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Italian wine on the German market, between younger generations and the challenges of 2023

Wine Monitor analysis by Nomisma: 30 million consumers in Germany, but crisis lightens shopping cart and slows growth
Wine at discount stores driving German consumer spending

The German market, the second outlet for Italian wine, both in value and volume, and third in the world in terms of imports as well as fourth in terms of consumption, is essentially stable, with 20 million hectoliters of wine consumed each year, equal to 24 liters per capita, and imports from Italy reaching 955 million euros (+5%) in the first 10 months of 2022, according to Istat data, out of a total of 2.2 billion euros (-4.4%), as revealed by the focus dedicated to the German market by Wine Monitor by Nomisma.

In volume, the decline was even more pronounced: -10%, which is also the negative rate, both in value and volume, for bottled still and sparkling wines. It fared better for sparkling wines, which showed a 9% growth in value (-5% in volume), and bag-in-box, with +23% in value and +36% in volume. Italian wine, in value terms, accounts for a 47% market share in the still and sparkling wine segment (with France at 24% and Spain at 11%) and 23% in the sparkling wine segment (with France at 66% and Spain at 9%), and while all types are losing in volume, in value sparkling wines mark +1%, significantly less than the total (+9%) and than French (+14%) and Spanish (+9%) bubbles.

Germany is a market that is very sensitive to generational logics, where Baby Boomers rule, while among the younger generation, wine experiences enormous competition, especially with ready-to-drinks, which, in the 2015-2021 period, grew at a rate of +6.3% annually, compared to wine’s 0.6% annual decline, still less than that recorded by beer (2%) and spirits (-1.2%). German consumers generally choose discount stores to do their shopping, and in 2021 the off-trade channel accounted for 89% of wine sales, compared to 11% for on-trade, and meanwhile e-commerce (30% of consumers buy online) has also grown a lot, accounting for nearly 6% of off-trade consumption.

Total wine, on the off-trade, reports a decline of 6% in value and 8% in volume, with still reds doing -10% in value, still whites -5%, sparkling wines -6%, semi-sparkling wines -3%, and rosés, the only positive exception, growing +2%. After the excellent performance in 2021, on the off-trade channel Italy does worse than average: -7% in value overall, which becomes -10% for still reds, -6% for still whites, -9% for sparkling wines, and -5% for sparkling wines, while rosés do better than average, at +5%.

The wine consumer base, in Germany, is particularly large: despite the warnings of the crisis and the general decline in consumption, 59% of the German population aged 18 to 65 (or 30 million people) have been drinking wine in recent months. Frequent consumers (every day or at least once a week) are 16%, and the highest penetration rate, by type, is of sparkling wines, which reach 53% of all consumers and 7% of frequent consumers. Generally, interest in wine, as found in so many other markets, from the United States to Great Britain, increases as age increases: the penetration rate rises from 44% among Gen Z to 59% among Millennials, increases to 62% among Gen X, and reaches 71% among Baby Boomers. In general, among Millennials and Gen Z the penetration rate is higher for mixed wine (spritzers but not only), and they are also the two generations that consume wine mostly outside the home.

The economic downturn obviously affects Germany as well, impacting wine consumption. Faced with rising prices, in fact, 75% of Germans have changed their food spending habits, and wine is listed as the third product on which the axe has fallen: 27% of Germans have in fact decided to spend or buy less of it. This decision is revealed in the 2022 data, with a negative differential between those who started drinking wine and those who decided to stop drinking it, both at home (-6%) and away from home (-17%). It is no coincidence that what drives purchases, as anticipated, is the price factor: presence of discounts and promotions and low price are in fact the criteria of choice indicated by 36% of German consumers, followed by the territory of production and the reputation of the brand or winery.

Among German consumers, especially younger ones, Italian wine enjoys a very good reputation: 78% of wine drinkers (22 million people) have chosen an Italian bottle at least once in the past 12 months. In terms of perceived quality, however, German wine is the favorite, chosen by 36% of Germans, followed by French wine (22%) and then Italian wine (20%). Among the most consumed Italian wines in the past year are Prosecco (by 54% of consumers), Lambrusco (38%), Chianti Classico (34%), Montepulciano d’Abruzzo (26%), Primitivo (24%), Lugana (22%), Soave (19%), Barolo (18%), Amarone della Valpolicella (17%) and Brunello di Montalcino (16%). The attributes that Germans attribute to Italian wine are, mainly, “excellent quality”, “tradition”, “elegance”, “cool”, “luxury”, “conviviality”, “expensive”, “everyday”, and “old style”.

Among German wine consumers, however, 22% did not chosen Italian products, and the reasons are different: 45% prefer wines from other regions, 37% believe the price is too high, and 25% admit to drinking it only in restaurants, where they no longer go because of inflation. Returning to, or choosing Italian wine for the first time, could be the recommendations of friends and relatives, the presence of discounts and promotions, and tasting at the point of sale, a promotional lever of definite interest.

Over the next 6-12 months, the trends are not rosy: between those who say they will drink more and those who say they will drink less, the differential is negative, especially in out-of-home consumption. Wines with social and environmental sustainability attributes, for which German consumers are willing to spend more, will suffer less. Italian wines will suffer less than competitors such as France and Spain, but still risk losing something. How and where to promote Italian wine and what messages need to be conveyed? In line with what is the perception of Italian wine, quality leads, followed by pairing with food, then sustainability and organic branding, aspects that the German consumer would like to find in Italian wine. Traditional promotional activities, such as tastings, loved by all age groups, both on trade and off trade, predominate, but cooking channels also play an important role because they are loved by younger people, and then of course the web and social media. In the next 2-3 years, wines that appeal to social and environmental sustainability, elements that, together with lower environmental impact and lower CO2 emissions, will drive this phenomenon. In second place, wines that are easy to mix, such as Prosecco, followed by RDTs, on which Italian companies will have to know how to innovate, then low-alcohol wines, premium wines and wines from native grape varieties.

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