Dusseldorf Sparkling wine will be more expensive. Germans also have to dig deeper into their pockets for cheap brands and private labels. “For the third time in a year, we feel compelled to raise prices,” says Oliver Gloden, CEO of Schloss Wachenheim AG. The shelf prices of the core brands Faber and Light Live have already risen from 2.99 to 3.49 euros. The sparkling wine cellar, mostly family-owned, is one of the largest sparkling wine producers in Europe.
First of all, the poor 2021 vintage, especially in France, caused a shortage of base wines throughout Europe and made a price increase for spring necessary. “Soon after the start of the Ukraine war we had to add the second increase. Rising energy prices have made everything in and around the champagne bottle more expensive,” explains the 46-year-old.
Glass in particular is scarce and expensive. “Either you pay significantly more or you don’t get any bottles.” The winery is currently negotiating prices again with retailers. “We cannot swallow the high additional costs, our margins are simply too small for that.”
Because Schloss Wachenheim produces a lot of sparkling wine in the tightly calculated entry-level price range. 40 percent of all filled bottles are sold as retail brands such as “Stolzenfels” at Aldi or “Burg Schöneck” at Lidl. Schloss Wachenheim and competitor Herres, both based in Trier, are Germany’s largest private label bottlers of sparkling wine.
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In contrast to the pandemic, when Germans treated themselves to more premium sparkling wine, in times of inflation many are turning to cheaper private labels. “Nevertheless, we are not a winner of the crisis, just a little more crisis-proof,” emphasizes Gloden. Because if psychological price thresholds were exceeded, price-sensitive consumers would no longer buy at all. The manager is worried about a drop in sales of up to 20 percent.
Faber as “democratization of sparkling wine enjoyment”
The December business is crucial for sparkling wine. The turnover of Schloss Wachenheim increased by 8.3 percent to 384 million euros in the past financial year (until the end of June). The result of the AG was about three cents per bottle. According to the company, this is far from enough to compensate for the rising costs. It won’t work without price increases. Gloden expects a slight decline in sales and earnings for the current financial year.
>> Read here: Little Red Riding Hood Mumm complains about higher costs
The winery still does just a third of its business in its home market. The Verband Deutscher Sektkellereien determined that Schloss Wachenheim, including its own brands, has a market share of twelve percent in Germany. This places the Trier-based company behind Rotkummel-Mumm with a market share of over 50 percent and Henkell Freixenet, the largest sparkling wine producer in the world. Little Red Riding Hood boss Christof Queisser also expects price increases of 50 cents to one euro per bottle of sparkling wine.
In the 1980s and 1990s, the company from Trier was even the German market leader for sparkling wine. Wachenheim Castle was ousted in 2001 when the East German cult brand Rotkummel swallowed up its West German competitor Mumm.
The small wine merchant Günther Reh from the Moselle village of Leiwen managed to climb to the top within 25 years. Then Reh bought the ailing Faber winery from Trier. In 1973 he launched the sparkling wine “Faber Krönung”, a cuvée of European wines and some Muscat wine. Seven years later, the winery was the industry leader without advertising, but with an extremely low price. Faber stands for the “democratization of sparkling wine enjoyment”, as Reh once explained the secret of success.
Schloss Wachenheim AG sparkling wine cellars
(Photo: Schloss Wachenheim AG)
In 1996 Faber was merged with the traditional but ailing Sektkellerei Schloss Wachenheim AG from the Palatinate, one of the oldest public limited companies in Germany. Founder’s son Nick Reh renovated the castle and sparkling wine brand, which relies on traditional bottle fermentation.
Stock: Schloss Wachenheim regularly pays a dividend
Today, the Reh family holds a good 70 percent of the group through Günther Reh AG. 30 percent of the shares are in free float. The group includes various brands such as Nymphenburg Sekt, Light live, Feist and the children’s party drink Robby Bubble. A year ago, the share was quoted at 20 euros, but the price has since fallen to a good 15 euros. Most recently, the dividend was increased from 50 to 60 cents. About a quarter of the group result is distributed to shareholders.
Schloss Wachenheim has gone through a long consolidation phase. “The merger of Faber with Wachenheim and other brands took a lot of energy. In addition, the market environment has changed significantly,” explains Gloden. Because Germans are drinking less and less sparkling wine. According to the association, consumption has fallen from 4.2 to 3.2 liters per capita over the past ten years.
“Unlike in Germany, the consumption of wine and sparkling wine has increased in Eastern Europe,” says the CEO of Schloss Wachenheim AG.
(Photo: Schloss Wachenheim AG)
In France, too, the sales of the Trierer have weakened in recent years because important trademarks have been lost there in the long term. In October, it was decided to move production from the Wissembourg site entirely to Tournan-en-Brie by the end of 2023. “The plant was underutilized,” says Gloden. 51 jobs were cut.
Eastern Europe has long been the engine of growth and the largest market for Schloss Wachenheim. “We are so big there because the Reh family got involved very early on. It was a courageous decision back then.” In Poland, the Trier company is the market leader for still wine, among other things. In the Czech Republic, a strong sparkling wine brand was built up with Mucha. In Romania, too, the Germans are leaders in many segments. “Unlike in Germany, the consumption of wine and sparkling wine has increased in Eastern Europe,” says Gloden.
Non-alcoholic sparkling wine is trendy
In Germany, alternatives with 0.0 percent alcohol from the Light Live brand were doing quite well. “We also offer Hûgo and Spriz without alcohol,” says Gloden. A hard seltzer, fruit-flavored sparkling water with alcohol, that was released in 2020 worked less well. The Ypso brand was discontinued. “The Hard Seltzer wave from the USA predicted by experts has not arrived in continental Europe,” says Gloden. Coca-Cola also recently took its Tipo Chico hard seltzer off the market in Germany.
Since 2017, Schloss Wachenheim has not only been a producer, but also a wine dealer. At that time, the company took over Rindchen’s Weinkontor and Vino Weinhandel (formerly Pieroth). After Hawesko with Jacques’ Wein-Depot, the Trier-based company is now the second largest German wine retailer, with 34 of its own shops and online shops. The winery wants to become more independent of the food trade. Further acquisitions of wine shops are planned.
All these strategic questions are closely coordinated with entrepreneur Nick Reh, today head of the supervisory board and executive board of Günther Reh AG. “The Reh family is deeply rooted in the business,” says manager Gloden, who is himself active in the second generation in the sparkling wine cellar. His father was technical director. After studying business administration, the son came to Schloss Wachenheim in 2000. Since 2015, Gloden has been on the board responsible for “everything that has to do with the product”. Gloden’s brother works as a technical director like his father once did. “Our family is very fond of wine and has close ties to the company.”
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