Portuguese Wine in Romania
Portuguese Wine in Romania
Table of content
Introduction 4
Analysis of the Romanian wine market 5
Import of wine in Romania 5
Consumption 7
Consumers 7
Distribution 8
Place8
Price 8
Promotion means 9
Packaging 9
Perspectives 9
Portuguese wines 11
Red wines 11
White wines 11
Sparkling wines 11
SWOT of Portuguese red wines in Romania 12
The case study12
The problem 12
Target market 13
Our concept and its 4P’s 13
Product 13
Price 17
Place17
Promotion 22
Critical conclusion 24
Bibliography 24
Introduction
The course “Marketing Internationally” aims at presenting the analysis of various tools and
approaches to understand international markets. Within this framework, we conducted researches
on Portuguese red wines.
The aim of this paper is to present a successful strategy of penetration and develop an
innovative concept of Portuguese red wine, which would lead to the improvement of Portuguese
red wine image in Romania.
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We decided to base our paper on a concept of sparkling red wine that we will call
“Palmelita”.
We have been able to write this paper on the basis of researches through syllabi and websites.
We will first analyze the Romanian market and identify opportunities for our product. To do
so, we will briefly describe consumption habits, distribution channels and we will highlight
perspectives of growth. Secondly, we will make a short description of Portuguese wines and their
characteristics. Afterwards, we will present our concept and explain the adaptation of 4P’s. And
finally, we will end this paper with a critical conclusion.
Because the production of wine is very high in Romania, the country imports a good part of its
wine. Romania imported in the first eight months of wine worth over 8 million after the same
period the previous year which amounted to 24 million euros. The main countries of origin for
imports of wine during this period were Italy, France, Moldova, Spain, Germany and Bulgaria.
Most of the imported wine is bottled wine. National Vineyard Growers and Wine (PNVV)
previously announced that import of wine has decreased during the first five months of the year
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with about 72% over the same period in 2008, from 164,193 hl to 47,560 hl, while exports for
this segment decreased by 11% from 60,053 hl to 53,409 hl.
Concerning sparkling wine, it is considered as good quality wine. In fact, we can see that its total
share in value is 33.8%, which is fifteen times more than its share in volume (2.3%).
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The three most exporting countries to Romania, that are France, Italy and Spain have supplied
more than 60% of Romania imports in terms of volume and 80% in value.
Consumption
The market for wine in Romania increased at a compound annual growth rate of 1.4% between
2004 and 2009.
The still wine category led the wine market in Romania, accounting for a share of 94.6%.
Leading players in Romanian wine market include Murfatlar, Cotnari and Vincon Vrancea
SA.The annual wine consumption per capita in Romania is about 24 litres at the bottom of the
EU wine consumption which ranges between 20 and 50 litres. Wines bottled in bottles of 0.75 l
is almost half the market, in terms of sales value occupying 72.2% of the total market, according
to a study conducted by the audit company and market research MEMRB IRI. Also, lately there
has been a segment sales increase to 2 liters of bottled wines, representing 38% of wine sold on
the Romanian market. 0.75 In the segment l consumers prefer white wines from Romania
(approx. 72%), followed by red wines (22.4%) and rose wines (5.6%). Sales by type of wine
consumption to show Romanians predilection semi-sweet wines (41.9%), followed by semi-dry
wines (24.2%) 19.5% dry wines. Sweet wines occupy 11.2% of consumer preferences. By
region, in terms of volume sold, Moldova is the most important area for bottled wine category to
0.75 l, followed by Bucharest, Muntenia and Oltenia, the last place being occupied Transylvania.
In terms of value, first place is held by Bucharest. It also revealed that, if bottled wine
consumption in Moldova to 2 liters ranks first in consumer preferences in Transylvania
consumers prefer bottled wine to 0.75 l.
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The evolution of wine market (mil.Euro)
600
500
400
300
200
100
0
2005 2006 2007 2008 2009* 2010*
Consumers
Romanian consumers show interesting characteristics for our case. Indeed, they are very curious
about new wines and they like to enjoy wine in a new way: wine bars. However, they are very
price-sensitive.
Nowadays, daily consumption (at home) has decreased whereas weekly consumption
(outside) has increased a lot. Wine has become a product of “pleasure”, it is associated to an “art
of living”. Consumption in restaurants and bars is quite high in Romania (25%). However, wine
is still mainly consumed at home (65%), tough it is increasingly consumed “outside” in
Bucharest.
Distribution
Place
5
Generally, department stores import directly their goods from producers. Smaller
distributors, such as wine merchant and retailers call for intermediaries to import their goods.
They are selling 30 million of bottles a year, representing 8% of total sales.
Bars, hotels and restaurants represent 23% of total sales in Romania. This sector is doing
very well and shows interesting perspectives of growth.
However, prices of wine on the menu have increased a lot. 18% of Romanians believe that prices
are acceptable while 2/3 of them think they are abusive. As a consequence, restaurateurs try to
offer wine with better quality/price and are looking for new and original wines.
Price
Many costs have to be taken into account when determining the price of wine. Firstly, standard
rates of excise duties are 47euros/hl for wine and 161euros/hl for sparkling wine. Special rates
(less than 8.5% vol.) of excise duties are 14euros/hl.
In Romania, VAT on wine equals 24%. Since 2002, one doesn’t need to call for fiscal
representative to pay off the VAT.
As Romania and Portugal are both in the EU, they don’t have to pay custom duties.
Average price of 75cl bottle in department stores is 6.26 Euros and 8.57 Euros in retailers and
smaller shops. With the entering of Italian, French and South Spanish wines, Romania has
become a competitive market. Medium quality wines encounter a lot of success while sales of
low and high quality wines are decreasing.
Indeed, white wines between 4 and 6 Euros are doing well. Concerning red wines, sales of top
quality wines remain steady while wines between 4.5 and 7Euros are slowly increasing.
Consumers of sparkling wines are highly price-sensitive. As a consequence sales of sparkling
wines above 8 Euros are decreasing because of fierce competition from “premier prix”
Champagne available for around 15Euros.
The average sales margin of restaurateurs is 50% of purchase price.
Promotion means
For 10 years, one can observe the development of fairs and specialized exhibitions (E.g.:
Brussels Wine Expo), the growing demand for trainings (E.g.: wine tasting club, wine course),
the success of specialized magazine (E.g.: Vino Magazine, In Vino Veritas). The Brussels Wine
Expo allows professionals and producers to get along with each other and present their new
products.
Romanians pay attention to press releases. Wine and gastronomy are broadly present in
Romania newspaper and magazines. That is why successful Public Relations, promotion and
branding strategies are important.
Packaging
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Packaging is also a key of success. In order to penetrate effectively the Romanian market, we
have to pay attention to packaging and offer a design and innovative concept, as “Nouveau
Monde” producers do.
The 30 December 2002 law relates to fiscal modifications on eco-taxes and eco-reduction.
Since 2002, distributors have to pay a packaging contribution instead of eco-taxes “sur les
récipients pour boissons à usage unique”. This contribution amounts 9.85 Euros/hl. No
contribution has to be paid on recyclable packaging.
Perspectives
After having analyzed the Romanian market, we can affirm that Romania is a promising
market for our product. Firstly, importations of new wines are increasing. Secondly, purchasing
power of Romanians is one of the highest in the European Union and consumption of wine is
quickly increasing. And finally, as it is a small country, investments in communication
campaigns will be low and rapidly effective.
Portuguese wines
Portugal is above all known for its Porto but this country has a large variety of native breeds,
producing a wide range of different wines. Portuguese vineyards are as old as Spanish ones.
Since its entering in the EU in 1986, wine growers and producers are making efforts to improve
the quality of their wines in order to compete with French and Italian wines.
Portuguese “Appellation contrôlée system” could be compared to the French one. Actually,
fifteen regions have the authorization to be called “Denominaçao de origem Controlada” D.O.C
(A.O.C in France): Vinho verde, Bairrada wine, Douro wine, Dão wine, Palmela wine, Algarve
wine, etc.
Portuguese wines are controlled by 2 organizations: Instituto da vinha et do vinho for classic
wines and Instituto do vinho do Porto for Porto[14]. Besides, each region has its own Comissão
Vitivinícola to supervise the quality of wines in various aspects of the cultivation and preparation
of vineyards, but also in assuring the quality of the wine.
Red wines
Regions of Dão, Douro and Alejanto produce the best red wines of the country. Recently, the
region of Palmela has developed interesting red wines. Those wines are powerful and
concentrated with a taste of cacao, licorice and spices.
White wines
Reputation of Portuguese white wines is rather bad, except the Vinho verde which is well known
across Europe.
Sparkling wines
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Concerning sparkling wines, they are produced in Palmela and Bairrada. They are developed
through the traditional method but with local wine varieties.
Strengths Weaknesses
High quality of grapes Weak image (lack of visibility and
branding)
Existing products Prejudices
Experience Low cost wines
Lot of varieties Less present on the Romanian market
than French and Italian wines
“green wine”
Douro valley (Porto)
Opportunities Threats
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As a result, we will have to build up a good image for our product, through a good
implementation of our marketing mix.
Concerning the strategy, we have a glocal strategy, which means that we will have a global
view of the European market but also focus on Romanian customers’ habits and needs.
Target market
Our first target is the upper-class segment, between 25 and 50 years old (active population)
because they have the economic opportunity to buy luxury wine. Moreover, this segment is
generally wine-lovers and is open-minded to new products.
Tangible elements
1. Quality
Portugal has produced wine for 4 centuries. Along the years they have acquired significant
know-how and experience, as can be seen with the high number of D.O.C. in Portugal and the
availability of high quality wines on the market.
2. Brand
We will commercialize our product under the name of “Palmelita”. This name is easy to
remember and to pronounce in Romania because is a latin name. As this name refers to the
region of Palmela, it will not only promote our product but it will also increase awareness on the
region and Portuguese wines in general.
Here is the label that will appear on our bottles of wine:
• Intangibles
2. Country-of-origin
Country-of-origin may affect consumer’s choice. In fact, consumers have negative and
positive stereotypes towards the quality of products according to their country-of-origin. When
exporting our Portuguese wine in Romania, we will have to pay attention to the perception
consumers have “on” the quality of Portuguese wine.
As we have seen in class, Portugal is often linked with food, sun, holidays, high quality of
grapes, agriculture and Porto. This encouraging perception will have a positive “prisma effect”
ant could improve our positioning on the Romanian market.
3.Positioning
As we want to develop a luxury wine we will have to select specific distribution channels. To
reach the high income population, we will have to build up the feeling of uniqueness and rarity.
In other words, luxury goods need to have unique characteristics and to provide “the extra-added
psychological benefits like esteem, prestige and a sense of a high status that reminds them and
others that they belong to an exclusive group of only a select few, who can afford these pricey
items”[20]. In order to respond to these expectations, we have to propose a complete concept,
with these specificities and to limit the distribution of the product.
The customers’ perception is an important challenge today. It is a key advantage to transform the
awareness into a selling process. We have to propose more than a wine, a symbol, a balanced
mix between innovation and tradition.
Customers are looking for good quality, based on know-how and tradition. That’s why we
will have to keep this traditional aspect while proposing an innovative concept.
We can use Port cask to benefit from both image and taste of this well-known wine.
Moreover, we can introduce a new technological innovation in the process such as the “Jetting”.
It is a new technical solution for sparkling wine without extra sugar added.
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Thanks to that, we would propose a traditional wine, very pure which is a current taste.
Price
As we position our product as a luxury good, we will sell it at a high price.
Romanian statistics show that 97% of bars and restaurants propose glasses of wine. The
average price of the glass is 5.26€ (with a standard deviation of 2.63), 41% of bars and
restaurants propose less than 5 types of wine for that price and 35% propose between 5 and 10
wines.
By considering a standard bottle (75cl), we can sell 9 glasses out of it, which gives us an
average price of 45€ per bottle (9x5,26€) in bars and restaurants.
According to a survey from Alain Bloeykens, 52% of Belgian restaurants sell their wines more
than three times more expensive than their buying price”. As a result, we can assume that we can
sell our products at an average price of 15€.
Place
We decided to penetrate the Romanian market through direct exportation. We will hire a sale
representative who will be in charge of building relationships with our distribution channels
(negotiation and conclusion of contracts). As a result, our international market segmentation will
be B-to-B.
• Distribution channels
To ensure the luxury and rarity of our product, we decided to limit our distribution network.
Besides, to reach the high purchasing power segment, we will target three distribution channels:
1. Wine bars
To minimize the risks of penetrating the market we will start by selling to only one or two
wine bars.
Wine bars are becoming very trendy in Brussels. In fact, many of them are flourishing across
the city. The area we will focus on will be Bucharest because it is the capital (which means many
foreigners with high potential). Furthermore, it is not so far from the city centre where many
tourists are.
The most interesting element of wine bars is the three-approach: tasting, discovering and
educating. Indeed, people attending wine bars are most of the time wine-lovers who want to
discover a new wine and its manufacturing process.
That’s why preparing didactic support and providing tasting accessories for wine bars has to
be provided in addition to the product. As a result, we will be able to promote our wine, explain
where it comes from, how it is produced, why it is rare and why it is a chance to drink it in
Romania.
We defined key criteria to select our partners:
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- Trendy places;
- To propose maximum 10 different wines;
- To give a specialist image.
In fact, we need to make sure that the bar will promote our wine because of its uniqueness. To
encourage bars in this way we have to find some motivation drifts like a discovery trip or a sales
collaboration for instance (see Promotion).
Our aim is to make the wine bar our selling point with the exclusivity in their area. As they
would store our products, assume the commercial process and pay the VAT in Romania, it will
enable us to reduce our costs.
Our only financial effort will be transport and payments facilities to guarantee them a limited
risk.
As a result, we decided to contact “un des sens”, which is a very cozy wine bar with many
choices of international and original wines. It is located in BruxIxelles and responds to our key
criteria.
2. Trendy restaurants
Our second distribution channel is the trendy restaurants. As for the wine bars, we chose to
concentrate ourselves on three trendy restaurants to limit investment risks and to be in
accordance with our “rarity value” of the luxury product.
Therefore, we chose three cities: Brussels, Antwerp and Gent. The reason of our choice is
due to:
- The high potential of the Flemish market, always looking for innovative products;
- Brussels has a lot of potential thanks to the internationalization of the city with EU
communities and the tourist areas.
The three restaurants are:
▪ “Gran Duca” in Antwerp:
This first restaurant is located in the centre of Antwerp and is known as one of the most
trendy and fashion places in the city. It is a combination of elegance and tradition.
It belongs to the small segment of high quality Italian restaurants. Situated on the roof of the
Hyllit hotel on the Keizer lei, it offers a magnificent view of the city. While entering, we notice a
wide and luxury atmosphere without having the impression of “too much”.
About the kitchen, they propose a modern Italian cuisine of the highest level. The uniqueness
of its location and kitchen makes it a restaurant of the highest level. Moreover, the range of
wines that they propose is a selection from all over the world.
We observe that the characteristics and core competences enumerated before are in
accordance with the strategy of our wine.
▪ “Belga Queen” in Brussels and Gent:
The well-known Belga Queen is located in Brussels and in Gent. The two locations have the
same menu and image, which could be an advantage if we give them the exclusivity. Indeed, we
would benefit from one client instead of having to deal with two.
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Their gastronomic trip and their wide sophisticated wine card are part of their philosophy. A
quite rare proposal is the one of Belgian and Portuguese wines on the menu. Ours would
complete perfectly their range and could even be proposed in cocktails or as aperitif.
In addition to that, there is a Belga Queen club that proposes “a haven for lovers of fine
cigars and exquisite wines”.
▪ “Faim de toi” in Gent:
We have selected another restaurant in Gent in case of a failure with the Belga Queen.
It is located near the city hall. The critic describes the place as the place to be of Gent. It is a
combination of different values such as a high-class kitchen; a classy interior and an innovative
lounge bar. A particular meal on their menu that attracted our attention is the one of “terrine de
foie d’oie met oude Porto”. Proposing our wine with this plate would be perfect.
Promotion
Our communication strategy will be to promote our product to our distribution channels.
• Multi-channels approach
To reach different targets through the AIDA model (Awareness, Interest, Desire, Action), we
will have to adapt our communication channels.
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Selling wine to the upper-class segment at a high price without brand image requires some
creativity.
We can stimulate awareness, interest and desire of our potential customers by different means:
- Few information available about the product, giving them the will to learn more about it;
- An uncluttered advertising to promote the idea of esteem and prestige;
- Sponsorship of famous events such as golf championships in order to reach the upper-class
of the Romanian market.
Nevertheless, this communication will only stimulate awareness, interest and desire in
customers’ minds. Once Awareness, Interest and Desire have been fulfilled, consumers will look
for places where our product is available.
Trendy restaurants and wine bars managers are our second target. As we have said before,
wine bars are very interesting for us to penetrate the Romanian market and to pursue our image
creation.
In order to attract (AIDA) the managers, our sales agent will be in charge of developing a
personal selling approach. He will be able to propose our three-day discovery trip in Portugal.
Most especially for wine bars managers, we could show them the vineyards, the cellar. In this
way, we could explain them the fabrication process. If we succeed in convincing them of our
product specificity, they will be able to transfer this knowledge to their customers.
Other ways to promote our product are sales promotions such as organizing a wine tasting,
wine accessories, and some price reduction, payment facilities and direct marketing (e.g. flyers).
To motivate our three distribution channels to promote our wine, we could also propose them
to collaborate with us in sales.
Concerning trade fairs, it won’t be considered in our case because it is too costly if we
compare with the costs of contact settlement.
Thanks to all these measures, we will generate the same awareness in their minds than in
customers’ one. In fact, awareness is very important because of the cognitive mapping, which
consists on “decoding information about the relative locations and attributes of phenomena in
their everyday spatial environment”. If they know our wine exists they will feel the potential
market when they discuss with their current clients.
Our last target is the “on board” segment. Convincing professional buyers from transport
companies to purchase our wine for their business class service can be very complex. That’s
why, as a start, we could propose them advertising and sponsorship for/in their “on board”
catalogues and magazines.
Critical conclusion
To conclude, we will focus on the main aim of this work, which was to deal with the problem of
improving Portuguese wine’s image in Romania in order to facilitate its importation.
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The first thing that came to us was that Portuguese wine had a low cost wine image, we tried
to compensate this by focusing on upper-class consumers and thus higher prices, selected trendy
sales places and restaurants. Thanks to our specific wine, we believe that Portuguese wine could,
in the future, evoke a “classy” image
Secondly, by motivating the distributors and involving them in our activity, they will become
a crucial ally in order to succeed in the Romania market. In fact, thanks to discovery trips,
didactic support, tasting sessions and so on, they will be able to know and sell our wine
practically as good as the producers.
Thirdly, Portugal in general doesn’t have such a bad image, as we talked about holidays,
agriculture, sun,… We believe that it is only a small step to convince the public that all these
factors contribute to a positive environment for wine production. Furthermore, the fact that
Portugal is part of the EU is an argument to guarantee a certain level of control and quality.
Finally, despite the fact that we are well aware that it is a risky and difficult task to focus on
such a specific segment in the Romania market, we are convinced that it’s the best way to
enhance Portuguese wine’s image. It could pave the way for future Portuguese wine
importations.
Bibliography
Course :
• S. Hill-Derive, Building an international presence, Part A – Marketing Internationally, course
activities, ICHEC, 2009
Websites :
• Excise duties, part 1 Alcohol PDF,
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• “3L boxed wine sales take off”, Wine Business, URL address:
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• “Première enquête sur les consomateurs de vin en restauration” URL address:
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