We might just see the beginning of a disorderly default of the local Greek wine market. Wineries have struggled for many months to collect money owed to them by their distributors, while the consumer demand continues to shift hard and fast towards bulk wine. Meanwhile, the pricing of existing stock of bottled wine held by supermarkets, wine shops and restaurants is not governed by logic any longer. In some cases, the only goal is to recover part of the initial investment.
I took the photo yesterday morning at a large branch of AB Vasilopoulos, Greece’s largest supermarket chain. I remember well when the Robola from the Gentilini winery was first listed in this chain about a year ago at around 11 Euros. Look carefully at the price now – it includes 23% VAT. We are entering a very dangerous territory: I very much doubt that the winery has ever sold a single bottle of the Robola 2009 at these low prices in the Greek marketplace.
The owner of Gentilini told me that they have sadly no control over AB Vasilopoulos’ pricing. The winery did not sell directly to them; the agreement was made by Gentilini’s exclusive distribution network. The contract with the distributor was severed before the 2010 vintage was sold to them. It is clearly against Gentilini’s interest to see their wine being offered at below cost. If times were not so difficult, they would buy back the wines themselves. Unfortunately this is not an option and all they can do is to wait until the stock has been depleted.
It is a sad reality that the Greek wineries are facing multiple problems in the local market. Cash flows have dried up long ago, distributors have collapsed, and demand for bottled wine above 5 Euros has imploded. One or two years ago, a winery might have been proud to see their wine being offered at a powerful supermarket chain. Today, this feeling has turned into sadness.
On the other hand, quite a few of the medium and larger sized wineries are working hard to introduce “economic” wines to the market. It will be very interesting to keep an eye on this development. Recent growth in the export markets also gives cause for optimism.
There are many power shifts taking place within the Greek wine industry right now. The crisis has torn apart many of the existing business models, and it is this dynamic that will bring real change. Change is what is needed, especially in the current environment.
Hi Markus, it’s been a long time since I posted my last comment. I agree with you that the situation is sad. I bought yesterday a couple of Tselepos Mantinia 2010 from an AB store for € 6.5 per bottle (around 20% discount). The problem of course has been boosted by the difficult financial situation consumers are facing, but has also to do with the mindset that most Greek winemakers (Gentilini not being one of them) have been cultivating over the past years, that wines, especially white, should be consumed within a year from the harvest. This was convenient to them during the days of “wines and roses” since it helped them accelerate their cash-flow rate, but has backfired now that they have diddiculty to push their production fast enough. Even restaurants insist to receive the latest vintage as soon as it is released to the market ( and this happens usually pretty soon after the harvest, by intenational standards) and argue that their customers would not accept a bottle of the previous vintage once the latest one has been released!
Another issue related to the difficulties that the wine market is facing, is the fact that renowned wineries are releasing special bottlings for the AB chain, retailing for less than 4 euros a bottle.
Hi Yianni, great to read you again :) You add a couple of valid points here. The early releases are actually problematic for the export markets, where later releases would be much prefered. I have also noticed a sharp increase of special AB bottlings from well known wineries. As I said, the situation is quite chaotic at the moment – but given the speed of the change in consumer habits, this might not be surprising.
Hi Markus
Thanks for all of the informative emails that you send out. On this subject my views tend to differ.
What you are seeing in the Greek wine market is simply a correction in the market at the supermarket level.
Fresh Greek whites that have never seen a barrel selling for 10-12 euros per bottle in their own market is simply over priced. How does the greek wine maker expect the Greek consumer to consume their own local wines when each bottle is selling for 1% of the monthly average salary Those same wines should have been selling for 7-8 euros and no more than that. I agree that Gentilini Robola ( a great wine) selling for under 6 euros is very low but the price drops at the supermarket level are long over due. Big producers introducing lower priced wines is simply something that is also long over due. The recession in Greece should not have been the reason to introduce these wines. Needing a well priced bridge wine to get the Greek consumers to try Greek bottled wine was needed over a decade ago. All we are now seeing is simply growing pains of a still maturing wine industry.
Hi Steve, thanks so much for sharing your point of view. Actually our opinions do not differ all that much. I was merely pointing out a high quality Greek wine from a winery with a solid reputation that is being sold now for under cost. To me, that is a sign of a highly distressed market. I totally agree that it is beneficial to see more quality at lower prices, luckily this is exactly what is currently happening.