THE GREEK WINE INDUSTRY 

DEMAND

The demand for wine in Greece has dropped sharply during the last 15 years, but recently the wine market seems to stabilize. In 1995/96 wine consumption amounted to 3.2 million HL against 2.6 million HL in 1991/92. Wine consumption represents 20% of total alcoholic drink consumption (against 34% in 1982). Average per capita consumption of wine in Greece is estimated at 30 liters annually and remains one of the highest in the world. However, it is below the E.U. average, which is 37 liters and approximately half of the relevant figure in France, Italy, Portugal and Luxembourg.

Changes in the socio-economic structure of the Greek family, high pricing, strong competition from alternative products, as well as the high taxation of alcoholic products are the main factors affecting demand.

Table-wine amounts for 90% of total wine consumption, with the traditional retsina accounting for 30% of the total, although its demand is declining. White wine is increasing its share to 75-80% of the total market, while rose wine lost ground against white wine. However, rose wines still hold 10% of the market. Finally, whereas demand for red wine remained rather stable during the 1990/95 period, in 1996 its share of total demand increased and reached 15%.

Consumer preferences have been reoriented towards quality wines, such as Domain, Chateau, etc., produced mainly by small sized firms or in limited quantities. House wines remain nevertheless, very popular and have recently improved their position in the market, accounting for about 60% of the total market (especially in the Attica area).

SUPPLY

Production has fallen in tandem with demand, with co-operatives having lost most of their share in favor of private firms. In 1994/95 production amounted to some 3.9 millions HL, against 4.5 millions HL in 1989/90 and almost 5.5 millions HL in the early '80s.

Generally speaking the wine sector in Greece is highly fragmented, mostly in small size firms. Co-operatives mostly produce and sell wine in bulk and, despite their strength in their close integration with the agricultural sector, they face severe problems in management and finance. The private sector primarily produces bottled wine, with an extensive variety of products. Within the private sector there is a small number of big size traditional producers with large output, well organized distribution and high levels of exports (TSANTALI, BOUTARI, ACHAIA CLAUSS, KOURTAKIS, etc.). However, the majority of private enterprises is small or medium sized, with limited production and distribution capabilities for their products. Due to the consumption swing towards quality wine they are expected to grab larger shares of the market. Finally, several small producers in bottled or bulk wine face problems in the quality and standardization of their products.

Table wine amounts for more than 90% of the total wine production in Greece, whereas white wine takes up almost 74%. Although organized firms account for most of the total output, house wine (primarily destined for self consumption) still gets 40% of it. This part includes about 180 thousand cultivators of vines.

Viniculture in Greece has been shrinking at an annual rate of 25% since the beginning of the '80s. This is due to the eradication policy which has reduced hectares by 30%. This measure has been adopted throughout EU, in order to reduce productive capacity. Furthermore, viniculture in Greece has other structural characteristics such as the big-age and small size vineyards, which are located mainly in the highlands, with irregular and dense plantations, elements which lead to high production costs and do not allow absolute control of the quality of raw material.

Viniculture for wine making accounts for 45% of total viniculture in Greece, out of which table wine is 80%. This type of plantations has fallen sharply, since the measure of eradication has been adopted for table wine. Greek viniculture includes 300 unique types of vine, which are traditionally cultivated in the country. In order to control the quality and cost of grapes, wine producers usually have their own vineyards, or they co-operate with cultivators, to get grapes or must or even wine for further processing. It is noted that raw material is equal to almost 50% of the total production cost, whereas packaging is 35%.

EXTERNAL TRADE

Wine is one of the most important agricultural exports of Greece; its value covers more than 50% of total exports in the beverage sector. Within the last five years wine exports have been almost equal to 10 times wine imports, so that the trade balance is positive, with the surplus amounting to 15.4 billion Drs in 1995. The volume of exports is fluctuating within the last years, reaching 60.8 million lt. in 1995 and representing 1.5%-2% of EU exports and 18% of Greek production. Exports are highly concentrated in two markets, since Germany and France account for 68% of total volume, whereas total exports to EU represent 85%-90% after 1990. A vital aspect is the shift to smaller bottles (under 2 lt.), which account more than 55% of total exports since 1992. In the past larger bottles, wine in bulk and must represented the core exports. Table wine remains the most important export category, with its share declining to 74.4% and white wine in big bottles taking most of it. VQPRD account for 7%, with an exceptional rise in white bottled wine. Imports still remain in low levels (1%-2% of total consumption), but they show remarkable growth rates. Sparkling wine and champagne accounted for 34% of total volume in 1994, whereas until the end of the '80s this was almost the only import category; other categories, especially table wine, which now accounts for 23% of total imports gained market share; VQPRD accounts for 5% and Vermouth the remaining 22%.

Excerpt from a published study in January of 1997 with subject  "The Greek Wine Industry" (No 142) by Ms Chara Messini. Conducted for the Sectoral Research Department of the Foundation for Economic and Industrial Research (IOBE). (http://www.iobe.gr/wine.htm)