf. Clemens 2017, p. 44.

119 Cf. Clemens 2017, p. 44.

120 Cf. Clemens 2017, p. 45.

121 Cf. Clemens 2017, p. 45.

122 Cf. Clemens 2017, p. 45.

123 Cf. Clemens 2017, p. 45.

124 Cf. Clemens 2017, p. 45.

125 Cf. Clemens 2017, p. 45.

126 Cf. Clemens 2017, p. 45.

127 Cf. Clemens 2017, p. 45.

128 Cf. Clemens 2017, p. 45.

129 Cf. Clemens 2017, p. 45.

130 Cf. Clemens 2017, p. 45.

131 Cf. Clemens 2017, p. 45.

132 Cf. Clemens 2017, p. 45.

133 Cf. Clemens 2017, p. 45.

134 Cf. MarketLine 2014, p. 18.

135 Cf. Linden 2018.

136 Cf. MarketLine 2014, p. 18.

137 Cf. Dressler 2018, p. 10.

138 Cf. Dressler 2018, p. 10.

139 Cf. MarketLine 2014, p. 20.

140 Cf. MarketLine 2014, p. 20.

141 Cf. Dressler 2018, p. 92.

142 Cf. Lapsley 2014, p. 16.

143 Cf. Lapsley 2014, p. 16.

144 Cf. Lapsley 2014, p. 16.

145 Cf. MarketLine 2014, p. 20.

146 Cf. Hermann 2016, p. 37.

147 Cf. Hermann 2016, p. 37.

148 Cf. Hermann 2016, p. 37.

149 Cf. Hermann 2016, p. 37.

150 Cf. Hermann 2016, p. 37.

151 Cf. Hermann 2016, p. 37.

152 Cf. Dressler 2018, p. 10.

153 Cf. Hermann 2016, p. 37.

154 Cf. Carter 2018, p. 68.

155 Cf. Carter 2018, p. 68.

156 Cf. Carter 2018, p. 68.

157 Cf. Lapsley 2014, p. 14.

158 Cf. Lapsley 2014, p. 14.

159 Cf. Lapsley 2014, p. 14.

160 Cf. Palma et al. 2014, p. 7.

161 Cf. Palma et al. 2014, p. 7.

162 Cf. Palma et al. 2014, p. 7.

163 Cf. Palma et al. 2014, p. 8.

164 Cf. Palma et al. 2014, p. 8.

165 Cf. Szolnoki and Loose 2016, p. 34.

166 Cf. Szolnoki and Loose 2016, p. 34.

167 Cf. Szolnoki and Loose 2016, p. 34.

168 Cf. Szolnoki and Loose 2016, p. 34.

169 Cf. Szolnoki and Loose 2016, p. 34.

170 Cf. Szolnoki and Loose 2016, pp. 34-35.

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An Evaluation of Online Wine Merchants That Are Successful in the German Market
University of Applied Sciences Osnabrück
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Wine Wein Germany Deutschland Market Research
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Federico Domingo (Author), 2019, An Evaluation of Online Wine Merchants That Are Successful in the German Market, Munich, GRIN Verlag,


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