Poland’s wine market is becoming reputed as a growth market. The retail value of still wine was reported at US$8933 M in 2019. Wine consumption in Poland has been increasing steadily where the five years 2014-2019 CAGR stood at 3.6% and the ten-year CAGR was 3.7%. Despite growth being constraint due to COVID-19, the market is still expected to grow over the next five years. It is estimated that the wine market will grow at a CAGR of 9.85% from 2020-2025. This is significantly higher than the 2014-2019 CAGR of 4.15%. According to the Global Compass 2020 Market Attractiveness report, Poland is now considered the 5th most attractive wine market, climbing 9 places from 2019. So what has spurred growth in this market?
One factor which has fuelled the market’s growth is Poland’s sustained economic growth and along with it, rising disposable incomes. Poland’s GDP per capita has been rising over the years with a Compound Annual Growth rate of 4.3%, and until 2020, has been exceeding the growth rate in Europe and Central Asia. Poland’s GDP per capita now stands at $34,431. Meanwhile, COVID is expected to have a less severe impact in Poland compared to its European counterparts. For example, The IMF has forecasted a 4.6% GDP reduction in Poland while a 7%, 7.2%,8% and 9.1% decline in Germany, France, Spain and Italy, respectively. In terms of the wine market, IWSR has forecasted still wine consumption to fall by 24% in 2020 due to COVID but will recover and grow by an annual average growth rate of 5.9% until 2024. Hence Poland’s wine market is in a well-placed position to recover from the pandemic and continue growing.
Wine consumption and consumer trends towards wines have also been encouraging. Wine is increasingly popular and is expected to displace beer and distilled spirits. Roughly 15 million adults in Poland consume wine at least twice a year. This number is on the rise. According to the IWSR, still wine consumption registered a compound annual growth rate of 3.4% in Poland from 2015 to 2019. For many years, Poland’s wine market was captured by low quality and cheap fruit wines. However, there is a growing demand for premium wines. Wine consumers in Poland are keen to learn about new wines, their origin, experience different flavours and purchase from high-quality brands as their incomes rise. In particular, there is a preference for red wines and sweeter wines come in second. There is also an emerging divergence from sweet wines to drier white wines. According to a Statista survey, red wines are popular where 95% of respondents prefer dry wine, 4% prefer semi-sweet and only 1% prefer sweet wine. Dry wine was also the most popular choice amongst white wines where in 2019, 75% of respondents preferred dry white wine. Sparkling wines such as champagne, although less seasonal compared to the past, still face seasonal demand during events such as Christmas, New years as well as Polish festivals. Successful marketing strategies, online wine sellers, higher presence of wine shops in places such as shopping centres have contributed to the higher demand for such premium wines.
Table: wine preferences, Source: Statistica
Opportunities for Australian Wine exporters?
So what opportunities are there for wine exporters? With forecasted growth in the wine market, increased demand for premium wines and a low market saturation there are opportunities for Australian wine exporters to enter this market. Domestic wine production is very small in Poland where it is reported that there are only 153 legally registered wineries in 2016 and 221.943 hectares of land under the vine. According to the Wine Intelligence report, Poland ranks 17th in terms of total imported still wine consumption. This amounts to roughly 117 million litres. While this number is similar to other European markets, Poland is one of the very few markets which is still experiencing positive volume growth. The ten-year growth rate of wine imports from 2009-2019 was estimated at 5%. In 2019, total Polish wine imports were valued at $360 million. In 2019, the highest number of wine imports came from Italy, Germany, France and the United States. There are estimated to be 700 Polish wine importers which comprise 50 large companies and the remainder are small importers, some of whom may have informal operations (USDA, 2020). Australia currently has a relatively low penetration in this market where it was ranked 13th in imported volumes and only 19 companies are exporting to this market.
A few things to consider
Direct alcohol beverage promotions in hypermarkets and speciality shops are banned. Hence importers alternatively promote their products in restaurants, hotels and wine tastings. It is common for importers to market their products through trade events. Importers commonly sell the products to wholesalers to retailers, in their own bars or shops while large wholesalers e.g. supermarkets import products directly. All wines which enter Poland face an excise tax. The value-added tax for wine products is also 23%. Australian wine exporters have an opportunity to target Poland’s growing wine market. Connecting with the market through trade events and keeping in the mind the conditions required to enter this market is crucial for market entry.