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Price Increases, Uptrading Driving Italian Wine’s Value Growth

December 3, 2013

After a 1% decline in shipments to 27 million cases in 2012, Italian wine is expected to be back in positive growth territory in the U.S. market by year-end, with volume estimated to rise 3%-5%. An even better showing is expected on the value side, which is up around 6% so far this year, boosted by price increases and the relative strength of Italy’s prestige wines.

Iconic Italian wines, including leading Super-Tuscans, Barolos, Chiantis and others, have recently been reclaiming some volume they’d lost during the economic downturn. “Last year the high end was still soft, but after several years we’re seeing renewed interest in those categories, and upscale wines are beginning to move again,” says Winebow chairman Leonardo LoCascio.

“It’s similar to what we’re seeing with domestic wine in that people are feeling a bit better economically and are shifting back to premium. The iconic Italian wines have a lot to do with it. People are familiar with these labels, which have some equity,” adds Ted Baseler, president and CEO of Ste. Michelle Wine Estates, which imports Italy’s Marchesi Antinori wines in the U.S.

Palm Bay International also is seeing progress on its high-end Italian brands. “Bertani Amarone and Fontanafredda Barolo are growing, and we’re seeing nice growth on Col d’Orcia Brunello,” says Marcy Whitman, the company’s senior vice president, marketing.

At the retail level, Sherry-Lehmann CEO Chris Adams cites Italy as being among the stronger parts of the business lately, with both its affordable wines and higher-end labels on the rise. “Italy has been showing a lot of strength. It offers a lot of options in terms of price points that can all still be considered affordable luxuries,” he says.

In addition to advances at the super-premium and above level, price increases—some necessitated by short harvests in 2011 and 2012—are also fueling value gains in the category. Frederick Wildman & Sons’ Folonari was one well-known Italian brand that opted to hike prices and weather the resulting backlash. Folonari slipped 3.4% to 285,000 cases last year, according to Impact Databank, but Wildman’s director of marketing for national brands, Francine Kowalski, tells SND it’s now “slowly starting to balance itself out.” Across Wildman’s portfolio, Kowalski adds that consumer interest in categories like Barolo and Valpolicella has been growing.

While the past two years have been challenging from a supply standpoint, Italy’s 2013 harvest could bring some relief. The country’s wine production is expected to increase 8% from 2012 to 44.5 million hectoliters, according to the Italian Association of Enologists.

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