Wine market in Germany

Germany is usually considered to be a textbook example of a price-sensitive wine market. Germans are commonly perceived as frugal consumers unwilling to pay more than a minimum for a certain style of wine, and there is certainly a grain of truth in this perception. That means retail markups both in stores and restaurants are usually significantly lower than in the US and the UK.

The direct-to-consumer channel is very important in Germany. A consumer survey conducted by Nielsen for the German Wine Institute (DWI) found that 15% of all off-premise wine purchases by volume (out of all wine, domestic and foreign) were made directly from wineries. It can be assumed that most of it was from German wineries; if this assumption is true, it means that around 35% of German wine by volume is sold directly to customers. It is corroborated by another survey of 400 wineries, commissioned by the DWI and conducted by Hochschule Geisenheim: according to which, 46% of revenue of surveyed wineries came from direct-to-customer sales, while 11% amounted to direct shipments to restaurants.^[6]

The country’s wine industry still struggles with the legacy of the 1970s, when vineyards were replanted with high-yielding clones, the legal framework equated quality with alcoholic ripeness, wine was industrialized and commoditized, and the quantity mindset prevailed over the cultural and aesthetic dimensions of wine.

This legacy affects cooperatives more than estates. Although in France and Italy many cooperatives succeeded in introducing quality incentives and modern marketing practices and thus produce highly competitive premium wines, in Germany it is still generally not the case. As of 2025, most German cooperative wines are underpriced and undermarketed. Around one-third of German wine production corresponds to cooperatives, with up to 70% of volume in Baden and Württemberg.^[7]

Premiumization poses a major challenge for many producers, both estates and cooperatives. With high labor costs because of mandatory minimum wage and simultaneously low availability of labor, many producers that have failed to justify higher prices are facing bankruptcy.^[8]

So-called PiWi grape varieties are modern hybrids that are gaining popularity among German winemakers for their sustainability (PiWi means pilzwiderstandsfähig, eng. fungus-resistant). They require less chemicals in the vineyard and less labor, but they may lack commercial appeal for buyers and customers. About 3% of all German vineyards are planted with PiWi varieties, but only 0.6% of all German wines in German restaurants account to any hybrids, including PiWi.^[9] The red variety Regent accounts for approximately 60% of these placements.

An opposing ethos is represented by the Historische Rebsorten (Historical Varieties) project. It was initially commissioned by the German government as a research project to gather plant material from old vineyard sites, but the official report was never published.^[10] However, many of these varieties that were initially thought to be extinct are available now in a commercial nursery.^[11] With their distinctive profiles and history, they might have significant commercial potential both in domestic and export markets.

The VDP (Verband Deutscher Prädikatsweingüter, eng. Association of German Prädikat Wine Estates) is a consortium of approximately 200 quality-minded producers that consolidate marketing efforts for promoting their wines worldwide. Since 2001, they have developed their own vineyard classification based on 19th-century land tax maps. Being heavily influenced by the Burgundian paradigm of Grands Crus and Premiers Crus, it introduces the terms Grosse Lage and Erste Lage for best vineyards and Grosses Gewächs and Erstes Gewächs for dry wines from those vineyards. The VDP has been very successful and gained much recognition, and many VDP wines command premium and luxury prices. Exports are very important for VDP members.

For many customers abroad, the VDP has become synonymous with German quality wine. This organization can be easily mistaken for an official government trade body. However, it is important to keep in mind that it represents only its 200 members, not the whole German winemaking industry that consists of approximately 14,000 winegrowing enterprises.^[12]

The German wine law of 1971 with its focus on alcoholic ripeness has been long outdated. A new legal framework has been introduced, coming into effect from the 2026 vintage which will be sold starting in 2027. The focus of the new law shifts to terroir, effectively appropriating the VDP terms of Grosses Gewächs and Erstes Gewächs and elevating them to the government level.^[13] However, although there is no established practice as of February 2026, it looks like the new legislation allows a much broader use of these terms. There is no doubt that there will be various problematic implications of this, as these terms in the legal and VDP frameworks have different meanings.

The new legislation creates new opportunities for non-VDP estates while, to a certain extent, attacking the VDP. The German wine industry is on the verge of dramatic changes.

Compiled and checked by Ilya Zabolotnov