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Italian Wine Shows Resilience As Argentina Surge Continues In US

May 6, 2011

Bottled wine imports climbed by more than 7% in 2010, according to Impact Databank, thanks to a strong performance by Italy and sharp increases by Argentina, Spain, Germany and New Zealand. Those trends have extended into 2011, according to the U.S. market’s leading wine importers.

Sparked by the meteoric rise of Malbec, Argentina’s share of the import category has boomed in recent years. Argentine Malbec was at just 625,000 cases in 2005 and is now over 4 million cases, advancing by 30% last year alone. “The taste profile of Argentine wine has been a key factor of its success in the U.S., as has the quality-price relationship of the category,” says Richard Cacciato, president and ceo of Frederick Wildman & Sons, whose Trapiche brand is spearheading Argentina’s growth.

After adding nearly 1 million cases in 2009, Chile’s bottled wine imports grew by just 0.9% in 2010. Some Chilean wine marketers see considerable potential in their efforts to replicate Argentine Malbec’s success story with Carménère, a varietal that’s playing a somewhat larger role but has yet to make significant inroads. “Carménère certainly isn’t a huge varietal type yet, but it’s consistently growing from year to year. I think that’s good news, given the great response to Malbec from South America,” says Ed Barden, director of the New World portfolio for Banfi Vintners, whose Concha y Toro brand dominates the Chilean category, while stablemate Walnut Crest is also among the leading entries. “We have a Carménère focus and we’re doing everything we can do to cultivate it in a bigger way.”

Italy has held strong during the downturn, while French bottled wine eked out a 1.1% increase in 2010 as market conditions improved. “Consumers are seeking three things: high quality, an understanding of the brand at a glance, and price. The value- to mid-priced (French) wines that are performing well have all three,” says Tom Steffanci, president of W.J. Deutsch & Sons, which imports Georges Duboeuf, the largest French brand in the U.S. “Starting in 2008, people began to spend less on bottles of wine and found that they weren’t sacrificing quality—with French wines in particular. At $12, people found that France could satisfy their need for high-quality wine. When the unemployment rate eases, I think the sweet spot in our business will be in the $10-to-$15 range.” Deutsch also markets HobNob, a line of five single variety labels from France priced at $10.99 per 750ml.

The on-premise remains challenging for both Italy and France, but there is cause for optimism. “Our Italian portfolio is growing, as is our French portfolio, which has gone through a difficult period,” says Cacciato. “The Italian side has grown because it represents value to consumers, while we’ve seen French growth mainly because consumers are spending more than in the past two years.” Cacciato cites Pascal Jolivet from the Loire Valley and Italy’s La Scolca Gavi, both of which are growing by double-digit rates in 2011, while doing most of their business in the on-premise.

Australia, meanwhile, continues to struggle on both the volume and value fronts. Its oversupply has flooded the U.S. market with bulk wine that continues to pull down pricing. “The average price for the Australian category has declined dramatically because of Australian private labels. With that comes the perception that Australian wines aren’t as good as they really are,” says Francesca Schuler, chief marketing officer at Treasury Wine Estates. Still, Schuler sees hope in the desirable profile of the category’s consumers. “Someone who’s into Australian wine tends to have a high basket ring,” she says. “They’re still very attractive shoppers for our retailers.”

US Table Wine Imports by Origin1,2
(millions of nine-liter cases)
Percent Change4 Market Share4
Rank Origin 2008 2009 2010 2008-2009 2009-2010 2008 2009 2010
1 Italy 22.28 21.92 23.86 -1.6% 8.8% 32.3% 32.2% 32.7%
2 Australia 16.99 15.44 15.12 -9.1% -2.0% 24.6% 22.7% 20.7%
3 France 8.21 7.39 7.48 -9.9% 1.1% 11.9% 10.9% 10.3%
4 Chile 6.16 7.12 7.19 15.7% 0.9% 8.9% 10.5% 9.9%
5 Argentina 3.86 5.09 6.08 31.9% 19.4% 5.6% 7.5% 8.3%
6 Spain 3.56 3.36 3.77 -5.6% 12.4% 5.2% 4.9% 5.2%
7 Germany 3.02 2.66 3.17 -12.1% 19.2% 4.4% 3.9% 4.3%
8 New Zealand 2.08 2.08 2.57 0.2% 23.3% 3.0% 3.1% 3.5%
9 Portugal 0.79 0.86 0.95 8.0% 11.1% 1.1% 1.3% 1.3%
10 South Africa 0.76 0.77 0.86 1.6% 11.4% 1.1% 1.1% 1.2%
Total Top 10 67.71 66.70 71.05 -1.5% 6.5% 98.2% 98.1% 97.4%
Others 1.25 1.32 1.87 5.6% 42.2% 1.8% 1.9% 2.6%
Total Imports3 68.95 68.02 72.92 -1.4% 7.2% 100.0% 100.0% 100.0%
1 Excludes bulk.
2 Excludes sparkling, fortified and specialty wines.
3 Addition of columns may not agree due to rounding.
4 Based on unrounded data.

Source: IMPACT DATABANK

 

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