Vineyards cover 1300 hectares of land in Luxembourg (1241 of which are currently in production), along the Moselle valley, from Schengen to the Northeast of the country. Production is dominated by French and German white grape varieties, for example, Rivaner, Auxerrois,
Pinot Gris, Riesling, Elbling, Pinot Blanc and Gewürztraminer. Over the course of the last few years, there has been a net growth in Pinot Noir plantations, used to produce red and Blanc de Noirs wine. The main grape is Rivaner, which accounts for almost 40% of production in Luxembourg.

In a normal year, production oscillates between 125 000 and 135 000 hectolitres, with an average harvest of 100 to 110 hl/ha. All wine produced is sold; Luxembourg does not have a problem with excess production. The majority of producers are members of cooperatives (62% of exploited vineyards). Independent wine producers and bottlers exploit 38% and 21.1% of vineyards respectively.

There are three main producers groups:
• "Les Domaines de Vinsmoselle": (6 cooperatives/450 members)
• Independent wine producers association (52): 22% of production
• Producers and merchants federation (6): 17 % of production

The breakdown of exported wines and their destination has recently changed in several ways, to show the following trends: 
- Luxembourg exports almost half of its grape production (50 to 60000 hectolitres according to the vintage) and re-exports 30 to 50 000 hl of its wine produce. Spirit exports generate around 0.5 million euros per year.
- More than two-thirds of exported wine from Luxembourg is Qualitätsweine, the equivalent of French AOC wines. Table wines account for 15%, crémants 9%, and sparkling wines 8% of all exports. Over the last three years, the dynamic crémant market has reduced the market-share of table and sparkling wines.

- Amongst “other wine products”, liqueurs and traditional eaux-de-vie are an important source of income and are highly valued products. The label "National brand" is a quality guarantee on these products. The main products which carry this label are kirsch, Lie de Vin, Marc de Vin, Mirabelle, Mûre sauvage, Poire, Poire Williams, Pomme, Prunelle, Quetsch and Sureau. There are around thirty producers of these liqueurs.

- 85% of exports go to Belgium, with an increase in AOC wine exports since 2005, which has boosted export figures (+9.4% in 2005 /2006 when compared to the previous campaign). Exports to the second largest client, Germany, are also progressing, more than doubling between the 2004/2005 (3533 hl) and 2005/2006 (7687 hl) campaigns.

Wine consumption levels in Luxembourg have been stable for many years, staying around 257 000 hl/year. This figure equates to 56 litres per person per year. This is divided, in broad terms, between 16 litres of local wine and 40 litres of imported wine. However, it is necessary to look more closely at these figures. The Luxembourg tax system favours buyers of fuel, tobacco, wine and spirits and there are a high number of cross border sales. It is therefore difficult to separate:

-Purchases by Luxembourg residents (459 500 people in 2006, more than a third of which were of foreign nationality)
-Purchases by 110 000 foreigner workers (from Germany, Belgium and France) who commute to work in Luxembourg and make their wine and spirit purchases there
-Purchases by tourists and other more occasional visitors (just under a million each year) who take advantage of their trip by stocking up on wines and spirits.

Consumption by local residents is characterised by a strong presence of foreign communities. Whilst Bordeaux is still considered prestigious, New World wines are progressing well in this open and cosmopolitan society. Mediterranean wines are also progressing well in the Portugese (65000 people) and Italian (19000) communities. Local consumption is also characterised by strong buying power. According to the OECD, the GDP per head in Luxembourg is two times that of France. The HORECA network (Hotels, restaurants and cafés) is particularly well developed; Luxembourg has around 200 hotels and around 1000 restaurants and cafés. Consumption habits follow the cultural borders that divide Luxembourg. For example, the South has a French influence and so wine is consumed with meals. On the other hand, in the North and the East, where there is a German influence, wine is more often consumed outside of meal times.

According to Luxembourg customs figures, wine imports reached 209 000 hectolitres in 2005 and 229 000 hectolitres in 2006 (+9.6%). Figures for wine imports into Luxembourg are difficult to understand, because wines that pass through Belgium are counted as Belgian imports. This is the case for New World wines, which arrive in Europe via the port of Anvers, and also for some French wines. A third of imports by volume are French, and French wines are estimated to hold around 40% of the Luxembourg wine market. This ‘mask’ effect is also the same for Portugese (12-25% according to estimations) and Italian imports (8-12%).

In this rising context, imports from France have remained fairly stable. In fact, the French market share has shown a decreasing trend, going from 35.7% in 2005 to 32.5% in 2006. Imports from Belgium are also slowing down, indicating that direct imports are increasing, in particular imports from Italy and Portugal.

In 2006, Luxembourg imported 46.8 million euro worth of French wines, placing it in 23rd place of all French clients. Sparkling wines account for 12.5% of all wines exported by France in volume and 30% in value. 90% of these wines are Champagne. Luxembourg imports 70 000 hl of still wines. Quality regional wines account for two thirds of this wine in terms of volume and 96% in terms of value (47087 hl for a total cost of 24.7 million euro). In 2006, table wines and local wines accounted for 31% of volume and 12.5% of the total value of exported still wine.

As it is a large white wine producer, 84% of all appellation wines imported by Luxembourg are reds and rosés.

There are around thirty importers-distributors who apply margins of between 15 and 40%. Supermarket margins are usually between 15 and 25%. For retail outlets, it is around 30-50%.
The Free On Board price is the price of merchandise when it is loaded onto a boat ready to leave port. In relation to this price, supermarkets/hypermarkets apply an average coefficient of 1.8 for still wines, 1.7 for sparkling wines, and 2.3 for spirits. In the more traditional sales networks, the average coefficient is 2.4 for still wines, 2.3 for sparkling wines and 3.1 for spirits. Some merchant-producers have resorted to importing because it allows them to extend their range of products and it is also a better business model. The Brussels economic committee, which manages both the Belgian and Luxembourg markets, gives the example of Bernard Massard cellars, Gales cellars and Sunnen-Hoffmann.
Tax
No excise duty is added to still or sparkling wines in Luxembourg. Excise duty is applied to spirits at 223 euro per hectolitre of pure alcohol. A consumption tax of 818 euro is also added, giving a total of almost 1041 euro. 12% VAT is added for still wines with 13% alcohol or lower, and 15% for wines with an alcohol level of over 13%. For sparkling wines, spirits and liqueurs (13% or higher), 15% VAT is added.