02-Planeta_manchette_175x100
Allegrini 2018
ROUND TABLE COLDIRETTI

Difficulties and opportunities for Italian wine in the main markets of the world

It resists in the US, collapses in China, falls in Germany: but, between promotion and digitization, there is room to grow again
Coldiretti, COVID, DIGITAL, FUTURE, GINO COLANGELO, GIOVANNI MANTOVANI, JOSE RALLO, MARKET, WINE, News
US market resists the crisis

Italian wine is stuck at a crossroads, between the effects of a spring lockdown, surpassed with impetus in the summer, and the quicksand of a second wave that is once again choking consumption, in Italy and abroad. The picture, however hard, is not dramatic, because the sector has shown, in this and many other difficult situations, to be able to accept and win the challenges, always finding new ways and new solutions to climb up the slope. Meanwhile, from the markets, different signals are coming from the U.S., where Italy, in the first 8 months of 2020, sent 1.16 billion euros of wine to the U.S., 2.3% more than in the same period of 2019, negative from China, which saw a real collapse of -38% in the “Covid semester”, ie between March and August 2020.
What is needed now, in addition to economic support to businesses, is a change of pace in promotion, which must necessarily go through digitization, and learn to reason system, especially because in the suspended world of these months, has gained space a certain autarchy. And so, both between wine companies and within the galaxy that is made in Italy, which includes many other sectors, from fashion to mechanics, united by the same charm and the same cultural roots, we must speak with one voice. This is the starting point of “Covid, the challenge of Made in Italy wine”, the digital round table that took place today, organized by Coldiretti and led by President Assoenologi Riccardo Cotarella, who led the speeches of Vincenzo Gesmundo, Secretary General Coldiretti, Francesco Ferreri, member of Coldiretti’s Executive Committee and member of the National Wine Committee, Josè Rallo, at the helm of Donnafugata and in the board of directors of ICE - Institute for Foreign Trade, Raffaele Borriello, Director General Ismea, Giovanni Mantovani, Director General VeronaFiere, Konstantin Pechtl, Purchasing Manager of the German chain Mack & Schühle AG/Weinwelt, Gino Colangelo, President Colangelo & Partners, Simone Incontro, Head of VeronaFiere Asia and Ettore Prandini, President Coldiretti.
“Internationalization is an obligatory choice for our country, which must seize this moment of crisis to develop a more incisive strategy of presence on foreign markets”, comments Ettore Prandini. “Companies must be helped to overcome this difficult moment and the recovery must be prepared with an extraordinary plan of internationalization also with the creation of new commercial channels and a massive communication campaign overcoming the current fragmentation and dispersion of resources by focusing, first of all, on a national direction through a single agency that accompanies companies around the world, enhancing the strategic role of Ice and with the support of embassies. In this context, a first objective has been achieved - continues Prandini - with the presence of Josè Rallo as the first agricultural representative on the board of directors of ICE, which comes from the world of wine, but also with the arrival for the first time in the Italian embassies of the figure of the Agricultural Diplomatic Councillor as we have asked. We then need to make up for structural delays and unblock all the infrastructure that would improve connections between the South and North of the country, but also with the rest of the world by sea and high speed rail, with a network of hubs consisting of airports, trains and cargo. A lack that every year - concludes Prandini - represents for our country a damage in terms of fewer export opportunities and a heavier “logistic bill” for the handling of goods”.
According to Giovanni Mantovani, at the helm of VeronaFiere, “we are once again in a critical phase, aggravated by an imminent economic crisis, which risks disrupting the sector in a new and challenging scenario. Wine knows how to accept these challenges and win them, but we need strategic and design lines to get back to selling. Vinitaly Nomisma Wine Monitor, in the semester March-August 2020, showed that world trade fell by 15.2%, with a loss of 1.5 billion euros. For Italy, on a customs basis, it is the worst result of the last 30 years, after an excellent start of the year, at +14% in the first two months, followed by a loss of 8.6%. A negative result, which in another period would have been a crisis, but if we compare it with our competitors, it is a half victory in a glass half empty anyway. Small and medium enterprises, the backbone of the sector, pay the price, and it is in this context - recalls Mantovani - that we arrive at Wine2Wine (from November 21 to 24, ed), the forum on the Italian wine business, this year all digitally, even if we tried to do it in the presence”.
Taking stock of the U.S. market, between possibilities and epochal changes, is Gino Colangelo, who recalls how the sector is strongly “regulated by the Three-Tier-System, different from State to State. It is still the first market for wine consumption, and imports account for 25% of purchases. The band that grows the most is the one above 15 dollars per bottle, and in 2020, despite everything, the trend is an increase in spending on wine, which will reach 50.7 billion dollars (+1.2% on 2019). In 2025 Gen Z and Millennials will be worth 38% of the market, but today Gen X and Baby Boomers are still worth 60% of purchases. During the pandemic, alcohol consumption in the U.S. increased by 14%, and the average price of a bottle of wine rose by almost a dollar: from $10.68 to $11.30. The largest brands - points out Colangelo - are appropriating a disproportionate slice of the market, and 49% of U.S. wineries are shifting marketing budgets towards digital activities such as virtual events and social media. Moving on to Italian wine, in the first half of 2020 it is in first place in terms of value, with a market share among imported wines of 35.3%, and volume (29.1%), with a growth of +1.8% on 2019, also due to the duties that have sunk the wines of France (-25.3%), Spain (-12.3%) and Germany (-39.3%)”.
If the market is stable all in all, the context is the main one that changes, with three big trends gaining space. “We are witnessing - Gino Colangelo resumes - a convergence between commerce and communication, with e-commerce sites that need content and large media that throw themselves on e-commerce, while retailers promote courses and training. The e-commerce, meanwhile, has made a remarkable leap forward, and will certainly not go back: today it is worth 12-15% of purchases, for an average expenditure of 60-70 dollars, and are more than 70% of consumers who make purchases on the web, and have every intention to continue to do so. A change that also impacts the rigid Three-tier-System, which now creaks, because companies can not always and only pass through importers, there are direct channels, as we have seen, both communication and sales, capable of questioning an entire system. But it's not all positive, on the contrary, there are enormous obstacles today on the US market: Horeca is in difficulty, especially the high end, and for quality wines it's a big problem. The work of retailers, however, remains fundamental, and at the moment it is almost zero, there are no promotional events, young people are buying without paying too much attention, while health messages are holding back consumption and the approach to wine. The opportunities - continues Colangelo - pass through online, technology at the service of e-commerce, retail sales, growth in the premium segment and the competitive advantage gained by Italy in recent months. It is in the folds of these changes that we find the opportunities for Italian wine companies, which must learn how to collect and analyze data, communicate to their audience, return, when possible, to welcome wine lover in the cellar, diversify sales channels, relocate travel budgets into digital marketing initiatives, work with importers and distributors for virtual tastings and branding initiatives, cover their entire consumer base, do promotion in a collective way”.
In China, which is returning to normal, says Simone Incontro, at the helm of VeronaFiere Asia, “and in addition to concern there is a desire to start again, from Shenzhen, a very young city that wants to start over, and where we are based. Today, quality and communication are even more important in a country where average wine consumption is just 1.2 liters per person per year, with Italy in fourth place among supplier countries, with tragic numbers to say the least. Between January and May, shipments fell to 5.34 million dollars, down 36%, for a market share of 7% and an average price per liter of 4.34 dollars, while in June there was a slight rebound in values, which does not stop the bleeding of volumes. We still need to learn how to communicate in the right way in China, using the appropriate tools. For example, Baidu is the first search engine, certainly not Google, and the first and only (or almost) social media is WeChat, from which most of the communication passes. Importers create WeChat groups, they use one per city, or per territory, they keep in touch and do marketing like this”. Among the latest events, organized here by Veronafiere, “the Italian Wine Week”, which was held in three cities in September, and has been a way of getting Italian wine out of Italian restaurants. We need different communication, especially for young people, who consume wine, but eat everything, and finding them is very difficult. In the end, the wine has to be sold, and during the next event, “Wine 2 Asia”, using the different platforms, we will push - like Vinitaly and together with Ice - to work with importers on tasting and online sales, really helping medium and small companies, because the online giants only look at the price, which often stops at $1.25 per bottle. What wine can be offered at that price? The good thing is that, during this pandemic, the Chinese consumer is looking beyond the label, what’s inside, the territory, the producer. There is a need for offline, which online must be supportive. The Chinese have discovered white wines, Prosecco, red wines other than Amarone and Primitivo, let's support them with serious fairs and make this moment work”.
Another key market for Italy is, instead, the German one, which, as Konstantin Pechtl, purchasing manager of the Mack & Schühle AG/Weinwelt chain, recalls, “it is the fourth largest market for wine consumption in the world, and the first by volume for imported wines: 15 million hectoliters, worth 58% of total wine consumption in Germany, which is worth 8.5% of world consumption, with an average consumption of 24.3 liters per capita per year. The overall market is worth 7.3 billion euros, 6.2 billion euros in the off-trade and 1.1 billion euros in the on-trade. More than 3 bottles out of 4 are sold in supermarkets and discount stores, where 50% of the wine sold in Germany passes, with Aldi alone worth 46% of the discount channel. 28% of sales take place in supermarkets, 8% in the company and 14% in bars, restaurants and wine shops. Consumption, by volume, has been decreasing for years, but in 2020 a real slump is expected, at 18.78 million hectoliters, followed by a slow recovery, up to 20.20 million hectoliters in 2025”.
As in the other markets, Konstantin Pechtl resumes, “and as Wine Intelligence trends tell us, due to social distancing, more wine is drunk at home, often without accompanying it to meals, multiplying the opportunities for consumption. Average spending is recovering, but still remains below pre-Covid levels. In addition, e-commerce is growing strongly, and consumers have become accustomed to buying wine online. Too bad, however, that they increasingly take refuge in their comfort zones, and therefore in the usual known labels. When the containment measures, lockdown or not, will be loosened, people will still have little desire for crowded situations, and will have to take this into account, as well as many wineries will have to somehow compensate for the decline in direct sales. Without forgetting that the economic crisis will leave less money in consumers’ pockets, even for wine. Meanwhile, with the closures of these months the situation for many bars and restaurants becomes more and more dramatic, many will not reopen, and the high quality cuisine will be more difficult than average. It will be the higher-end wines and small wine cellars that will pay the price, especially as shopping moves to large-scale distribution and lower prices”, concludes the purchasing manager of the Mack & Schühle AG/Weinwelt chain.
Playing a key role in the ongoing process of internationalization of Italian wine, which will need a good steer to support the changes and guide future growth, is the Ice - Institute for Foreign Trade, in which Board of Directors also sits the Sicilian winemaker Josè Rallo. “Ice is a war machine, but it needs to be strengthened. There is a very strong “country theme”: as Italians we are not able to create a system, neither between private individuals nor in synergy with the public. Ice's guidelines are based on modernization, towards economic diplomacy. That passes through the Ice Embassies and offices around the world, which have been working together for some time. Not only logistically, but in the exchange of data and information, as well as in new synergies. An important work, especially where politics decides on trade flows, through duties or agreements. Another interesting theme is communication: the made in Italy of excellence between fashion, mechanics and agro-food is a symbol of appeal and ability, which attracts consumers from all over the world, an integrated communication, between culture and products, would be good and right, there are funds already allocated for 2021. We have spoken so far through intermediaries, such as the Horeca channel, but in this era learning how to communicate directly to the final consumer, using digital, in an innovative and different way, could prove fundamental”.
In recent months, Jose Rallo continues, “the key word in the Ice strategy has been ‘digital’: the entire strategy of promotional activities has been remodeled in this sense, which is sometimes the only way to get in touch with markets and end consumers. Thus was born Fiera Smart 365, where you meet only in digital, a platform that will also be present at major trade fairs. And wine, how do you make wine taste on the web? It seems strange, but sommelier courses and training and updating opportunities are growing on the online channel. Ice’s commitment, therefore, is also strong in terms of e-commerce and market places, with support activities for those who want to start selling on the web, and agreements with the main market places (Amazon, Alibaba) with which Ice has made agreements as if they were large supermarket chains. For the first time, young collaborators with digital knowledge and scientific techniques will be hired to evolve their skills and put them at the service of companies. In 2020, Ice will guarantee free service to companies with less than 100 employees, almost all of them in the wine sector. Betting on foreign trade is vital, today it is done in a different way, digital and e-commerce change the way of selling and communicating, and we hope that the campaign on the beauty of Made in Italy will arrive soon, to drive all sectors. And then, that it becomes a system, both as a sector and between different sectors: we are all symbols and all indispensable to each other, wine to fashion, Parmigiano to Ferrari, with culture - concludes Josè Rallo - as a common thread that helps us to be at the center and in the heart of consumers in all countries of the world”.
Finally, to make an overall assessment of the moment that Italian wine is going through, between difficulties and opportunities, the Director General Ismea Raffaele Borriello. “Wine is a sector that has given a lot, in economic and employment terms, and has held its own, thanks to an important recovery in large-scale distribution, with domestic purchases at +8% in the first 9 months. Also abroad there is an important growth after the end of the lockdown, also because in the U.S. duties have not affected us. In perspective, the first element to consider is uncertainty, which plays against those who do business. In the meantime, for the duration of the pandemic, and then for the performance of the global economy which, net of China, is experiencing a double-digit GDP reduction. And this involves a drop in demand, which made in Italy could discount. And again, the effects of the policies of world governments on the context: the recovery fund seemed a done deal, and instead we are still waiting, even to understand how they will be used”.
There are also opportunities, “the first of its kind connected to the recovery fund, provided it is well structured. And then we have to face the atavistic problems, like that of the manpower, and others, that limit the development of the enterprises. In this period, the initiatives of the Government are giving important results, I refer to the I refer to the reduction of social security charges for example, that has allowed the enterprises to continue to finance the productive cycles. Today, however, there is a need for investments, which in the agri-food industry are decreasing by 40% from 2006 to today. A threat looming, when the pandemic ends, is that of competition with domestic products on foreign markets. On this front, important resources have been put in place to support promotion, and also thanks to Ice we can give a new impetus. But we also have to worry about how our products arrive abroad: the issue of logistics, evoked by everyone, needs a serious plan, the competitiveness of the sector depends on it. 90% of fruit and vegetables travel by road, other than kick scooters ...”.

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