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Regional Analysis |
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With an annual production of just 2.5 million hectolitres, Austria is anything but a big player in global markets. While cultivation area continues to shrink moderately, the annual wine harvest is also decreasing by the year. This is not only due to the volatile weather conditions in recent years, but also to growing quality awareness among vintners, who have long since put quality ahead of quantity and are generating smaller and smaller yields per hectare. Were it not for Austria’s booming tourism industry – winter tourism in particular is of vital importance for the economy – the country’s wines would be largely unknown abroad. This is partly because the volume of wine produced each year, allowing for the normal annual fluctuations, more or less equals the amount consumed by the domestic market plus tourists. Yet although the volume of Austrian wine exported is still relatively insignificant, some progress has been made in recent years, which gives the most well-known producers international recognition, if not volume.
Previously, the focus was on exporting bulk wine. Over the last few years, efforts at exporting bottled wines have met with increasing success. While increases in bulk wine are still considered in years of large production, that was hardly the case in 2005 and 2006. On the other hand, exports of bottled wines more than doubled in the period 2000 to 2005, from 14.5 to 32.4 million litres. The record year for exports in the recent past was 2003, with a total of 83,432,000 litres, bulk and bottled, moved off shore.
Of far greater importance for the Austrian wine industry, however, is the sales revenue that has been generated with bottled wines in 2006 – approximately €66,000,000 compared with only €14,000,000 for bulk wine. In addition to this encouraging development in exports, Austrian wine has held its own on the domestic market. As in the past, the biggest sales are in the hotel, bar and restaurant sector, followed by home consumption through sales from the winery, food retailers and others. Around 84% of the wine sold in restaurants is Austrian, compared to just 75% in the off-trade, though this figure is increasing slightly. Supermarket sales also continue to grow at the expense of direct sales from the winery. Put briefly, it would be fair to say that the domestic market is stable and that the export market has the potential to yield increased added value, despite the lower yields.
The most important export market for Austrian wine in terms of volume is neighbouring Germany, which is by far Austria’s most important trading partner. Although Germany accounts for some 69% of all exports, the average price of €1.70 per litre does little to boost domestic pride. Another key market in terms of volume is the Czech Republic, which represents 16% of total volume, but only 5% of export revenue as sales are built almost entirely on bulk wine. Another very promising market for quality Austrian wines is that of Switzerland |
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Regional Analysis |
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and Liechtenstein, where sales are booming. With an average price of €7.30 per litre, they are extremely attractive propositions for Austrian wine producers. The only markets to yield better prices are Great Britain with €17.60 (but only approximately 2% of exports) and Japan with €9.70 (but less than 1% of exports). Demand for top Austrian wines is also healthy in the United States, which, with a 13% share of the exports and an average price of €5.30, is growing steadily in importance.
Scaling down the vineyards
Some 40 different varieties of vine are permitted in Austria for the production of quality wines. According to the latest figures, just under 52,000 hectares were planted in 2006, although not all are yielding grapes. Since 1999, the vineyards growing white wine varieties, the majority of which is Grüner Veltliner that is planted on 16,854 hectares, have been scaled back to 35,287 hectares. By contrast, the vineyards planted with red wine varieties have increased by 4,330 hectares to 16,682 hectares over the same period, representing today almost a third of all Austrian vineyards. At the forefront of this red wine boom are the two principal Austrian varieties, Blaufränkisch, with an increase of 676 hectares, and Blauer Zweigelt, a crossing of the indigenous varieties Blaufränkisch and St. Laurent, which has increased by 2,157 hectares since 1999.
In 2006, the ratio of white to red wine had reached 60:40. Compare this to the 1990 ratio of 80:20, or the 1970 ratio of 88:12, and the trend is clear. More red wine grapes are being planted and produced in Austria today than ever before. This development is due in no small part to changes in consumer taste. Today, Austrians drink as much red wine as white, and red wine has the upper hand in retail outlets, generating roughly 20% more sales revenue than its white counterpart. Austria’s red wine enjoys a growing reputation domestically and rising demand abroad. Today, red wine accounts for half of bottled wine exports, compared with just a third in 2000. Exports of bottled red wine increased almost sixfold in the period 2000 to 2005 – from 5.24 to 30.46 million litres – while the white wine segment more or less doubled to 31.61 million litres.
Small-scale operations, very small structures
The Austrian wine-growing landscape is characterised by its extremely small structures. There are no fewer than 20,000 small operations covering some 51,000 hectares, many of which rely to a great extent on direct hand sales. By contrast, over half the overall vineyards are devoted to operations with more than five hectares of vineyards and that are potentially active exporters. Winemaking operations that can claim to be large by international standards, meaning over 200 hectares, are few and far between. While there were once over fifty cooperatives, there are only a handful of vintners’ cooperatives still active today. The most important of these is |
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Regional Analysis |
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Winzer Krems, followed by white wine-producing cooperative Freie Weingärtner Wachau in Dürnstein. As regards red wine, the most influential cooperative organisations are Winzerkeller Neckenmarkt and Vereinte Winzer Horitschon, both in the Mittelburgenland area, and the cooperative in Andau on Lake Neusiedl. The largest private company is Lenz Moser AG in Rohrendorf. With some 60 employees, this company generates an annual turnover of €30 million; of the 16 million bottles produced, some 30% are exported. The name Lenz Moser has a brand awareness level of 90% in Austria.
However, the driving force behind the encouraging development of the Austrian wine market over the last 20 years are those family operations that are committed to quality production and whose products can now be found on wine lists all over the world. From the Riesling and Grüner Veltliner varieties produced by estates in the Wachau such as Hirtzberger, Knoll, F.X. Pichler or Bründlmayer from Langenlois, to name just a few of the hundreds of respected names, to the dessert wines produced by Alois Kracher in Illmitz, Austrian wines have now entered the international market from the top end. Giving credit were it is due, it is also thanks to the highly professional Austrian Wine Marketing Board that this quality-oriented marketing has always been given the support it requires and that Austrian wines enjoy a high profile among renowned wine journalists and sommeliers today.
Appellation marketing through DACs
The international wine market can often be treacherous terrain and it is scarcely advisable for a small country to arrive on the scene with tongue-twisting varieties such as “Grüner Veltliner” or “Blauer Zweigelt”, which are then produced in a confusing variety of quality levels. When, in addition, their labels also cite locations that not even Austrian consumers can place, and when these wines come from a wide range of growing areas – some of which are just a few hundred hectares in size – then even the most enthusiastic wine lovers can be forgiven for getting cold feet. In order to simplify the question of appellation, Austrian wineries are focusing more and more on marketing appellations than individual varieties. To this end, the term DAC, which stands for Districtus Austriae Controllatus (Controlled District of Austria) was created, based on established models. Given the increasing industrialisation of the international wine industry, it is necessary for Austrian wines to have a clear positioning. Geographical appellations (DAC) are a key component in Austria’s response to the industrialisation strategies of other countries. Here, the main focus is on soils, handwork and the origin of the wine.
Since 2002, Austria’s growing areas have been able to market their own wines within the framework of a clear appellation system (DAC). The first to move forward was the large Weinviertel district with its Grüner Veltliner variety, |
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Regional Analysis |
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a campaign that met with a high level of acceptance from customers. Today, the “Weinviertel” DAC can be found on all wine lists in Austria, and some 1.7 million bottles were produced by hundreds of small estates in 2006.
Mittelburgenland was the first Austrian red wine district to follow suit, presenting typical Blaufränkisch wines from the 2005 vintage onwards under the name “Mittelburgenland DAC”. A more full-bodied variant bears the additional designation “Reserve”. At the start, a total of 42 producers made some 800,000 bottles of Blaufränkisch, which conveys a clear appellation character as a Mittelburgenland DAC. So far, Traisental is the third of the sixteen Austrian wine-growing regions to have opted for the DAC for the Grüner Veltliner and Riesling varieties. It remains to be seen whether these measures will help to paint a clearer picture of Austrian wines on export markets or whether they simply add to the confusion.
Whatever the future holds, Austria will not be one of the high volume producers of the world. Willi Klinger, head of the Austrian Wine Marketing Board, is adamant that “small volumes and high quality” is the best approach to take.
“In Austria, it is all about identity and tradition first and foremost – but an innovative form of tradition that is not set in its ways,” he said. “A second important and positive point is youth and dynamism. People are laid-back and very modern in spite of the traditional environment, whether this relates to the wine architecture or to the truly dynamic development of the country’s young people.” And just as Austria likes to see itself as the “delicatessen of Europe” when it comes to fine foods, it can also offer international wine lovers a selection ranging from young, fresh Veltliner and elegant, sweet Trockenbeerenauslese wines to fruity Zweigelt or mineral Blaufränkisch varieties.
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