Winemakers coped with a challenging year, with rains triggering additional costs, set to reflect in profitability, in higher shelf prices and in winemakers’ long-term strategy.
Nevertheless, managers say 2014 should be seen in a special context, as, after two years of weak harvests, the market started to return to normality, in the context where prices and offers became competitive.
“For two years in a row, 2011 and 2012, wine output was way below the normal averages. As a result, production costs went up, winemakers raised shelf prices and consumers, coping with a falling purchasing power, shifted toward other beverage categories. This falling consumption also marked the trend of last year,” said Daniel Negrescu, Murfatlar brand manager.
He explained that the situation changed in 2014, with winemakers returning to conditions he sees as “normal” owing to the above-average production registered in 2013.
According to data provided by the International Organization of Vine and Wine (OIV), 2013 output topped 5 million hectoliters of wine, a recent years’ high. In 2014, output slid to 4 million hectoliters, according to the same source.
There were two types of factors with an impact over wine consumption in 2014: positive ones, such as a higher quality at market level, a wider offer and the summer season’s lacking long period of hot weather, believes Gabriel Roceanu, general manager of Carl Reh Winery, which owns Crama Oprisor.
On the other hand, in his opinion, there were negative factors such as the high prices compared with purchasing power, the existence of a still significant volume of wine produced in individual households. He estimates the premium segment weighs 10% in wine consumption, the mainstream segment accounts for 30%, while the low-price segment holds the biggest weight, of 60%.
All managers point to a rising premium segment, as well as to the new wineries, which position themselves on the higher price segment and that promote themselves more aggressively on the market.
A country report by Euromonitor, quoted by Murfatlar, shows that premium wine sales rose by 20% in 2013 on the year though the wine market as a whole declined.
Countrywide, the harvest was 20% lower than in 2013, but there are areas where output was 80-90% harmed.
“Costs are clearly higher. Certain product categories will be able to bear this higher cost by a reduced profit margin, meaning the current price will maintain. We are speaking of the segment of wines with a shelf price of above RON16-18. For the rest, there will be very high price pressures and they will probably rise,” believes Daniel Negrescu.
In the same context, promotions to the supply chain and consumers will be curbed, which, according to Negrescu, also means increased prices.
Another phenomenon registered on the wine market this year, which is also linked to output, refers to the increased offer of grapes for winemaking as there is still a shortage of winemaking facilities.
(English version by Catalina Apostoiu)