Pierpaolo Penco, Italy Country Manager at Wine Intelligence, reflects on the impact of Covid-19 on the wine market in Italy, focusing on insights from the Wine Intelligence Italy Wine Landscapes 2020 report, released this week
WI: How has the situation in Italy changed in recent weeks?
PP: We had two months of ‘hard’ lockdown, but since the 4th of May, we have been experiencing a new type of normal where we are trying to live ‘with’ the virus. We are allowed to go outside our homes, wearing a mask when we shop, travel or go to the office. In the upcoming weeks, we will be allowed to travel from one region to another and plan holidays. The wine industry didn’t completely stop in the vineyards and winemaking during the hard lockdown, and now cellar doors are beginning to open to visitors and producers are planning their next harvest.
WI: What will be the impact on the wine market in Italy for the rest of 2020?
PP: We are still experiencing change in sales channels, and I expect this will continue throughout the rest of the year. So far, retail (in volume) and e-commerce (in percentage) are the clear winners with improved performance, while the on-trade is still trying to recover from the long period when bars and restaurants were closed. Several producers I have spoken to told me that export market sales were flat during lockdown, but did not drop much. They had to be creative in keeping contact with importers, distributors and opinion leaders, but online tools (such as video calls) have helped manage business relationships, making this easier.
WI: Have consumers changed their consumption patterns? Have new at home occasions emerged in Italy?
PP: The lockdown pushed wine consumers to drink more of their wine at home – understandably since we couldn’t leave our homes – but these drinking occasions were mainly during informal meals with the family and sometimes while enjoying food from the restaurants that were able to deliver. During the first weeks of lockdown, online social events became very popular and sales from e-commerce shops rose. But now that the new lighter lockdown has been granted and bars can open for takeaway or an aperitif at socially distanced tables, I expect a decline in online parties, especially from the younger generations as people returned back to more classic social occasions. This quick return has led to concern about a second wave of infections and several mayors have threatened slightly more restrictive measures again, so we will have to see what comes next.
What we do know from the Italy Landscapes 2020 report, being published this week, is that Italian regular wine drinkers, especially the younger generation, are now more open to trying new styles of wine, particularly organic or sustainable – both of which are seen as healthier options.
WI: How will the wine market in Italy change going forward (ie beyond 2020)?
PP: The biggest question for the rest of the year (and probably for 2021, too) is if and how the on-trade channel can recover. Now, 4 in 5 restaurants are open, but some of them for takeaway and home delivery only. The Michelin Guide Director, Gwendal Poullennec, recently said that less than 20% of ‘fine dining’ operators have opened their doors, and other trade organisations have stated that around 30% of on-trade businesses will close permanently. This causes great concern for the wine industry in Italy as we therefore need to plan alternative ways to supply and sell bottles. It’s not only a matter of future sales, but also cash flow problems that will make it difficult for many to recover. This is why many in the industry, along with the Government and other Institutions, will cut the production of the incoming vintage by a 10-20% (some Denominations of origin will lower the yields) and will be allowed to distil around 1-2 million hectolitres of table wine.
I expect we’ll see some wineries reducing new product development (instead focusing on core brand and products) and reducing focus on wine tourism – as some will downsize, or not open their B&B or restaurants while foreign tourism remains slow or non-existent.
WI: Can you tell us a bit more about the new Italy Wine Landscapes 2020 report?
PP: This is the first publication of Italy Wine Landscapes Wine Intelligence has produced. The report covers key consumption behaviours and attitudes of Italian regular wine drinkers and key trends in the sector, with the addition of a section on the impact of Covid-19. Both quantitative and qualitative research methodologies have been used to create an overview and profiling of regular wine drinkers in Italy, including demographics, frequency of consumption, attitudes and involvement with wine, point of view on closures, as well as a confidence and knowledge index amongst other topics.
Some key highlights of the report include:
- Prosecco is currently the most popular type of wine in Italy, with the denomination Prosecco DOC leading the ranking in terms of awareness, consumption and conversion.
- Italian consumers are strongly guided by food when it comes to their wine choices – they pay attention to food parings as they drink wine more often during meal-times
- In terms of age, Millennials tend to be more wine curious, especially when it comes to alternative wines
- According the brand health section of the report, sparkling wine brands rank higher on the Wine Intelligence Brand Power Index than still wines in Italy, with Ferrari Spumanti leading the ranking
- When asked about their anticipated future priorities post lockdown, Italian regular wine drinkers give very low priority to travel, major social events and expensive purchases. However, half of regular wine drinkers say that the pandemic will not change their eating and drinking habits and it will not prevent them from trying new alcoholic drinks and new food styles
- Trade experts predict that the current situation could open up new opportunities for the wine industry, especially for alternative wines, as people search for healthier and more sustainable products
Italy Wine Landscapes 2020 will be available for purchase this week. For more information, please contact Pierpaolo Penco, Country Manager for Italy.