Discounter Aldi Pulls Top German Vintners Into Low-Cost Fold | Business| Economy and finance news from a German perspective | DW | 28.08.2007
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Discounter Aldi Pulls Top German Vintners Into Low-Cost Fold

Germany's grocery discounter Aldi has struck a deal with two respected German winemakers to sell top-flight cuvees at cut-rate prices. The move has some observers scratching their heads, and others hoping for the best.

White wine being poured into glasses

The reputation of German wine has greatly improved of late

The reputation of German wine has been on the rise in recent years. No longer viewed solely as the producer of painfully sweet whites, the country is starting to enjoy a worldwide reputation as a producer of subtle and flavourful Rieslings, Burgundies and Müller-Thurgaus, among others.

Woman eating grapes

Everyone knows when it's time for picking

So it may not seem like the ideal time for two of the country's most respected wine makers to hop into bed with the country's number one discount supermarket chain.

After all, by continuously slashing prices, Aldi has lowered the average price of wine on its shelves from over two euros ($2.70) for a 0.75 liter bottle in 2001, to 1.73 euros a bottle today, according to Ernst Büscher, a spokesman for the German Wine Institute, an industry association.

"I expect to sell out"

But partnering with Aldi is exactly what German winemakers Raimond Prüm, of the Mosel region, and Fritz Keller, from Kaiserstuhl in Baden, deemed the right thing to do.

Back in June, Keller struck a deal with Aldi to produce Weissburgunder and Spätburgunder wines. To produce enough wine, he will cooperate with some 1,000 local vintners, who have to adhere to a strict set of quality criteria in order to be able to contribute to the cuvee. The wines will be priced to sell at around seven or eight euros.

Raimund Prüm, whose best Rieslings can sell for hundreds of euros per bottle, also struck a deal to release a cuvee for Aldi. For his release of between 300,000 and a half a million bottles, Prüm will use grapes of his own, as well as selected other vineyards. The other grapes must be grown in accordance with rigid growing, production and territory criteria.

Given the relatively small production, and the price of between six and eight euros per bottle, Prüm told Germany's Die Welt newspaper, "I expect the wine to sell out in a number of hours."

Win-win situation?

Wine grower picks his grapes in German wine region

Small growers are still important in German wine regions

For Prüm, the situation is win-win. For one thing, thanks to Aldi's massive distribution system, his wines can be appreciated by the widest possible audience.

"The wine will be something special for the discounter to offer, and will show just how high a quality wine the Mosel region can produce," Prüm said.

Statistics are unreliable, but the German Wine Institute estimates retail grocery sales in general account for 70 percent of wine sales in Germany; 30 percent of that amount can be chalked up to Aldi sales alone. Wine specialty shops, in contrast, account for just 3 to 5 percent of sales.

Ironically, getting the invitation to sell wine through a giant discounter can be seen as an honor in itself, according to the German Wine Institute's Büscher. Aldi has promoted high-quality, higher-priced Italian and Spanish wines in the past; now its Germany's turn.

"That Aldi is now opening this price class for German wines shows that the image of German wines has improved, both here and internationally," Büscher said.

But Nils Vahrenwald, the owner of Weinhaus Süd, a mid-sized distributor of international wines in Cologne, is skeptical about the wine makers who are in league with rock-bottom retailers.

Good for the industry?

Hikers in Rudesheim vinyards

In Rudesheim, vinyards are also hiking paths

"I don't understand why they're doing it -- these winemakers don't need to be on the shelves next to the cheapest mass-produced stuff," Vahrenwald said. "I honestly do not know how they are making this wine, but they must be buying the cheapest grapes, working on it a little in production, and then selling it for a great profit.

"In the end they aren't doing German wine a favor," said Vahrenwald, who noted that he has spent years trying to boost the image of German wines among his customers, even back when it was out of fashion.

But Ulrich Sauter, an editor at Germany's Wein Gourmet magazine, said he does think both parties stand to gain from the deal.

Person carrying Aldi bags

Aldi has had a huge influence on German wine tastes

"From the side of the discounters, they want to get more prestige," he said. "The producers want more sales. And if Aldi is ready to have more expensive wines on its shelves that could be an improvement for the wine growers."

"I agree that it's a paradoxical situation, but I don't think people like Fritz Keller are doing this just to make a profit," Sauter said. "I think he is really concerned about the structure of the small wine villages in his region. If the small wine growers in Kaiserstuhl, in Baden, in the Mosel, disappear, these regions would change entirely."

Finally, Sauter said, only time will tell whether it's a good move or a bad one for the German wine industry.

"We'll only know after we taste the wines they make," he said.

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