Interview: New Growth Drivers
Sweden: “We can expect 30% of the market to be organic moving forward”
With sales totalling 22.7 million litres in 2019, Giertz Vinimport is the leading supplier of wine to the Swedish distribution monopoly Systembolaget with a 10.4% market share. Owner and president Emil Sallnäs and director Fredrik Ålander outline what they see as the future growth areas for the wine market in Sweden.
Which countries or categories are currently on trend in Sweden?
France is doing well at Systembolaget and represents a large portion of our portfolio. Generally speaking, the Old World countries are doing well whereas the New World is not performing overall as well as it has done - a lot of people have reverted to the more traditional producer regions and countries. Before the Covid-19 crisis, sparkling wine was the only style of wine that was really growing, particularly styles other than Champagne. Rosé has flattened and in Northern Europe is very weather-dependent. Sales tend to be stronger when we have a good summer. In terms of pricing, the trend is for premiumisation, so around the 100 kroner segment or approximately 10 euros, which equates to an ex-cellar price of approximately 3.2 euros. Obviously taxes represent around 30% of the retail price but the 100 to 150 kroner category was definitely performing very well before Covid-19. We feel that premiumisation will last because it has a lot to do with Swedish people being very interested in wine. Conversely, the 7-8 euro bracket in Systembolaget stores is struggling as people seem to have lost interest in entry-level wines.
Sweden is renowned for its environmental pledge. How does this pan out in the wine market?
Organic is still a big driver of sales in Sweden and in fact, it’s almost what people expect – the norm. Organic accounts for approximately 20% of sales and we can expect 30% of the market to be organic moving forward. It’s a very important part of our business – for some of our companies, organic has a 40-45% share of the portfolio. But it’s not the silver bullet it was, say five years ago. Today, the marketing, the label design, the price point and the taste all have to be on point. The flavour is essential, as demonstrated by the fact that organic wines didn’t grow in Sweden until they were on a par with conventional wines in terms of taste. There are supply issues. We have seen some difficult vintages, especially in the South of France, which have caused supply problems in Sweden. But at the moment, organic and Fairtrade stand out as the leading endorsements. Other certifications have quite a steep hill to climb before people will trust and understand them.
How do you see the way forward for the Swedish wine market and what advice could you give would-be exporters?
For good or bad, the monopoly will never stop trying to improve its environmental footprint. There will be a lot of focus on transportation and bottles. As a company, almost all our transport in Europe is by train. Reducing the weight of sparkling wine bottles is certainly on Systembolaget’s agenda. Bag-in-box wines, whose market share rose to 60% in March and April 2020 due to Covid-19, seem to have flattened out and going forward, we think their share will stabilise or drop slightly. Would-be exporters to Sweden need a lot of patience, flexibility and a mindset where you really want to meet consumer trends and genuinely cooperate with your local partner. You need to have a clear sustainable profile and be able to show it, and also that you are working to improve sustainability. Depending on the type of wine you sell, you also need to understand that while the on-trade plays an important part in the market, it’s not as important as in other parts of the world. There are very few examples of brands which have a successful business just by selling through the on-trade. They have a combination of the two and you have to understand how to combine them effectively.
Sweden is Europe’s sixth largest imported wine market with sales of 22 million cases valued at US$2.2 billion (1.97 billion euros). Per capita wine consumption: 23.8 litres Sources: Wine Australia, Statista