Italian wine exports decreasing

According to preliminary data diffused by Istat, in the first 2008 quarter Italy has decreased by 9,1% its wine exports in volume. Exports in value have instead grown by 7,7%, amounting to 798 million euros, driven by an average price of 2,02 euros per litre (+18,6%). Exports have decreased especially in Germany (-12%), in France (-26%) and in the United Kingdom (-9%). The Russian market, in particular, has registered a significant setback: -63% in volume and -26% in value. Wine exports to Usa have instead slightly grown (+2.3% in volume, and +3.2 in value), while good results have been registered in Canada (+6% and + 12%), Japan (+7.6 and +12%) and Switzerland (+1.6% and +11%). "These signals had been anticipated by the 2007 last quarter results, and have not been caused by the Euros/Usa dollars unfavorable exchange rates. In my opinion - commented Andrea Sartori, President of the Unione Italiana Vini - the main cause of the decreasing exports is that Italy has been the only country to have increased the average prices of some of its most popular wines. Spain, for example, has maintained stable prices, and in the first 2008 quarter has grown by 16%, both in volume and in value. Given these assumptions, it is not unlikely that the exports decline will be confirmed even in the coming months".

"It is a curious trait of the Italian character, almost universal, not to be able to look ahead commercially and make the sacrifice of to-day's small gains to secure the greater gains of the future. The little shopkeeper will overcharge you a franc, even knowing that he drives you to another shopman, just as the wine grower intent on quick sales and an immediate profit, no matter what the reputation of his wine may be, rather than give labor and care to the making, and wait for his advantage in a reputation for his crus some years to come". These is part of a New York Times article dated January 18, 1884, and you can download it here. It has been written about 150 years ago, but it could have been written yesterday.

Italy European leader in organic grapes cultivation

With 34.000 hectares, twice as France and Spain, Italy has conquered the primacy in the European organic grapes cultivated area. In the Italian market, according to the 2007 Ismea-Ac Nielsen report, alcoholic beverages account for 0,6% of total domestic consumption of organic products. Wine made with organic grapes, however, represents 60% of the sector (almost +50% compared to 2006), and sales amount to more than 1,2 million euros (245.000 litres). Within the European Union–funded research project Orwine (Organic Viticulture and Winemaking) a qualitative consumer study was carried out in 2006 in four case-study countries: Italy, France, Germany, and Switzerland. The aim of the study was to identify consumers’ attitudes and expectations with regard to wine made with organic grapes. This segment has a positive image regarding grape production and wine processing, and is furthermore perceived as healthier compared to conventional wine. With regard to sensorial quality, however, wine made with organic grapes still faces image problems, although the taste has improved. A specific conference on Organic Viticulture and Wine has taken place in Modena during the 16th Ifoam Organic World Congress, on June 16th and 17th.

Last week I was in Sicily, where I met a young and talented wine producer called Vincenzo Adamo. He owns about 40 hectares of vineyards near Alcamo, that are organically grown since 2000. Vincenzo firmly believes in organic grape cultivation, but the word "organic" (biologico) almost do not appears on the back-labels of its wines. This situation is emblematic of what is happening on a larger scale in Italy: organic grape cultivation is growing, but the organic segment has not yet been adequately understood and valued by the wine market.

Italian sparkling wines: 276 mio bottles per year

Italian wineries produce every year about 276 million bottles of sparkling wines. Among them 255 million bottles are made with the Charmat method (refermentation in large containers, like Prosecco and Asti Spumante), while 21 million bottles are produced with the traditional (Champagne) method. The total number of Italian wineries involved in the production of sparkling wines are more than 800, with a turnover of 1,96 billion euros. In 2007 exports have reached 380 million euros, with an increase of 15% compared with 2006. The domestic consumption has risen by 10%, and the average annual expenditure of Italian families for sparkling wine was 40 euros. With a production of 10-11 million bottles of Traditional method sparkling wines Lombardy is the most productive region, followed by Trentino Alto Adige with 7-8 million, and by Piedmont with about 1 million. Berlucchi (4,9 million bottles per year) and Cantine Ferrari (5 million) represent roughly 50% of Traditional method sparkling wines domestic production.

Italian sparkling wines are succesful, but internal competition is going to be rough, expecially for the Traditional method ones. Demand, first of all, is still very limited (only 2,8 bottles per capita, well below the European average), and 60% of the consumption is concentrated in less than 60 days in a year (December and January). Competition, moreover, has been hitherto dominated by two wineries (Berlucchi and Ferrari), but things are changing, and Traditional method sparkling wines are now produced in almost every Italian region, Campania and Sicily included. One good example is the Dubl sparkling wines range produced by the Campanian producer Feudi di San Gregorio in collaboration with the Champagne house Jacques Selosse. By the way, in Italy last year Champagne sales have reached 190 mio euros...

Wine and food leads "Made in Italy" abroad

A recent research made by "Osservatorio giornalistico internazionale Nathan il Saggio", a company member of the Klaus Davi & Co group, has found that wine and food is the most representative economic sector of the "Made in Italy" abroad. The research has monitored around 49.800 articles about Italy published by major international newspapers, and has selected more than 5.000 of them. The data were presented on May 26th in Milan, to celebrate the 20th anniversary of Ornellaia, the Italian wine more often cited by the international press. Fashion (3.344 articles) remains the preferred subject by foreign journalists, followed by cars (490 articles) and by wine and food (463 articles). The fourth place is occupied by Italian companies (356 articles), and the fifth by art and design (356 articles). The Italian objects preferred by the foreign press are perfumes (18%), cellphones (15%), wine (15%), bikes and motorbikes (14%), glasses (10%), travel (9%), sportswear (8%), underwear and swimming costumes (4%), bed and mattresses (2%). The articles that praise Italy the most come especially from America, Russia and the Middle East.

(translated and adapted from http://www.agi.it/food/notizie/200805151336-eco-rt11089-art.html)

Fashion, cars and wine are the three subjects most frequentely associated to the "Made in Italy" image by the International press. But the three of them are well known worldwide expecially for their high price range, and their "icon" status. Think about Armani, Ferrari and Ornellaia... We are lucky for having these brands, but we unfortunately lack everyday brands with a high perceived value (for example H&M in the fashion sector, or Yellow Tail in the wine market). Do you agree with me?

January exports: 2008 starts well

After a flat month in December, exports of Italian wine had a good month in January. It must be said that this is a very light month, also because it comes after the peak of the last quarter of the year. We exported 1.3m/hl, about flat compared to last January, for a value of EUR238m, an increase of 14% compared to January 2007. The average export price of EUR1.83 shows an increase of 16% over January 2007. Moving to annual figures (February 2007-January 2008), Italian exports are still growing by about 9%, broken down as +1.5% from volumes (18.8m/hl) and a +7.5% from the price-mix . If there is a negative impact from the bad advertising recently offered (for free) by the Italian press to the sector of Italian wine, we will see it only in a few months, when we will comment exports in May-June. In this context of growth, the lion share continues to be taken by sparkling wines, which grew in January by 67%. The annual growth stands at 30%, or EUR400m. To push exports of sparkling wine are the usual countries: England (third market, +111% in a year, EUR60m), Spain (EUR35m, +150%) and Russia (+66% to EUR24m). US shows a constant deceleration at +7% per annum (vs. the +15% of just 3 months ago). Germany continues to do well, with an annual growth rate that remains at around 10% per annum. Japan and the Netherlands are clearly down.The export of bottled wines also had a good month: the annual growth remains at around 6%, which is equally divided between higher volumes and better prices. United States and Germany are now stable (and this is not bad for the United States, considering the negative impact of the exchange). The growth markets are still UK (+9%), Canada (+7%) and Switzerland (+11%). After the sparkling wines, bulk wines are those growing more, with an annual growth of +15%, driven mainly by the price-mix. Volumes are decreasing, we are at 6.4m/hl year, now far from peak touched of 7.1m/hl in June 2007. Where is this bulk wine going? EUR256m of EUR458m of the total go to Germany (stable compared to a year ago), EUR45m in France (-25%), EUR20m in Switzerland (-20%), EUR47m Czech Republic (+37%) and EUR18m in Hungary (-35%). Finally, a few words on imports in January which were stable at EUR20m, with a total for the year of EUR345m (17%). Splitting this value by type, the bulk wines were up 16% to EUR86m, bottled wines were up 9% to EUR54m and sparkling wines (Champagne and a bit of Cava) reached EUR205m, +20% vs. January 2007.

(from http://inumeridelvino.it/2008/05/esportazioni-di-vino-italiano-aggiornamento-gennaio-2008.html)

It's always astonishing to discover how much Italian bulk wine is still exported in the world! Could be interesting to know how it is sold in Germany, in France or in Switzerland, once it is bottled. A positive signal is that in 2007/2006 Italian bulk wines' exports have increased by 15% in value.

National sales down, export up. Promotion needed

Cibus 2008, the most important Italian fair dedicated to the food and beverage industry, has decided to carry out an exclusive study on 14 macro-categories, wine included. The study considers the structure and the economy of each sector, and ends with a summary of the main quantitative data. The work was carried out by the Centro Studi Cibus, which has gathered informations from several public and private sources. According to the Cibus study the wine industry is the second in Italy by turnover, after the dairy industry, and the first for value in exports (21% of total exports of food and beverage). According to the most recent estimates by Federalimentare, the Italian wine industry turnover calculated in producer prices is 10.9 billion euros. According to Istat the domestic production has fallen to around 44 million hectolitres, touching the absolute minimum in the last thirty years. This quantity is obtained by about 730.000 hectares of vines. The wines with an appellation of origin (in Italy there are 470 Doc, Docg and Igt), represent less than 60% of the total wine production in volume (excluding musts), with peaks of over 80% in northern Italy. The other 40% is represented by simple table wines. The wine export's volume, about 18.2 million hectolitres, gives Italy the world leadership with a 20% quota, ahead of Spain and France. Italy has the second best placement in value after France, with about 3.48 billion euros. Major markets abroad are Germany, United Kingdom, United States, France and Switzerland. The first market in value is the U.S., followed by German and Uk. Wine import's volume in Italy is about 1.7 million hectolitres, with a value of more than 345 million euros. The major suppliers are U.S., Spain and France, followed by Portugal, Germany, Greece and Chile. In Italy table wines' consumption is declining, but the premium wines are growing, with one of the highest per capita consumption of wine. Oiv estimates about 49 litres per capita in Italy, after Luxembourg and France. It is estimated that in Italy 43.7% of the total wine sales is done by supermarkets. The Horeca (hotel, restaurants and catering) does another 20%, while 8,3% by wine shops and wine bars. The wine direct sales detain a 9.4% market share, while other channels cover the remaining 18.7%. The foreign markets are going to offer the Italian wine industry the major growth prospects. Today the export share on the total turnover amounts to over 30%, and is going to further increase in the coming years, thanks to Eastern Europe and the Asian markets. Among the emerging countries the more promising one is Russia, where in the last three years the Italian wine exports have almost tripled in volume. In China and India, instead, the wine exports remain very modest in absolute terms. In the future Italy will have to diversify its export markets, that are now too concentrated (the first five countries detain 70% of the exports), and implement innovative marketing strategies, to intercept the new consumers' tastes and to value the distinctive elements of Italian wine production. On the domestic market producers will have to consolidate the links between winemaking and the territory (enoturism, wine roads…).

(translated and adapted from http://www.winenews.it/index.php?c=detail&id=12754&dc=15&bn=1)

Focus on diversity or build a unitarian image? It's dificult for the Italian wine industry to find an answer to that question. On the national market the great diversity of the wine's appellations is still perceived as a strenght, but abroad it tends to be seen as a weakness. Probably producers will have to build stronger and bigger brands. But do not forget how easy it is for Italians to emphasize what divide each one from the other, instead of what they share.

Italian wines conquer China and Usa

The 2007 was a good year for Italian wine exports to the United States: 845 million litres sold, and an 8% increase on 2006. The growth, says http://www.vinitaly.com/, is set to continue in the following years: in 2010 the wine cases sold in the United States will be 337 million, and could reach 354 million in 2015. "The American market is treacherous - explains Aniello Musella, director of the Foreign Trade Institute in New York - and can never be considered acquired; it needs to be approached carefully, because if there are opportunities to gain, the biggest importer abandons the supplier". With the euro quoted at 1.60 on the dollar, importers are already reducing their profit margins, since the prices of Italian wines increased by 2.5%. "But the continuous increase in wine consumption in the U.S. - added Musella - makes us optimistic about the future". Among American consumers, in addition, the price increase has not yet being perceived, because for this segment the price is not a determining factor of choice. Today Italy is the leader in U.S. for export in volume, while in value is second after France. According to the Assoenologi director, Giuseppe Martelli, it is now necessary to focus on innovative products. "With market analysis and studies aimed exclusively at American public", he says. Another market destined to become crucial for Italian wine exports is China: from 2003 to 2007 Italian exports have risen from 400.000 to 20 million dollars. A real explosion, if you consider that the main sale channel is still that of hotels and catering. The analysis of the Asian market potential was given by the Assoenologi Congress, as reported by http://www.vinitaly.com/. "The great opportunity for Italian wine depends on the possibility of entering the Chinese restaurants - said Antonino La Spina, Ice executive in Beijing - because today the "Made in Italy" wine is a symbol of social change for a population with a middle income class of about 200 million people". Entering the circuit of Chinese restaurants is an opportunity because, according to Ice, in China the wine is consumed mainly outside home, expecially to celebrate (for the Chinese New Year there is a 30% peak of sales). The challenge for the Italian producers is to fit in a market where France has always been the leader, with 98 million dollars in sales in 2007, thanks to the strong presence of retail chains like Carrefour (250 hypermarkets) and Auchan. According to Ice the Chinese wine producers, represented by 4-5 groups of medium and large size, will aim at an increase in production. "The cultivated area - concluded La Spina - will rise from over 46.000 hectares of 2005, half of which Sauvignon, to 66.000 hectares in 2010".

(translated and adapted from http://www.b2b24.ilsole24ore.com/articoli/0,1254,24_ART_88474,00.html?lw=24;6)

Ok: the 2007 has been a good year for the Italian wine industry. But what about margins? Italian wines, in fact, still have a very low average price on the markets, and in the future the industry will have to work hard in the premium range. Not easy in China, where a lot of wine is still sold in bulk, neither in Usa, where the competition is getting harder and harder.

January Italian wine exports to Usa

In January 2008 the Italian wine exports to the United States have declined by 2% in volume, and have increased by 0.7% in value. The data were announced by the Italian Wine and Food Institute, explaining that the continuous strengthening of the euro is seriously penalising the Italian products's exports.

(translated and adapted from http://www.vino24.tv/index.php?option=com_content&task=view&id=1649&Itemid=2)

2007 wine imports in Italy: +17% in volume

Not only the exports of Italian wines have grown in 2007, but also the imports. The growth of our imports were indeed much more pronounced than those of the exports, closing with a +17.3% in volume, and a +20% in value. The significant growth is dued mainly to the increased wine supply from Spain, France, Portugal, the new twelve EU countries as well as from the United States, Chile and Argentina. The average price of imported wines and sparkling wines in 2007 has increased to the level of 2 euros per litre, against 1.96 euros in 2006. From the 26 EU countries was imported 60.4% of wines and sparkling wines, with a volume of 1,041,063 hectolitres and for an equivalent of 286.165.000 euros. The imported musts were 25.929 hectolitres, for an equivalent of 726.000 euros, so our total supplies from European markets amounted to 1,066,992 hl (+19.4%), worth 286.891.000 euros (+20.7%). The positive trend of wine shipments in the Italian market from non EU countries has continued for the fourth consecutive year: the most substantial imports came from the U.S. with 623.713 hectolitres and a value of 50.131.000 euros, followed by Chile with 17.206 hl (+57,7%), Argentina with 14.893 hl (+44,6%), and Australia with 11.077 hl (-11%).

(translated and adapted from http://www.focuswine.it/portal/intxt.asp?idtext=4313&at=89097038S94851930S18970386068331&uid=REGGI565)

Wine sales in Italy according to Mediobanca

We are addressing the different distribution formulas of wine, on the basis of surveys carried out by Mediobanca which has interestingly split the results depending on the type of company (total market or just cooperatives) and product type (all wines rather that only those above 25 euros). The picture of 2007 data when compared to previous years shows: (1) a stabilization of the weight of large distributors, which does not seem to grow more than the market anymore and that is indeed declining in the segment of high price wines; (2) the steady decline of wine shops and wine bars as regards the whole distribution of wines, while they maintain a leading role in the high price wines; (3) the strong growth of alternative distribution methods.The market share of large surfaces reached 43.7%, a bit less than last year (44.2%). Cooperatives as always directed a more significant part on large retailers (about 50% of their products against 51% last year). The decline of wine shops is quite evident from the graph, with their share dropping to 8.3% from 10% in 2006 and 11.5% in 2005. Very similar, although less pronounced is decline of the contrade channel which represents 20%, a bit less than last year. Having said that, you might wonder who grows because all parties we mentioned were down! Direct sales and channel called “others” are taking market share in a significant way, highlighting the increasing role of internet and remote sales.Things turn radically different when we move about the highly price wines (the ones selling for more than 25 euros per bottle). Here the evolution of sales channels is fairly stable, with the large surfaces that seems to have lost further ground moving from 9% to 7% and on-trade channel going from 41% to 44%. The wineries did not shine in 2007, maintaining their very high stake of 28%. The strong growth in direct sales which we noticed for the totality of wine distribution is not evident here, with an increase compared to 2006 (12% vs. 10%) but back to the same level of 2005. Similarly, the other channels do not seem to have had better luck and remain relegated to 8% of the total (compared to 10% in 2006).I include again the two pies with the distribution of wine in Italy. You can see the major role of large surfaces in the sale of wine but not in the high quality wines segment. Looking at this detail, cooperatives seem to segment better their distribution channels: a lot more large retailers for the total wine business, but much less for the really good wines (only 2% compared to 7% for the total of the sample).

(from http://inumeridelvino.it/2008/04/canali-di-vendita-vino-italia-2007-fonte-mediobanca.html#more-1186)

Demografic trend of wine buyer in Italy

On Food magazine of March appeared a poll, made by Gn Reaserch, who interviewed the responsible of wine buying of the Italian’s family. Today we will analyze the demografic trend of wine buyer in Italy.

Analyze now how the consumption is splitted by age, area, and city size. The data show that almost of the people don’t drink wine and that the consumption of the people younger of 34 is less than 10%. These 2 key fact are worrisome for the future, because they mean a strong reduction of the volume of consumption. This is partially explained by the missing of a marketing and communication strategy turned to gain new consumer and especially the young one. Let’ see where mainly the wine is bought, for area and city type. Here I am surprised by the market shares that still have the producers and the cooperative especially if compared with the market share of the wine shop; It seems that the main competitor of the wine shop is the producer and not the mass market.

(from http://inumeridelvino.it/2008/04/identikit-del-consumatore-del-vino-in-italia-tendenze-demografiche.html)

Italian sparkling wines

Exports of sparkling wine in 2007 were the main factor driving foreign trade of Italian wines. They grew from 300m to 387m, +29%, with an improvement in terms of both volume (+14%) and price mix (+15%). The post will also provide you details of the first 10 markets of Italian sparkling wines (where we immediately highlight the performance of Spain and Russia) and an analysis of the weight of some markets for the sparkling wine against the weight for bottled wines. The first graph shows the evolution of the value: the blue bars are all up and this means that exports grew in each month compared to the previous year, and the black line stops just a 387m: as you can see visually, growth accelerated in the final months of the year, which are those where exports are concentrated (40% in the last 3 months).The export volumes decreased slightly in December (-16% 110k/hl), bringing the total annual 1.207m/hl, against a level of 1.059m/hl of 2006 and touched a high in the 12 months to November 2007 1228k/hl. The critica market for volumes of sparkling wines is Germany, which suffered a decline in the month of December by 34% after two months with an increase of 10%. If viewed over the year volumes are up about 10% in Germany, even though during the year this growth was reaching 15%. The markets that keep growing volumes are three: the United Kingdom, Spain and Russia, which together cover about 200k/hl year, while the United States are gradually losing strength (+4%) and could go negative during 2008.The mix improved significantly. Enlargin the graph to the long term, we would understand that this is a recovery of a past, because 3.38EUR is not a high level. We have to warn you because these numbers are somewhat’ strange. The mix improved significantly in the last quarter thanks to Spain and the United Kingdom, which showed very high levels (such as to think of an anomaly in numbers).Finally we include detailed numbers for breakdown by nation. As you can see markets that are driving exports are the United Kingdom (doubling in the year), Spain at +132% and Russia at +67%. The United States are still performing well, given the tough exchange rate, while Japan is not performing well, with a 4% decline.The last chart provides you a comparison between sparkling and bottled wines. The % is the weight of the export market for that type of wine. The USA are much more important for still wines than for sparkling wines while Russia works out in the opposite way. The UK market seems more balanced from this point of view. As you can see, in the USA we export 27% of total Italian still wines exports but only 15% of sparkling wine exports.
(from http://inumeridelvino.it/2008/04/esportazioni-di-spumante-italiano-sommario-2007.html)