Dutch Wine Market Research Assignment Answer and Case Study Report Analysis Paper

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Wine Report by Dania Menzo

Dutch wine production and grape varieties

The Netherlands has approximately 170 professional- and commercial vineyards. Most Dutch vineyards are located in the province of Gelderland, followed up by the province of Maastricht. The Dutch vineyards cover approximately 300 hectares, whereas in, for example Bordeaux, the vineyards cover approximately 115000 hectares. This shows the small scale of the Dutch vineyards, however, due to the global warming the Dutch wines are improving.

The first vineyards in the Netherlands were situated around Maastricht, which was approximately in the year 968. The Dutch wine was perceived as quite drinkable, until the climate became very chilly in the 16th century. At that point, beer became very popular and hope was given up on the Dutch wine production.

Due to the cold- and varying climate, the grapes which are used for Dutch wine making need to be cold resistant. Therefore, the climate is not suitable for growth of certain traditional grape varieties such as Merlot and Cabernet Sauvignon. However, a change in the future of Dutch wine production is highly likely when taking the global warming and thus climate change into consideration. The most successful grape-growing region in the Netherlands is the province of Limburg. (Holland.com, 2019)

15 years ago the Dutch wine was perceived to be so acidic that it was almost unbearable to drink. At this moment, many different grape varieties are used in the Netherlands. The best quality wine is achieved with, amongst others, the grape varieties Chardonnay, Kemer, Auxerrois, Riesling, Pinot Blanc, and Müller-Thurgau for white wines and Dornfelder, Zweigelt, Trollinger, Portugieser, and Pinot Noir/Spâtburgunder for red wines.(Seven-wines.com, 2019)

Dutch wine is not expected to be exported (on large scales) to other countries in the near future as it simply does not exceed the quality of the wines produced in much more wine friendly climates such as Italy, France or Spain. The estimated import of wine in the Netherlands is approximately 366 million litres, whereas the estimated home country production accounts for only 900,000 litres. (DutchNews.nl, 2015)

Wine market; supply and demand

Wine is grown in more than 60 countries worldwide, the top leaders being France, Italy and Spain. However, other continents and countries (e.g. Asia, Africa and Australia) are continuously increasing in market share and therefore becoming a serious competitor. The wine consumption keeps on growing since the year 1990. Year of decline were 2008 and 2009, a perceived consequence from the world’s financial economic crisis. Luxemburg, France, Italy, Portugal and Switzerland are the largest wine consumers. (Yourwineestate.com, 2019)

Wine in- and export was limited until the 1970’s, in this era wine was mainly consumed domestically. Up until 1980 France was the top leader globally when looking at wine consumption- and production. However, this changed when people became more aware of health risks that could occur from daily alcohol consumption. Since 1980, alcohol consumption has almost decreased by 40 percent in France and Italy. Nevertheless, the wine consumption rates in France and Italy are still on top globally. (Gro-intelligence.com, 2015)

Domestic Consumption Patterns

As you can see in the graph above, wine supply was in a constant surplus for several years and demand has dropped drastically. This forced the European Union to undertake action. A legislation was implemented in 1976, forbidding any new vineyards to be planted, which lasted until 2015. At that moment, the practise of ‘crisis distillation’ was also introduced, subsidizing the wine surplus cost in order to prevent waste. In 2008, the European Union assisted in making wine more suitable for export. (Gro-intelligence.com, 2015)

Global Wine Production by Country

Due to a long-lasting drought, wine production becomes more difficult in certain regions. In the United States of America, most wine is consumed domestically. However, the lasting drought in California has been a serious problem for certain producers to maintain their place in the market. This also counts for Chile, where successful vineyards such as Winery De Martino now have limited production possibilities due to a lasting drought since 2007.

The drought also occurs in South Africa, however, the conditions are not as bad as in Chile or the United States of America. South Africa is currently in the top 10 of wine producers and is known for its Pinotage grapes. Unfortunately, South Africa is also suffering from a fall in demand due to the decreased wine consumption over the years. Cheaper beverages, such as beer, are a serious competitor for wine producers nowadays.

As mentioned before, there is a decline in demand for large wine producers such as Italy and France. However, other countries such as Ireland, Singapore, South Korea, Turkey and China, experience an ongoing rise in demand.

Africa and China experience an ongoing high demand in wines, in China especially (almost solely) red wines are popular. However, demand exceeds supply as there is more demand for import wines rather than wines produced domestically. (Gro-intelligence.com, 2015)

Wine production; general

In total, more than ten thousand different grapes are grown which are used for wine production. Generally, wine can be divided into four main categories;

  • Red wine
  • White wine
  • Sparkling wine
  • Fortified- or dessert wine

These categories also consist of more detailed categories;
Sparkling Wine

  • Light-Bodied White Wine
  • Full-Bodied White Wine
  • Aromatic (sweet) White Wine
  • Rosé Wine
  • Light-Bodied Red Wine
  • Medium-Bodied Red Wine
  • Full-Bodied Red Wine

Dessert Wine (Puckette, 2019)

There are different ways of determining and creating the taste of a wine. When making wine and determining the desired flavour the following aspects are (amongst others) taken into consideration;
1. Harvest date
The moment of picking the grapes determine the taste of the wine. Grapes which are picked early usually make acidic wine whereas grapes that are picked later make sweet wine with a higher alcohol percentage.
2. Skin contact
This refers to the amount of time the grapes actually touch the juice while it is turning into wine. When using the process ‘cold soaking’ (keeping the grapes cold) the fruity flavours are usually extracted from the skin of the grapes.
3. Fermentation
Warm fermentation is mainly used for red wines as it increases colour and tannin. Cold fermentation is used for white- or rosé wines in order to maintain delicate aromas in the wines.

The process of making wine differs and depends on the type of wine. However, there are five main steps that are most commonly used when making wine;

  1. Harvesting the grapes
  2. Crushing and pressing the grapes
  3. Fermenting the grapes to turn them into wine
  4. Aging the wine
  5. Bottling the wine

The grapes can be picked from the vineyards either manually or by using machines. In order to maintain the quality of the grapes, some producers might prefer picking grapes by hand. The quality of the grape is determined by the time of picking, seasonal influences, climate influences and the soil. The timing of picking the grapes will also determine whether the wine is sweet or acidic.

After picking the grapes they are crushed and pressed. When producing white wine, grapes are usually crushed immediately after picking in order to remove the soil from the skin. However, grapes for red wine production are crushed after a certain amount of time in order to maintain its colour.

A couple of hours after crushing the grapes, the must (remains from the crushed grapes) is fermented. In order to fasten the fermentation process, yeast is usually added to the must and the sugar from the must is converted into alcohol after more or less ten days. When producing sweet wines, the fermenting process is usually stopped earlier in order to maintain some of the sugars from the must. Clarification is the process after fermentation where all of the unwanted particles are removed from the wine. Usually, wines are aged before bottling it and saved into a vessel. (Alcohol.org, 2018)

The most planted wine grape in the world would be Cabernet Sauvignon. In the figure below you can see the 10 most popular types of wines in the industry. (Wine Folly, 2018)

Common Types of Wine

Soils and viticulture

The soil used to grow the grapes determine the taste of the wine, this is why wine from different regions or countries have different taste.

There are 4 mail soil types, each wine reacts differently on each soil type;

-Sandy soils (more softly flavoured wines, less colour and low in acidity and tannin)

Example areas with sandy soils; Bordeaux and Northern Médoc in France
Example grape varieties; Cabernet Sauvignon

-Clay soils (very bold wines, highly flavoured and strong)

Example areas with clay soils; Rioja and Ribera del Duero in Spain
Example grape varieties; Tempranillo

-Silt soils (smooth wines with less acidity, very hard for growing roots due to the fine grained soil)

Example areas; Oregon and Washington in the United States of America
Example grape varieties; Pinot noir

Loam soils (mix of clay, sand and silt. Very vigorous and thus wines with little flavour and colour)

Example areas; Sonoma Valley and Napa Valley in the United States of America
Example grape varieties; Cabernet Sauvignon and Pinot Noir

The Dutch white wines are considered to be better than the red wines and the wines from the south of the Netherlands are considered to be better than anywhere else in the country. In the south of the Netherlands, the grapes are usually grown on hills, which allow them to receive more sunlight and thus create more qualitative wines. As mentioned before, most Dutch Wines are produced in the province of Gelderland and Limburg, mostly on sandy soils. In the province of Brabant sandy soils can also be found. Clay soils can be found in Friesland province, Groningen province, Noord-Holland province and Zeeland province. (Dewijnhoek.nl, 2019)

This also applies to German vineyards; along the Rhine, in the south of Germany, wines tend to be more successful due to the higher amount of sun than in the rest of Germany. In Germany, just as well as in the Netherlands, a great variety of soil types exist.

The quality of the wine tends to depend on climate- and geographical factors rather than on the type of soil. However, soil certainly is an important aspect when looking at the quality of wine. Water supply is a very important feature when looking at the best wine growing soils. It is rather important to have enough water supplies in the soils; however, soils over drained with water appear to be less successful. Therefore, a lot of rain does certainly not promise high quality wine. The highest quality wines tend to come from less fertile soils with low vigour. The more fertile the soil, the more vigorous the soil is and thus the less flavoured the wine will turn out to be. (Beukers, 2017)

European union wine labels

The classification of wine consists of different wine laws- and legislations which are different per country. In roman times, Italy and France started with implementing strict laws when it came to wine production. Even though it differs per country, the most wine laws- and legislations are focussed on the origin of wine, how the wine was produced and the authenticity of the wines. One of the first classifications, implemented in the Bordeaux region of France in 1855, catalogued all of the best wines from Bordeaux region. (Wine-searcher.com, 2019)

The European union wine classification determines quality with two different quality labels;

Protected Designation of Origin (PDO)

Wines with a PDO label are produced and processed in in a specific geographical area, using their own knowledge and skills. The quality of these wines is exclusively determined by the circumstances of the region and environment, looking at physical- and human factors. Each country has its own label name for the PDO label in their own language.

Protected Geographical Indication (PGI)

Specific areas have specific qualities when it comes to producing wine. The PGI label focusses mainly on the geographical area where the wine was produced and which quality aspects specifically belong to this area or region. (Wine-searcher.com, 2019)

The two Dutch- and Belgian wine classifications are quite similar to the PDO and PGI classification.

-BOB (Beschermde oorsprongsbenaming) refers to the EU Protected Destination of Origin.

The first BOB was labelled to the Maasvallei area in Limburg province in 2017. In the Maasvallei region, high quality Riesling is produced. Right now, 4 different wines in the Netherlands have the BOB label. Strict rules must be applied and followed in order to obtain a BOB label. The wines labelled with a BOB must (amongst others) be produced from a few specific grape varieties, just as well as it needs to have a specific alcohol percentage (9.5% alcohol). 100 percent of the wine’s grapes with a BOB classification need to be originated from the geographical area. (Perswijn, 2017)

BGA (Beschermende geografische afkomst) refers to the EU Protected Geographical Indication.

There are quite a lot of wines which already have the BGA classification. This classification, as mentioned before, is not only about the geographical location but also about the human- and physical factors. 85 percent of the wine’s grapes with a BGA classification need to be originated from the geographical area. (Eu-streekproducten.nl, 2019)

Wines from Mosel (Moselle) area

The Mosel river begins in France and flows into Germany to eventually end in the Rhine river. The Mosel area is especially known for their amazing Riesling wines.

The Mosel valley does not just grow Riesling grapes, the other grapes definitely worth mentioning are Elbling, Pinot Blanc, Pinot Gris, Kerner and Auxerrois. The Pinot Blanc- and Auxerroix grape variety are also grown in the Netherlands. Just like the Dutch vineyards, in the Mosel area a small percentage of Pinot Noir grapes are also grown. (Puckette, 2017)

Mosel Valley Wine Varieties

(Puckette, 2017)

Below you can read some of the characteristics of the well-known Riesling wines;

  • The wines become yellow as they age but start out with a pale colour.
  • The younger Riesling wines have aromas of honeydew and lime, with a medium intensity. As they age, they develop intense aromas of gasoline, lemon, honey and apricot.
  • The taste of the wine is usually highly acidic which is balanced with sweetness.
  • High quality Riesling wines can age up to 40 years, depending on the quality of the wine. Wines with low quality usually age up to 5 years.

In the Mosel area, three different wine classifications are used. Qualitatswein (QbA), VDP and Pradikatswein.

  1. The VDP association rates the wine by looking at the quality of the vineyard. Wines with the certification ‘Grosse Lage’ are perceived to come from the best vineyards in Germany. Approximately 200 wineries are invited by the VDP association and you will definitely find Riesling wines from the Mosel area with this classification.
  2. A Qualitatswein label can be obtained when the wine has a minimum level of ripeness.
  3. A Pradikatswein label is the most common label used for the wines in the Mosel area. This label also refers to the ripeness of the wine and to the percentage of grapes which have been affected by the so called ‘noble rot’. This is a certain mould, used to perfect certain types of wine. (Puckette, 2017)

Wines from Alsace area

The Alsace region is a region in the east of France, once again along the Rhine. The Alsace region is divided by two parts; the Bas-Rhin and the Haut-Rhin. When thinking of the best vineyards of the Alsace region, many think immediately of the Haut-Rhin part of the Alsace as this region is perceived to have exceptional vineyards. In the Alsace region, different grapes can be found, quite equally divided in quantity.

Just like the Mosel regionand the Netherlands, we see the grape varieties Pinot Blanc, Pinot Gris, Pinot noir and Riesling. The differences between the Riesling from the two areas, Mosel and Alsace, is that the Riesling wine from Alsace is usually dry and less sweet. (Puckette, 2017)

Alsace Wine Statistics

Three different ‘AOC’ (Appellation d’Origine Contrôlée) laws are implemented in the Alsace region. These laws cover different aspects and are divided by 3 main AOC’s.

  1. Alsace AOC for 92% white still wines
    The wine needs to consist of no less than 100% of the grape variety that is labelled on the wine. Blends are (highly exceptional) allowed, but need to be labelled with the name Edelzwicker, a label that usually represents low quality wine.
  2. Crémant d’Alsace AOC for Sparkling white and rosé wines
    This AOC described sparkling wine, usually the sparkling wines from Alsace region are compared with champagne and is considered to be highly qualitative.
  3. Alsace Grand Cru AOC for Limited special vineyard wines

This is quite an exceptional AOC which only covers a small percentage of production in the Alsace region. In order to obtain the relatively high alcohol percentage that is required for this wine, the grapes need to be very ripe and thus are exposed to more sunlight than other grapes. (Puckette, 2017)

Sparkling wine; an idea for Dutch wine producers?

Due to the lack of sun in the Netherlands, the Dutch wines are mostly highly acidic, which means that there is definitely potential for Dutch sparkling wine production. Additionally, there are even wine producers which initially started with the idea to produce sparkling wine.

Sparkling wine is usually produced with a grape blend of Chardonnay and Pinot Noir. Since these two grape varieties are both grown at the Dutch vineyards, a future opportunity to produce sparkling wine is definitely possible. Due to the acidic taste of sparkling wine, Pinot Noir and Chardonnay are likely to be more successful (when used for sparkling wine) in cold climates. Therefore we can conclude that right now, there are definitely opportunities for sparkling wine in the Netherlands. However, the global warming and thus futuristic climate change will not benefit the grape varieties Chardonnay and Pinot Noir since they are more likely to be successful (for sparkling wine) when grown in cold climates. (Californiachampagnes.com, 2019)

My vision of the future of Dutch wines

Dutch wines have already made huge developments when looking at decades ago. Wine was considered to be ‘not drinkable’ and nowadays Dutch wines are definitely more successful and deserve a share in the wine market. However, due to the cold climate it is still more difficult to grow quality grapes, especially when looking at other wine friendly climates in France, Italy or Spain.Additionally, Dutch wines are considered to be quite expensive due to the relatively high (rent) costs of owning a vineyard. When looking at the future of Dutch wine, global warming and climate change need to be taken into consideration and their (possible) positive effect on Dutch wine of the future.The Dutch wine market is not expected to be able to compete with successful other wine countries anytime soon. However, with continuous development and a possible warmer climate in the future, they might obtain a bigger market share. The climate of the future will determine many things, the ability will rise to develop more types of wines and to increase the alcohol percentages.

Interview outcome

I conducted an interview with Gilbert Sweep, the owner of the wine and asparagus farm in Etten-Leur. We asked questions about the topics below.

Supply and demand

Due to the combination of growing asparagus and wine, the demand is quite high and usually highest in spring or early summer. The consumer usually purchases a combination, wine and asparagus. Due to the high demand for asparagus in April, May and June, the demand for wine also has its peak during these months.

Types of wines and grape varieties

We mainly use German races, our wines are Walnut wines and Sant Porto. Our oldest wine is 17 years old and we also work with a Michelin star restaurant which has one of our wines on their menu. This restaurant is called De Zwaan. The current sommelier of this restaurant used to work with us at the vineyard. The grapes are picked quite late and crushed very late in order to create more taste.

Exporting wine abroad

This is not the case.

What is the best season for producing the wine and the asparagus?

The best season is late spring/early summer. Unfortunately, this year the weather has not been very beneficial as we suffered from the cold until more or less June.

Do you suffer from competition from other wine regions or vineyards in the neighbourhood?

Customers usually buy their asparagus with us, because we sell both wine and asparagus we don’t really suffer from competition in other regions in the Netherlands, our competitors are only from the vineyards that surround Breda. Our customers always buy a combination of asparagus and wine.

What is your expectation of the future of wine in the Netherlands? Do you think the Netherlands will benefit from climate change and thus rising temperatures?

Yes, absolutely. The Netherlands will be able to use more grape varieties and therefore produce many more types of wine.Additionally, due to the warmth we can produce wines with higher alcohol percentages.

What is the difference between wine production in the Netherlands and other more wine friendly countries?

The climate is the most important aspect of the wine producing region. It is also important to look at whether the region has a continental climate or a maritime climate. A very humid climate is a danger for all the wines due to the quick development of moulds.

Wine Assignment Questions:

  1. What kind of grapes and wines do you produce and why did you choose for this variety?
  2. What do you think is a negative/positive point of having a vineyard in the Netherlands?
  3. How do you deal with supply and demand? How do you keep your production constant?
  4. What do you think of the use of fertilizers in your production?
  5. What the best region to produce wine?
  6. What is the biggest challenge of producing wine in the Netherlands?
  7. Who are your competitors? How do you distinguish yourself from them?
  8. How is the profitability within the wine market? Can this business the profitable by itself?
  9. How is technology implemented in your production?
  10. How do you keep a standardized wine quality?

Beste; Als u moeite ondervind de vragen te ontcijferen en beantwoorden in het Engels, zou ik u graag een Nederlandse vertaling sturen. Dank u vriendelijk voor uw medewerking.

References

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Seven-wines.com. (2019). Wine Regions – Seven Wines. [online] Available at: https://www.seven-wines.com/the-netherlands-wine/wine-regions.html [Accessed 18 Jun. 2019].

DutchNews.nl – Live. (2015). Get to grapes with Dutch wine – DutchNews.nl – Live. [online] Available at: https://www.dutchnews.nl/features/2015/10/get-to-grapes-with-dutch-wine/ [Accessed 18 Jun. 2019].

Yourwineestate.com. (2019). Facts and figures around the global wine market | YourWineEstate. [online] Available at: https://www.yourwineestate.com/wine-knowledge/global-wine-market/ [Accessed 18 Jun. 2019].

Gro-intelligence.com. (2015). [online] Available at: https://gro-intelligence.com/insights/world-wine-consumption-and-production [Accessed 18 Jun. 2019].

Puckette, M. (2019). The 9 Primary Styles of Wine | Wine Folly. [online] Wine Folly. Available at: https://winefolly.com/review/everything-you-need-to-know-about-wine-in-9-bottles/ [Accessed 18 Jun. 2019].

Alcohol.org. (2018). What Goes into Making Various Types of Wine?. [online] Available at: https://www.alcohol.org/statistics-information/wine-making/ [Accessed 18 Jun. 2019].

Wine Folly. (2018). Wine Basics – A Beginner’s Guide to Drinking Wine | Wine Folly. [online] Available at: https://winefolly.com/wine-basics-beginners-guide/ [Accessed 18 Jun. 2019].

Dewijnhoek.nl. (2019). General wine information of Dutch wine growing. [online] Available at: http://www.dewijnhoek.nl/nederland/english/page3.html [Accessed 18 Jun. 2019].

Beukers, M. (2017). Introducing Dutch Wine. [online] Wijnkronieken.nl. Available at: https://www.wijnkronieken.nl/introducing-dutch-wine/ [Accessed 18 Jun. 2019].

Wine-searcher.com. (2019). [online] Available at: https://www.wine-searcher.com/wine-label-eu.lml [Accessed 18 Jun. 2019].

Perswijn. (2017). Eerste BOB in Nederland – Perswijn. [online] Available at: https://perswijn.nl/2017/12/12/eerste-bob-in-nederland/ [Accessed 18 Jun. 2019].

Eu-streekproducten.nl. (2019). Beschermdeoorsprongsbenamingen (BOB) enbeschermdegeografischeaanduidingen (BGA) voorwijn | EU-streekproducten.nl. [online] Available at: http://www.eu-streekproducten.nl/content/beschermde-oorsprongsbenamingen-bob-en-beschermde-geografische-aanduidingen-bga-voor-wijn [Accessed 18 Jun. 2019].

Puckette, M. (2017). The Mosel Valley Wine Guide | Wine Folly. [online] Wine Folly. Available at: https://winefolly.com/review/mosel-valley-wine-guide/ [Accessed 18 Jun. 2019].

Puckette, M. (2017). Alsace Wine Region: A Guide for Enthusiasts | Wine Folly. [online] Wine Folly. Available at: https://winefolly.com/review/alsace-wine-region/ [Accessed 18 Jun. 2019].

Californiachampagnes.com. (2019). What are the different types of grapes used to produce sparkling wine?. [online] Available at: http://www.californiachampagnes.com/grapes-used-in-sparkling-wine/ [Accessed 18 Jun. 2019].

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