Let's Toast to Exports
OPINION |

Let's Toast to Exports

ITALY IS THE LEADING WINE PRODUCER IN THE WORLD BUT THE AVERAGE EXPORT PRICE IS HALF THAT OF FRANCE. THREE REASONS FOR THIS GAP, NONE RELATING TO THE QUALITY OF THE PRODUCT

by Massimiliano Bruni
Translated by Alex Foti


Last year, Italy celebrated a new record for its local production. A  few months ago in October, the OIV, the International Organisation of Vine and Wine, based in Paris, made the first data available on last year's wine production. Italy is the world's largest wine producer with almost 49 million hectoliters, an increase of approximately 10% over the previous year. Faced with continuing decline in domestic consumption – one out of every two Italians now does not drink wine and Italians consume a total of just over 20 million hectoliters, i.e. less than 30 liters per person a year – exports are becoming a necessity for Italian manufacturers to sell their bottles. Looking at foreign markets, the US confirmed its position as top importer of Italian wines.

Despite the sharp decline in the Russian market, 2015 has been celebrated by many as a record year, with exports at their highest value in Italian history, reaching €5.4bn. If you look at the average value of exports, however, you can see that, although growing, it stood at around €2.67 per liter, less than half the average price of exported French wine, €5.84. The biggest difference is in sparkling wines, with the price of Champagne exceeding that of our sparkling wines by a multiple of about 5. This was also true in still wines, where the gap is more than 30%. Italian wine producers have to work on having the perceived value of their product translated into higher selling prices, thus enhancing the country's ability to generate wealth. This can be done by having markets acknowledge the outstanding quality of Italian wine that producers are rightly proud of.

Let's look at why there is such a gap and how Italian wine exporters can try to bridge it. Firstly, Italian wine companies are on average rather small and limited in size. This limits the interest of many traders operating in foreign markets to invest the energy and resources needed to enhance the value of our production, due to the high risk of not having enough product to meet market demand and the low returns involved. Secondly, the prevailing culture in Italy is that of the region of origin, according to a widely used logic where origin of the product is the main selection criterion for marketing communication. In export markets, however, the choice of grape variety prevails in the minds of consumers, who often prefer to buy single varieties over blends, or in any case wines that are easy to understand and identify. Thirdly, since wine purchasing takes place predominantly on the shelf, the ability to have easily storable bottles that carry recognizable labels and names becomes of particular importance. In this, there is a very wide margin for improvement. Italian vintners must remember to list three things on their wines: product name, manufacturer name, and the grapes that go into the product. A typical designation is often added to this, so that in Italy we have four different types of classifications (DOC, DOCG, IGT, table wine), something which certainly does not facilitate understanding by consumers who are non-experts. It is no coincidence that a more market-oriented approach has ended up generating a separate category, that of Super Tuscans. Most of the best known Italian wines that are appreciated abroad belong to this category, and an IGT label is required to attain exposure in export markets.

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