April 8, 2010 / 3:48 PM / in 8 years

Italy winemakers see sales recovery in 2011-2012

VERONA, Italy (Reuters Life!) - Italian winemakers look beyond 2010 to see a return to pre-crisis sales levels next year or in 2012 after the global economic downturn drained consumer demand last year.

<p>A woman fills glasses with sparkling wine at the Vinitaly wine expo in Verona April 8, 2010. REUTERS/Paolo Bona</p>

Italy, the world’s second-biggest wine producer after France, had output of about 4.5 billion liters (989.9 million Imp gallons) in 2009 and saw export sales drop 6 percent to 3.5 billion euros ($4.66 billion) last year hit by the crisis and growing competition from the “New World” wines, according to industry data.

“2010 is not going to be an easy year. I don’t think we’ll see a general recovery in consumer demand this year,” Andrea Sartori, chairman of Italian wine industry body Unione Italiana Vini (UIV) told Reuters in an interview on Thursday.

“We’ll have to wait until 2011 to see the sector returning to pre-crisis levels,” Sartori said at the wine trade fair Vinitaly in northern Italian wine growing region of Veneto.

In 2009, Italian wine sales to core export markets, the United States and Britain, fell 7 and 10 percent respectively hammered by the crisis and advance of rivals from Chile, Argentina, South Africa, Australia and New Zealand, according to UIV estimates based on data from Italy’s statistics agency ISTAT.

Lamberto Vallarino Gancia, chairman of the Federvini trade body, was more cautious in predicting a full recovery in the next two years as consumers have become more attentive to spending during the crisis.

Volumes of Italian wine exports rose 6 percent to 1.95 billion liters in 2009, UIV data showed. But volumes grew mostly because producers slashed prices, and margins, to win back consumers, winemakers said.

Average price of Italian wine dropped 20 percent last year, with ordinary wine prices plunging 25 percent and special denomination quality wines losing 13 percent, Agriculture Minister Luca Zaia said at Vinitaly opening ceremony.

Such sharp price falls hit producer margins and can be seen as compromising quality standards, winemakers said.

“I think prices have hit the bottom. Producers don’t earn any money any more. It’s a sell-off and it hits quality wine producers hardest,” Gancia told Reuters.

<p>A man holds a glass of red wine at the Vinitaly wine expo in Verona April 8, 2010. REUTERS/Paolo Bona</p>

U.S. MARKET TO POWER RECOVERY, EYES ON ASIA

“2010 has started under a sign of reasonable optimism,” Claudio Galletti, chairman of Enoteca Italiana, a promotion body for Tuscan wines, told Reuters.

First signs of consumer demand for Italian wine picking up this year have been seen in the core U.S. and German markets and in small but promising markets such as Russia, China and Japan, winemakers said.

But with the U.S. economy recovering faster from the crisis than Europe, Italian winemakers pin sales rebound hopes on U.S. consumers and their love for “Made in Italy” products.

In an effort to protect reputation of Italian wines, Italian authorities have seized 10 million liters of cheap red wine with false Chianti labels which were earmarked for the U.S. market, Zaia said. He said several companies were involved in this “commercial fraud” but declined to give more details.

The Chianti Classico consortium said their producers had nothing to do with the fraud. Industry sources said the false Chianti wine was seized at the end of last year.

The U.S. was the second-biggest export market for Italian wine after Germany with 738 million euros of sales and the third market in terms of volumes after Germany and Britain with about 240 million liters of wine sold there, according to UIV data.

Italian winemakers are pushing to expand in Asia, still considered a niche market, betting on economic growth and westernization of consumer habits there.

Enoteca Italiana opened a promotion center in China’s Shanghai in 2008 and has seen consumer interest growing there, Galletti said.

VeronaFiere, organiser of Vinitaly, is due to sign a key partnership with the Hong Kong Trade Development Council to promote Italian wines to the world’s fastest growing consumption regions.

Reporting by Svetlana Kovalyova, editing by Paul Casciato

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