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ITALIAN WINE EXPORTS IN 2004

by Italian Trade Commission

NEW YORK
May 11, 2005

Against a background of domestic lack of growth, which is starting to look like a consumer goods crisis in some market sectors, there have been clear signs of an upward turn in Italian wine exports.

Italian wine is experiencing an overall growth of 5.4% in value, hitting € 2.837 million, an absolute record in the sector, and a 6.3% increase in volume—equivalent to 14.1 hectoliters.

The first signs of these amazing results were contained in the figures published for the first semester of 2004, which highlighted wine exports’ holding power—due mainly to a dip in unit values—thanks to an abundant harvest and a decrease in business margins.

During the second semester this phenomenon was largely recouped with a tangible increase in values.

This positive trend has been verified in different markets. Germany is in top position, with + 1.6%, a modest increase that still breaks a long decline through a significant growth in volume, up by 7.4%.

Italy holds on to its spot as the top supplier by volume to the German market, with a 37% share of the market. The Veneto and Trentino Alto Adige regions maintain their position as market leader in quality white wines. Table wines are experiencing an opposite trend, with a slight 3.1% growth. In the field of quality reds (V.Q.P.R.D. ), there has been renewed interest in Piedmont wines (+17%), although overall imports show a tangible fall-off. Italian leaders in this category are Tuscan wines, which come in second after Bordeaux wines.

The United Kingdom is up by 8.6 % in value, from 295 to 320 million euros, following the market growth described by the data of Wine & Spirits Association WSA.

Switzerland is up by 10%, consolidating its position as the fourth biggest export outlet, with a value of 192 million euros, and showing how a market considered small can still hold interesting potential.

On the other side of the Atlantic there has been a growth in demand that to some extent compensates for the downward effect of the dollar-euro exchange rate. The U.S. is the top market for Italian wine in value, at more than 740 million euros, up by 4.2%, and at a volume of 2.1 hectoliters, up by 2.8%. In this case, too, there was a pick-up in the growth of the Italian product’s value, after a price resistance that had lasted for more than two years.

Canada continues to be a source of satisfaction for the sector, confirming the country’s excellent economic health, allowing for a growing expansion in consumer goods. Data at year’s end show a 10% increase in volume and the same percentage in value.

The only black spot in the larger markets is Japan, where values have further decreased, down by 5.2%, following the 4.9% decrease of 2003, showing yet again the shakiness of the Japanese market and the effect of the euro/yen exchange rate.

Fortunately the crisis in the Rising Sun stops at the Japanese borders. The Far Eastern markets’ potential is starting to be realized, showing the growing role and strategic future of the area for Italian exports.

The rosy evolution of the Far Eastern markets can be seen in the growth data: South Korea +21% and a value of 4.3 million euros; Hong Kong +6%; Singapore +14.5%; Thailand +21%; China +98%; Taiwan +45%; and Malaysia +60%. A smooth, constant growth rate over time is certainly promising for larger investments, aimed at consolidating and growing the new market for the most forward-looking entrepreneurs.

There has also been some dynamism in areas less important to Italian wine. In the Middle East there is a sharp dip in the Israeli market and a simultaneous growth in the United Arab Emirates, which undoubtedly underlies the market’s evolution into a distribution center for neighboring markets, a major duty-free center, and also an international business hub, filled with top-of-the-line hotel chains.

The newest member countries of the European Union are the fastest growing areas, with an upward dynamic: Poland +31%; Malta +126%; Slovakia +141%; Lithuania +54%; Estonia +53%; Cyprus +34%; Slovenia +178%.

Russia has seen a 18.5% growth that crowns a three-year period of impetuous growth and is perhaps realizing the expectations of many Italian producers for the potential of the Russian market.

In terms of the types of wine exported, the overall trend is toward a growth in white wines following a double-pronged orientation: an increase in table wines and a dip in quality wines; for reds there has been growth in both types, with a slight prevalence in table wines. Spumanti has gone down by 4% while sparkling wines have seen a 3% growth.

2004 was a year of unexpected growth for the sector, far superior to the predictions and the general morale of the sector, which may be too modest considering the results achieved.

In assessing the period gone by, characterized by strong uncertainties in the international economy and tensions over exchange rates, one cannot ignore this positive stimulus for the Italian Wine System.

The System’s competitiveness is coming out of this strengthened, with fewer frivolous ambitions but especially with a clearer vision of the road to follow: ongoing research into improving the production factors, into the forms of collaboration between companies along the entire production line and into targeted investments.

For more information, please contact: Stefano Raimondi
Italian Trade Commission, Rome
Wine, Beverage, and Alcohol Division
s.raimondi@ice.it

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