Even Italy cannot completely escape the global decline. For the third time in two decades, Italian sales have fallen. Previously, it took the global economic crisis of 2009 and the Covid year of 2020 to put such a dent in sales.
The value of wine exports fell by 0.8% compared to 2022 and amounted to €7.77 billion; however, 2022 was an unusual year, boosted by price growth and a good exchange rate with the dollar. That year, exports increased 9.8% and reached €7.9 billion.
But sales were already falling in 2022 (-0.6%), and dropped another per cent in 2023.
Yet, in terms of volume, Italy’s wine industry remains the world export champion at 21.4 million hectrolitres in 2023, compared to Spain’s 20 million hectrolitres.
A complex export story
A closer look at the export figures reveals a skewed picture. The figures were compiled by Unione Italiana Vini (UIV) and the Ismea agricultural market service institute, drawing on the work of the Istat statistics office. The overall decrease in volume has been mitigated by positive trends in the bulk wine market, which saw a 12% growth. This growth was propelled by a 10.5% drop in prices, stimulating the market's expansion. Only semi-sparkling wine achieved growth in both sales (+2.9%) and turnover (+7.3%).
The high stock levels cut the price, which stimulated the German bottling industry to go into a veritable buying frenzy. Of the five largest export markets, Germany alone delivered a positive result, increasing imports by a remarkable 8.4%, but only spending 2.7% more than in 2022.
While the Germans are always accused of being "price-sensitive" Germans, it should be noted that imports of DOP and IGP products did not suffer from the run on bulk goods and remained stable. In addition, Germans paid 5.9%b more for Italian sparkling wines, totalling €145.8 million. All in all, German spending on Italian wine in 2023 totalled just under €1.2 billion.
DOP and IGP slowed down
The overall picture of exports shows the difficulties of still wines that come from a protected origin — they’re declining the most. The volume of DOP wines exported fell by 6.2% compared to the previous year, while IGP wines fell by 4.3%.
In France, as UIV-Ismea emphasises, the decline in the corresponding categories was even worse at -11% and -8%. Red wines are suffering, as in other countries. DOP qualities are down by 8%, which is even worse than the drop in IGP at 6%. Exports of ottled generic red wines fell by a full 9%.
The picture worsens depending on the region. Red DOP wines from Veneto fell by 12.5% and Tuscan red wines by 10.5%, while Piedmont got off relatively lightly at 5.5%. On the white side, the declines were more moderate, especially for IGP (-1.3%). Exports of DOC white wines fell by 4.7%.
Explosive development in the US
The Italian wine industry is particularly worried about its favourite market. Exports to the USA had already dropped by 6% less last year, but the value had still risen then. Now the volume has plummeted by a further 9.1% and the value has fallen by 5.3% to €1.76 billion.
The slump in the flow of goods is mainly due to the reduction of stocks accumulated in the hullabaloo of the reopening after Covid. However, produceres also recognise that the US market is undergoing major changes and are trying to respond to new consumer trends.
The situation is similar for Canada. The country had gained a full 11.4% in value in 2022, but lost 9% in 2023 with demand falling by 11.3%.
Problems in Asia
In addition to North America, the former Asian beacons of hope are causing headaches for the Italians. The shrinking economy of Japan, Italy's first and most valuable market in Asia, is reflected in demand. A shocking 13.4% has been lost, and the loss in value amounts to 7.9%.
South Korea is also in decline, after five years of constant growth.
China's imports are in free fall and Chinese wine consumption has halved in the past five years. Following the 11.8% drop in value in 2022, spending fell by a further 22.3% in 2023. Italy's producers now only sell wine worth €96 million to a country with a population of 1.4 billion.
Mixed situation for sparkling wine
For years, Italian sparkling wines were a guarantee of growth for the industry. More and more regions wanted to jump on the bandwagon and introduced sparkling wines. There was barely a grape variety that wasn’t turned into a sparkling wine, as every appellation and almost every producer wanted to get on the bandwagon that had gained momentum with Prosecco.
Since 2010, the segment has grown by 223% in volume. In 2023, the first reversal is noticeable with a drop of 2.3%, although Prosecco has only fallen by 1.7%.
The decline in the main markets of the USA (-12%) and the UK (-4.4%) has been offset by a good performance in Eastern Europe, France and Germany. In France, imports are thriving; the country has been in love with Prosecco for several years and can no longer afford as much Champagne, due to a drop in purchasing power. Italian sparkling wines account for €130.3 million of the total export value of €316 million (+25.6 %). Among these, Prosecco grew by 21%.
Japan and China also posted poor figures for sparkling wines. Japan still spent €37.6 million (-15.7%), while China only spent €11.2 million (-20.2%) on Bollicine.
What is 2024 looking like?
Since the beginning of the year, there have been signs of an easing in the cost of dry materials, the most important part of which are, of course, bottles. But we are still nowhere near acceptable levels or even what we had before the start of the ongoing wars and conflicts. The ongoing destocking on the major world markets is certainly not improving the general cost situation; on the contrary, suppliers are keeping prices high in view of the significantly lower volumes.
It is becoming increasingly difficult to make predictions, even in the very short term. The decline in wine consumption, which is mainly focused on red wines, is not helpful for those who now have to plan the future activities of producers (investments, organisation, etc.). However, one must be confident and fully committed to finding new keys to market penetration: One must not disregard the phenomenon of premiumisation of consumption, many drink less but better.
Unfortunately, the ongoing conflicts have led to a slowdown in the development of our export business. The crisis in some sales markets, coupled with increased logistics costs and the blocking of the movement of goods, are the very first consequences of the ongoing war between Russia and Ukraine, as well as the development of other hotspots in the Middle East. We are living in difficult times, we are navigating with a sense of proportion, but we are ready for the challenges ahead.
Attention, construction site!
On 22 March 2024, the venerable Accademia Italiana della Vite e del Vino in Florence inaugurated its 75th academic year. The opening speech was given by Lamberto Frescobaldi, President of the family business of the same name and the Unione Italiano Vini, on the topic of "The current situation and prospects of the national wine sector".
Frescobaldi is never afraid to castigate the failings of the industry, and there are plenty of them to choose from. For example, the jungle of over 400 DOCs and DOCGs, which not even the Italians themselves can see through.
Only seven of these DOPs reach a bottling volume of over 500,000 hectolitres and these seven also account for over half of the total DOP volume. Frescobaldi suggested mergers and the cancellation of origins that hardly bottle at all as a way out.
"A reorganisation would give the sector the opportunity to channel energy and resources into research and sales promotion, because times are changing for the wine sector at an unsustainable speed," said Frescobaldi.
The sector must be based on four pillars: rationalisation, investment, knowledge of the markets, and marketing. Export markets have been the key to the development of the wine sector over the last 20 years. Frescobaldi recalled that Italy's export business had started with the sale of bulk wine, which was only later gradually replaced by bottled wines.
"An example of this is France, our direct competitor, where we have evolved from anonymous producers of bulk wines to producers of medium-high profile wines, with a 120% increase in value compared to a 70% decrease in volume over the last 20 years," explained Frescobaldi.
He also called for further differentiation of export markets, as only five main markets account for 62% of exports. The dependence on individual players is too great, as the sub-optimal performance of the USA and Canada in 2023 proves.
"We must not only be able to recognise and absorb the demographic changes that will determine the development of consumption," Frescobaldi explained.
The Italian paradox
Everyone is talking about the short harvest in 2023, but Italy's real problem is overproduction. Due to the smallest harvest since 1947, the wine sector has once again pushed aside the urgent need for structural reforms. Just eight months ago, Italy recorded the highest stock levels in the last 20 years. There was talk of distilling surplus wine, and many origins reduced yields or decided on harvest reserves as a market-regulating measure. Today, the stocks are worth their weight in gold in view of the extreme harvest losses and help to save the market balance.
After all, price increases would be extremely dangerous against the backdrop of declining consumption, as the results in the food trade for 2023 show. Only a few coveted appellations, such as DOC Lugana, can still afford price increases. The harvest on Lake Garda was decimated by 35% due to the hailstorms in April and July, but the barrel wine price is now at a difficult €5 per litre for the Lugana business.
What is 2024 looking like?
Production costs remain at the level of the last quarter of 2023, with the exception of glass. It became cheaper in January, albeit after increases of around 80% between 2022 and 2023. This is offset by rising costs for some types of wine due to the lower harvest volume. Table wines in particular recorded a sharp price increase of around 40% within a year.
We currently have sufficient stocks to cover our requirements. We continue to export to all countries, including those at war. The decline in consumption, which is mainly due to inflation caused by geopolitical events, is affecting sales for all of us.
Looking to the future
The long-term damage caused by the Peronospora infestation will also affect parts of the 2024 harvest, but new plants will certainly go into production again. In order to get a grip on overproduction, yield restrictions are being considered, including selection according to market relevance in the distribution of planting rights.
For the time being, grubbing up as in France is out of the question for the Italians. Also, the situation is not quite that bad, as things are looking better than in Bordeaux.
Let's see which topics will take centre stage at the largest class reunion of the Italian industry. However, Vinitaly is not necessarily the place where exhibitors and visitors have the opportunity to discuss the next impending peak in stocks. It is best to concentrate on the good quality that the 2023 vintage has produced despite all the obstacles — and look forward to the concentrated Italianità in the exhibition halls.
Meininger at Vinitaly
"TASTING EX...PRESS: Wine without alcohol – chances & tastes"
This year, Meininger's International and WEINWIRTSCHAFT are enriching the Vinitaly tasting program with the much-discussed wine topic. Anja Zimmer, editor-in-chief of Meininger's International and Clemens Gerke, editor-in-chief of WEINWIRTSCHAFT will present eight dealcoholized wines from Italy and other countries. The selection consists of wines that have won MUNDUS VINI alcohol-free awards.
Date: Monday, April 15, 2024, at 3 p.m. in Sala A on the 1st floor of Hall 10
Admission: €20. Click HERE to register.
