Greece adapts to a new reality (Excerpt)

Source: The IWSR Magazine (October issue)

By Sophia Holliday

November 15, 2015

Political upheaval, economic uncertainty and social unrest all helped to contribute to the downturn in both the Turkish and Greek spirits markets in 2014. Overall spirits consumption dropped -1.6% and -1.5% respectively over the year, alongside stagnant wine sales in both markets. And with more uncertain times ahead, the direction for the industry’s path to recovery in the region is far from clear.

In 2015 fraught negotiations with Greece’s creditors over access to a bailout loan and the closure of Greek banks, as well as the resignation of the Prime Minister Alexis Tsipras, added further fuel to the market’s rising tension levels. For a while imports ground to a halt, disrupting supply for the major importers and affecting local producers reliant on shipments of bottles and other materials from abroad. Managing partner of Concepts, a local producer and distributor in Greece, Demetre Steinhauer says: “After the capital controls, the Greek spirits industry was effectively frozen for a couple of months, especially in the domestic market. Nevertheless, the good tourist season in the summer months helped to offset some of the impact on the market.”

Unsurprisingly, consumer behaviour in Greece is changing along with the new economic realities of the market. Smaller, more informal bars and cafés, where consumers can nurse a couple of drinks over the course of an evening, are picking up trade from the closure of the larger-scale venues. Locality has become an important feature in the market as consumers cut back on excess expenses such as petrol costs. Furthermore, there has been a strong shift towards beer or coffee as opposed to spirits or cocktails in the on-trade as a way of reducing expenditure; this has resulted in a large increase in ‘café bars’ which serve coffee in the day and transform into bars at night. The local aniseed-based ouzo category has been one of the biggest casualties of the economic downturn. Traditional consumers have been opting for more affordable beer or wine for at-home consumption, while unbranded tsipouro, a similar aniseed flavoured grape skin distillate, is taking share of the market as a result of vastly disparate tax rates. Compounding the category’s difficulties is the fact that younger consumers are now favouring spirits, such as rum or vodka, above ouzo’s old-fashioned image.

Scotch whisky, once the dominant spirits category in Greece, has suffered a similar fate and volumes have plummeted in recent years. Overall consumption shrank to a record-low 950,000 cases in 2014, having fallen from 2.3m cases just five years ago. Johnnie Walker alone has shed more than 500,000 cases over this time, with volumes reaching 260,000 cases last year, down from 810,000 in 2009. But there are signs the decline could be slowing. Key players, including Diageo, Edrington and Pernod Ricard, are once again focusing their efforts on the category; market leaders Johnnie Walker and Haig launched new advertising campaigns in 2014, resulting in the first positive growth for Johnnie Walker Black Label in five years.

Furthermore, many of the leading malt Scotch brands were able to maintain their sales throughout 2014 despite the negative environment, thanks to the category’s appeal to Greece’s wealthier, and least financially strained, consumer