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Market segmentation
and selection in
Denmark

Before you can start any marketing strategy, you will need to
determine the market you want to target. By dividing your market
into groups with similar needs and preferences, you can prioritize
the groups you want to target, gain understanding of their behaviour
and form the basis of responding to their needs with appropriate
marketing strategies, such as the trade channel on which to focus
and your distribution strategy. This module will help you by showing
the basic segmentations which can be made of the wine market in
Denmark.

More information on how to do market segmentation can be found in CBIs Export
Marketing Planner and on Internet-based marketing sources such as:
http://www.articledashboard.com/Article/Marketing-Strategy--7-Steps-To-Market-
Segmentation/3686

Market segmentation
The Danish wine market can be segmented based on several product criteria including:
taste factors, quality, and certification. After determining which of these segments you
target, and therewith which type of wine you aim to export to Denmark, you should
determine what your export capacity in terms of volume will be, in order to match this with
the demands of the different sales channels in Denmark. This is explained in the next
section.

When segmenting the Danish market, it can be concluded that in general the following segments
provide most opportunities for DC exporters: still, ros, (semi) dry, and organic or Fair Trade
certification.
Segmentation by taste
The Danish wine market can be segmented based on consumers preferences based on the
colour of wine (red, white, ros), the preference for still or sparkling wine (see Figure 1),
and dry versus sweet varieties.






Market segmentation and selection in Denmark
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Figure 1 Types of wine imported by Denmark in 2010

Source: Eurostat (2011)
White, red or ros?
Currently, red wine has the biggest share in consumption and imports, but ros wine shows an increase
in consumption.
In 2009, Danish imports of wine from DCs consisted for 84% of red/ros wine and for 16%
of white wine, while in 2006, red/ros wine accounted for 82%. Since consumption also
still consists for the major part (75%) of red wine, this segment is the most important in
Denmark. However, while the red wine segment is more saturated, ros wine is a growing
trend in Denmark. Furthermore, Danish imports of white wine from DCs declined by 3.8%
annually in value between 2006 and 2010, especially during the economic crisis, making
this segment currently less interesting.
Dry vs. sweet
Dry or semi-dry wines are most popular in Denmark.
Danes mostly consume dry or semi-dry wine, leaving few opportunities for selling sweet
wine on this market. Moreover, the (semi) dry wines are expected to retain their popularity
on the Danish market.
Still vs. sparkling
Although sparkling wine imports from DCs are growing, they are still very small, making the still wine
segment most interesting.
Wine imports by Denmark consisted for 6.1% of sparkling wine in 2010 (Eurostat). However,
when looking at Danish imports from DCs, sparkling wine accounted for only 0.4%.
Although sparkling wine imports from DCs increased by 78% annually on average in the
period 2006-2010, imports are still rather small. Argentina, South Africa and Chile all
emerged as suppliers in this review period.
With or without protected geographical status?
In 2010, total Danish wine imports in value consisted for 43% of wines with PDO or PGI and
for the remaining share of wines without geographical protection. However, Danish
imports from DCs consisted almost entirely (99.7%) of not geographically protected wines.
Denmark imports most of the PDO/PGI wines from France and Italy. This indicates that DCs
currently do not find opportunities for this type of wine in Denmark.
Niche markets
A distinction can also be made between conventional wines and organic or Fair Trade
certified wines. Consumers who buy certified wines are interested in sustainability issues.
Although this market segment is still a niche market, it is a growing one. Sales of organic
wine, beer and cider grew by 35% between 2008 and 2009.
Market segmentation and selection in Denmark
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Select your target market based on export volume
After you have segmented the market based on product characteristics, it is useful to
segment the different sales channels in Denmark, based on their demands regarding your
export capacity in volume terms (see Figure 2). This helps you to select the appropriate sales
channel for your company, and forms a basis for your market entry strategy into Denmark.

Three main categories of sales channels can be distinguished: on-trade, supermarkets
(including discounters) and specialist retailers. Online sales, in general, also concern low
volumes of wine. You should select the one that is most appropriate for your company.
How to reach these sales channels is presented in the module Trade channels and market
entry strategy for wine in Denmark.
Off-trade vs. on-trade
When exporting to Denmark, you can choose between the off-trade and the on-trade
segment. The off-trade segment refers to end-consumers who drink wine at home having
bought it at retailers, while the on-trade segment refers to restaurants, bars and other such
locations. About 88% of the wine in Denmark is sold in the off-trade segment, and the
remaining share in the on-trade. The off-trade segment consists of two main types of
retailers: supermarkets and specialist shops.

Supermarkets and discounters demand high volumes of competitively priced wine. You need to
be able to fill at least one container per month if you aim to supply this segment directly.

Specialist retailers look for smaller volumes, higher quality and unique wines. These retailers
are specialised in selling wine and sometimes also offer other types of alcoholic beverages
to consumers in Denmark.

The on-trade sector consists of many players which also demand relatively small volumes of
wine. Restaurants have to maintain their image and do not want a wine on their menu
which is also available at a supermarket. They often have several different types of wine on
their menu, and offer table wine as well as quality wine.
Market segmentation and selection in Denmark
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Figure 2 Export volume and sales channel segments

Bulk vs. bottled exports
When exporting your wine to Denmark, you should decide whether to export it in bulk, or
to bottle the wine in your country. Exporting in bulk is only possible if you are able to
produce a large volume of wine, of at least 100 thousand litres (25 thousand litres per
shipment). In 2008, wine imports by Denmark consisted of 45% bulk wine and 55% bottled
wine. Note that Denmark mostly imports bulk wine for bag-in-box wine production.
Besides, importing bulk wine is cheaper.


This survey was compiled for CBI by ProFound Advisers In Development
in cooperation with Theo Jansen

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