Premium Wine Competition Sharpens: Vincon Aims For The Top

Vrancea-based Vincon, Romania's largest producer of wine and spirits, is now aiming for the lead of the premium wine segment, after having secured dominance over the common wine segment. Nevertheless, Vincon started off with a small handicap on a very competitive market that has become a theater to quite powerful domestic and international actors. Jidvei, Murfatlar, Cramele Prahova and Vinarte have been struggling for years to loyalize consumers on this precious segment. Massive investments in technology and marketing have been employed to maintain awareness and reputation.

Vincon's management estimates the wine retail market at 150 million EUR. However, the market's coordinates will change in a few years as French and especially Italian producers will take the opportunity presented by EU's enlargement and bring a diversity of wines at competitive prices to the Romanian market. The ongoing competition among domestic winemakers could therefore be a very useful rehearsal for when that time comes. After the year 1999 privatization, the new management of Vincon devoted more and more attention to the premium wine segment. The company was at that time the leader of medium segment of the market. By end-2001, the company had already launched the white wine brands "Beciul domnesc" (The Royal Cellar) and "Domeniile Vincon" (The Vincon Domains) and then "Comoara Pivnitei" (The Treasure In The Cellar), a super-premium brand. The "Vita Nobila" (Noble Vine) brand added to the medium segment portfolio last year.

Brand rejuvenation also involves terminating unsuccessful products. Vincon has developed an impressive product portfolio over the years, but not all of it turned out successful. Since the company produces almost all kinds of white, red and aromatic wines and works with many kinds of grapes, it was perfectly expectable that the product portfolio should diversify. On the other hand, it is much easier to loyalize customers to fewer brands. "A rough downsizing of the product portfolio is coming next," said Vincon marketing manager Sorin Ichim. Marketing efforts were supported by technological efforts, too: "We have made six million euros worth of post-privatization investments in modern grape processing lines and production environment temperature control system," said Ghita Pinca, senior business consultant for Vincon. He added: "Our target is to increase the share of premium wines from 15 percent to 20 percent of the aggregate turnover by the year-end." Vincon's management is planning to conclude the year with sales of some 700 billion ROL, up by 100 billion ROL more than last year. White and sweet wines seem the key to this objective as they account for 70 percent of the company's portfolio. "Red wine sales increased insignificantly last year, although red wine accounts for 70% of the wine sales in Western countries," Ghita Pinca said.