ROMANIAN WINE DISTRIBUTION CHANNELS
Romania’s wine exports represent 3.5% of the country’s wine production and 0.5% of EU exports, placing it 18th in the EU. These numbers don’t reflect Romania’s 3.6 million hectoliters wine production ranking Romania on the 6th place in the EU. As such, it seems that 90% of wine production is mostly commercialized on the domestic market. The largest distribution wine channel in Romania is mainly supermarkets and hypermarkets. A few large wineries like Vincon, Murfatlar, Cotnari, and Jidvei are the major players holding 70% of the market share while around 50 small wineries compete for the rest of 30%. This is because of the high slotting allowances paid by these wineries to supermarkets and hypermarkets to have their products carried by these retailers. Usually, large wineries bid up these lump-sum upfront fees in order to eliminate competitors. They hold complete bargaining power in the retailer distribution channel. Allowance fees are also related to quantities of sales. As such, small wineries would always be at a disadvantage, first because of limited production capacity and secondly their consumer retail price would always be higher due to higher marginal cost incurred by the slotting allowance.
However, HoReCa, referring to the distribution channel within the food service industry, is a less costly option that would fit better the needs of small-scale wineries. In order to have their wine listed on HoReCa operators’ menus, wineries need to pay a yearly ‘label tax’ which usually ranges between 100 and 1000 euros per product. Besides this ‘entry fee’, a HoReCa collaboration requires the hire of a manufacturer agent who would work to sell the winery’s products to HoReCa operators. Moreover, once they get their product listed on menus, wineries need to encourage the restaurant’s staff to promote and sell the wine bottles to consumers. Even though this seems a considerably cheaper option than the distribution in supermarkets and hypermarkets, it is still not viable for lots of small wineries due to these extra costs. Therefore, having difficulties to ensure entire production, small wineries should organize themselves into co-ops where members would pool winemaking and marketing resources. As such, co-ops would boost wine sales, enhance wine quality and lobby the government for policies that would suit their own interest. Vineyard owners should surpass the bad connotation of ‘co-ops’ in Romanian culture inherited from the socialist centralized regime. Instead, they should follow into the steps of top wine producing countries, such as Italy, France, Spain, Germany, and Austria and adopt co-ops to achieve unity and synergy within the Romanian wine industry, with the final goal of increasing export growth. Moreover, slotting fees diminish competition and should be prohibited because they are competitively exclusionary for small wineries.