Distribution of Wine in Switzerland

The Swiss love wine. The Swiss spend around 600 Euro’s per person a year on wine, more than anyone else in the world. There are several other interesting facts to know about Switzerland:

• with a population of 7.5 million and per capita consumption of 36 litres, almost two thirds of Switzerland's demand is covered by imports. Approximately 1 million hl. of the total wine consumption are produced domestically, whereas 1.7 million hl. are imported.
• wines are imported mainly from Italy (24%), in particular from Tuscany, Veneto, Sicily and Puglia, while 15% comes from France and 10% from Spain.
• in 2017 Swiss wine was produced from nearly 14.748 hectares of vineyards; almost 43 percent of Swiss vineyards are composed of white grape varieties, and 57% of red grape varieties, totalling 240 grape varieties.
• there are 4 main grape varieties. After Pinot Noir, the second most widespread grape grown in Switzerland is Chasselas (also called Fendant), followed by Gamay and Merlot - which together represent 72% of the domestic production.
• the Swiss wine heritage was recognised by UNESCO when the Lavaux vineyard terraces were granted the status of world heritage site by UNESCO (Canton of Vaud).
• Switzerland's largest wine producing canton is Valais (35%) followed by the Canton of Vaud, Ticino and the Canton of Geneva, with 15%, 12% and 10% respectively.
  

One of the first things to do when distributing a product on a foreign market is to register the company brand in order to prevent abuse or unauthorised use of the brand by third parties.

The Confederation's trademark protection centre is the IGE - the Swiss Federal Institute of Intellectual Property, in Bern.

A brand may be registered with the above Institute in classes that comply with international recognised classifications:

• applications may be filed online on the IGE website, indicating the name of a Domiciliary Company duly registered with the Commercial Register of a Swiss canton (such company may be a potential distributor), and uploading a graphic or word logo if necessary.
• this procedure is completed in about 4 months as of the filing of the application and payment of duties. Within a couple of weeks the Institute will however inform the applicant that the application is being processed, and advise of any errors or omissions.
• the registration is valid for 10 years and may be renewed.
• N.B.: in Switzerland no search is carried out to verify the infringement of previous brands (applicants are therefore advised to carry out a clearance search for the existence of similar brands at their own expense).
  

According to Swiss laws on product labelling, information on the label should be displayed in at least one of the three official Swiss languages (German, French and Italian). By law, at least the following information should be included on the label:

• the name of the wine or grape variety
• the name or company name and address of the producer, winemaker, retailer, importer, bottler or seller and, in any event, the details of a contact person or company
• country of origin • Alcohol by volume percentage.
• volume in litres, centiliters or hectoliters
• production lot number indicating the lot
• information regarding the presence of sulphurous dioxide, using the wording «contains sulphites» or «contains sulphur dioxide».
• food, additives or processing aids which are GMOs, contain GMOs orare obtained from GMOs

In addition to the above requirements, additional information may be indicated at the discretion of the distributor, such as geographical data (canton, district, municipality), year of vintage, images of the geographical production area or images containing well-known elements referring to the same, recommendations for the consumer (food pairing, ageing, serving, etc.), organoleptic characteristics (colour, flavour, bouquet and aroma), history of the wine or company, etc.

With regards to the import of Italian wine into Switzerland, by law each shipment of Italian wine must indicate the «Denomination of controlled origin» (DOC) or «Denomination of controlled and guaranteed origin» (DOCG) on the label also indicating that it is to be sold in Switzerland, accompanied by a certificate of analysis and certificate of origin. The certificate of origin should guarantee that Italian wines bearing the DOC or DOCG status comply with Italian laws on the wines in question, that they come from an officially delimited region or place of production and are obtained from authorised grape varieties.

Obtaining full details about the potential distributor is very important to determine whether or not a particular distributor is the right partner to develop the Swiss market.

The best way to obtain information of this kind is to consult an Extract from the Commercial Register, which is similar to the Italian Chamber of Commerce and may be obtained by the public free of charge on the website of the Commercial Register of any canton of the Swiss Confederation (www.zefix.ch).

The extracts include information such as the company name, the corporate purpose and registered office, the paid up and subscribed capital and the name of the directors.

This information is a good starting point that enables to exclude cases of fraud or companies that are not transparent and to start evaluating the choice of the distribution partner.

For a more detailed analysis, an extract may be requested from the Debt Collection and Bankruptcy Office to verify the good standing and solvency of the company, including any enforcement proceedings that may be pending.

Another aspect to verify is information regarding sales licenses for alcoholic products.

Although Switzerland belongs to the Schengen area, it is not a member of the European Customs Union. Consequently customs checks are carried out on goods crossing the border.

Importers need to present the following documents to the custom authorities when crossing the border:

• an Electronic Customs Declaration showing the GIP number of the importer, details of the consignee and agent;
• sales invoice and pro-forma invoice;
• The EUR 1 Movement Certificate -which is issued by Italian customs and applies the preferential trade arrangement for products circulating in the EU given that, as a result of a bilateral agreement, Switzerland is treated as a EU country;
• transport documents (Packing List and Bill of Lading);
• copy of the registration with the Commercial Register (CR) for the sale of wine;
• copy of the CSCV company number allocation.

What is the GIP number? In order to import specific agricultural products, including wine, into Switzerland, the importer of the product must apply for an import permit, namely, a General Import Permit (GIP), from the Federal Office of Agriculture (FOAG), which is issued to natural and legal persons as well as to communities of persons domiciled or with registered offices in the Swiss customs territory.

A GIP should be obtained for wine imports exceeding 20 kg gross, and it is free and valid indefinitely but not transferable. A GIP does not need to be obtained for imports of sparkling and sweet wines.

In addition to the GIP, which does not automatically give the holder the right to import goods, an import quota must be requested and allocated. Import quotas are established for wine imports so that in order to buy wine abroad, the importer must hold a quota of the national import quota for the product in question, and the importer must hold a GIP before applying for the quota allocation. The national quota is divided into further quotas that are allocated until all the quotas are used. Quotas are allocated through auctions published periodically for natural or legal persons who have a registered office or are domiciled in Switzerland and the calendar year is generally considered as the period in which the quota is set. Quotas are allocated on a first come, first served basis, according to the highest amount offered. Quotas may be transferred. By way of example, the 2015 wine quota was set at 1,700,000 hectoliters and in recent years the quota has never been used in full. If the importer holds a quota, it may import the goods at the lowest or zero quota rate of duty (QRD). If the importer does not hold a quota, it may import goods in any case without limitation, but it will in this case pay the out-of-quota rate of duty (OQRD).

The importer presents the Customs Declaration, as specified above, and pays import duty and other taxes. The importer should find the correct customs tariff of the product, because all shipments from abroad are subject to import duty (the rate is defined according to the weight) and value added tax (VAT) of 7.7% throughout Switzerland. In the case of wine, the duty rates range from CHF 56 to CHF 65 (depending on the type of wine) per 100 kg gross weight, with the exception of sparkling wines whose rate is CHF 91 per 100 kg of gross weight.

For a product to be distributed successfully it must be advertised and promoted efficiently: potential customers must be given the opportunity of getting to know the wine, appreciating its quality and understanding what characteristics differentiate it from competing products distributed on the market, above all successful domestic wines.

The many seasonal events in the food and wine industry, which are organised throughout Switzerland, are undoubtedly a good advertising channel for products. As regards the Canton of Ticino, for example, events such as “Wine Cellar Open Days” in May and “Year of Vintage Presentations” in September are organised as well as wine tasting events during the main holidays such as Easter and Christmas in the main squares of the capitals of the cantons.
These events were initially introduced to promote domestic wines, but thanks to their success and the number of visitors they attract, an increasing number of international wines are presented.

In addition to traditional promotional and sales channels, the eCommerce Food & Beverage market segment in Switzerland is growing very rapidly. Innovative sales solutions through omnichannels and new business models are also very interesting.

Some of the eCommerce platforms in Switzerland are the following:

• Flaschenpost: considered to be the largest online wine shop in Switzerland with more than 17,000 wines from 70 of the most famous wine cellars in Switzerland;
• SellWine, a platform based in the Canton of Ticino which distributes products throughout Switzerland and the Principality of Liechtenstein.

Both platforms ship throughout Switzerland and, at higher costs, all over the world.

What to look for in a good eCommerce service:

• there should be no minimum number of bottles requirement per order;
• bottles damaged during transport or spoiled products should be refunded or replaced;
• the method of payment should be secure.
  

Once the distributor with the proper requisites has been selected, the contract may be negotiated focusing above all on the following aspects:

• clearly define the collaboration model
• sales contract
• distribution contract, differentiating between an EXCLUSIVE and SELECTIVE distribution contract
• agency contract
• licence to open single-brand stores or sell through a virtual store

The above collaboration models should be defined with a written contract which provides the respective obligations of the parties. Both parties should have their own advisors in order to ensure that the signed contract is complete and satisfactory.

• The contract should be drawn up in English and in one of the three official languages of Switzerland. Taking into account the fact that the contract governs international relationships, it would be advisable to draw the contract up in English as well as in one of the official languages (German, French or Italian) in Switzerland, depending on the canton in which the distributor has its head office (if, for example, the distributor operates in the Canton of Vaud, the contract should be drawn up both in French and in English).
  
  
• Exclusive rights should be granted only at specific conditions. This is a very common request in the case of commercial distribution. Where possible, exclusive rights should be limited to certain areas or distribution channels (e.g. large-scale retail channels), in which the distributor guarantees that it is able to obtain a specific minimum turnover. A clause should be included providing the possibility of revoking the exclusive rights if the agreed minimum targets are not met.
  
  
• Applicable law and jurisdiction, in order to simplify the settlement of disputes or deal with other sensitive situations, such as credit collection filings and lawsuits against counterfeiting or unfair competition, it should be taken into account that Swiss courts are fast, efficient and less costly than arbitration tribunals or other European courts; Swiss legal theory and case law is consistent, making Swiss jurisdiction a winning choice for proceedings.