Distribution of Wine in Austria

Practical Guide

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Austria: a market with an impressive potential

With 2.32 million hl of wine, Austria produces around 1% of the global wine production on an area of 45,439 ha. As an ever-growing high-quality niche player, Austrian winemakers account for some of the world’s finest Rieslings and Sauvignon Blancs. Austria’s main export partner is Germany (47%), followed by Switzerland (11%) and the USA (9%). Wine imports are mainly dominated by Italian red wines and a fair amount of Italian sparkling wines. Given that Austrians consuming slightly more wine than is locally produced, the wine market offers plenty of opportunity to the international wine trade.

How to protect your Trademarks in Austria

Choosing the right scope of protection for a trademark is essential and strongly depends on the target market. Trademark protection is open to three viable options: registration of (i) an EU trade mark, (ii) a national trademark and additionally (iii) an international trademark. An EU trade mark offers certain advantages (see here in detail), yet business activities that focus on a few countries only, might benefit from tailored registrations of a national trademarks.

The registration procedure of a national mark in Austria usually takes 2-3 months but there is also a fast track registration available (only eligible for certain registrations), taking approx. 10 days. The preferred way of filling a registration with the Austrian Patent Office is online. The application fee is € 280.

It is essential to check for a possible conflict with other trademarks, even if they may not be active in the Austrian market (yet). The Austrian Patent Office offers a free research platform but also a trademark similarity search for € 105, delivering the results within 24 hours.

The label for alcoholic beverages in Austria

In addition to the EU Regulations (see EU section) incorporated into Austrian law, the Austrian Wine Law sets strict production standards for wine but also for the label content.

Mandatory information on the label (permitted in German or English): name of the product, name of the Protected Designation of Origin, or Protected Geographical Indication, or the producing country, nominal volume, name and address of the bottler, alcohol content (tolerance limit +/- 0,5%vol), sugar content (only mandatory for wine produced in Austria), allergenic ingredients (only if a certain limit is exceeded), imported wine: name of the importer.

The use of specific terms (e.g. Classic, Selection, Tradition) is restricted to Quality Wine (Qualitätswein), other terms (e.g. Reserve, Premium) as well as geographical indications have strict requirements. Some terms are forbidden in general such as: histamine-free, low-histamine, vegan wine, Naturwein (but it is allowed to use the term natural wine on the label of an orange wine produced by specific organic producers under certain conditions). Any misleading content is prohibited as well.

To make things a little more confusing Austria has two classification systems: a quality classification system (that is similar to the German one but – of course – with slightly different meanings and categories) and a system for designated areas using the abbreviation DAC (= Districtus Austriae Controllatus) marking typical wines of a certain region. Currently Austria has 15 DAC regions (each with a different set of rules).

Advertisement of wine in Austria: allowed but regulated

Austria exhibits a dual system for regulating the advertisement for alcoholic beverages, consisting of legal and self-imposed restrictions. Austria’s legal regulations are in accordance with the Audiovisual Media Services Directive but are gold plated by prohibiting the promotion of spirits (distilled beverages containing 15% alcohol or more). Consequently, certain legal restrictions for the advertisement of alcoholic beverages apply for public broadcasting, private radio television.

Austria’s legal restrictions are flanked with a self-limitation code governed by the Austrian Advertising Council. The Austrian self-limitation code is based on the European Advertising Self-Regulation Charta and the European Advertising Standards Alliance.

Customs clearance, duties and taxation for the sale of wine in Austria

For information about customs clearance see EU guide. In contrast to northern European and Anglo-Saxon member states, Austria does not aim at reducing the general availability of alcohol and focusses instead on specific pain points (e.g. driving under influence, protection of minors).

Alcohol tax does not apply to still wine in Austria, for sparkling wine a tax of € 100 per hl generally applies but is suspended until further notice under the Austrian COVID-19 recovery package.

A sales tax of 20% applies on all wine sales in Austria.

Opportunities in the Austrian market

Excellence in wine is deeply enshrined into the Austrian culture. In 1860, one of the world’s first viniculture schools was founded in Klosterneuburg. Following quality issues in the early 1980s, Austria adopted some of the strictest wine laws in the world leading to a wide array of high quality wine producers competing nationally and internationally. The demand in Austria for locally produced wine is high, but thanks to the rising focus of local vintners on quality wine, the Austrian market offers great opportunities for exporters in the retail sector for low- to mid-price wine.

As national production focuses on white wine (70% of total production), there are good chances for the export of red and sparkling wine. Because of the Germanic Wine System (in contrast to the Romanic System used in Spain, Italy and France), consumers focus lies on the grape variety rather than the regional typicity of a wine. Retailers prefer cuvées (= a blend of grape varieties) because they are easy to substitute by a product with the same taste profile.

Wine trade is a non-restricted business in Austria, hence a general trading business license is sufficient. As a result, grocery stores are also permitted to trade wine and spirits making the retail sector an important market for wine in Austria. The hospitality industry is generally restricted and licensing therefore bound to a proof of competence of the business operator, yet no additional licensing is required to sell alcoholic beverages.

Contracts for the distribution of wine in Austria

The commercial distribution of wine takes place mainly through agency (see here more info) and distribution contracts: while the first are regulated by EU Directive 86/653 (here more information), the latter are atypical contracts, without a specific regulation. Below, then, some practical tips to take into account when drafting one of these contracts.

Scope: It is highly recommended to define clearly and completely the rights and obligations of each party, especially in distribution contracts, which - as seen - do not have a detailed regulatory framework.

Renumeration: Agents are entitled to a commission (in specific cases even if the contractual term has already ended). There are statutory rules on an agent’s renumeration, but these rules are not mandatory and the parties may explicitly agree on different terms, provided that they do not violate mandatory rules to protect the agent.

Termination indemnity: Commercial agents are generally entitled to a termination indemnity, which cannot be excluded by agreement and which is quantified – according to the relevant EU Directive (see EU paragraph) - in a maximum amount corresponding to the average of one year's commissions. No severance indemnity is provided for in the distribution contracts, but the distributor can claim compensation for investments not amortized during the contractual relationship.

Term: Contracts with an indefinite term may be terminated by each party with a withdrawal communication with an appropriate period of notice, which in the case of the commercial agency is mandatorily established by law. Contracts with a fixed term end automatically at the agreed date and may be terminated only for good cause.

Non-compete Clause: Under Austrian law a commercial agent is bound by a legal non-compete obligation during the contractual term. Additionally, considering to add a post-contractual non-compete clause to the contact is recommended.

Applicable law and competent court: The parties are free to choose the applicable law and competent court but cannot waive mandatory Austrian law. Arbitration clauses must be agreed on in writing.

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