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30 September 2020

Colangelo reveals the opportunities for Italian wine in the USA

As a preview for the webinar focusing on "Italian wine in the USA during and after Covid-19: challenges and opportunities" scheduled on Wednesday 7 October 12 pm (USA), Vinitaly interviewed Gino Colangelo, founder and president of Colangelo & Partners (www.colangelopr.com), the leading wine and spirits communication agency in the United States with offices in New York and San Francisco and an international staff of 55 wine, marketing and communications experts.


Gino Colangelo will moderate the webinar focusing on the future of Italian wine in the USA. It will be attended by Giovanni Mantovani (CEO, Veronafiere), Alison Napjus (senior editor, Wine Spectator), Michael Osborn (founder and executive vice president, Wine.com), Aaron Sherman (co-founder and CEO of SevenFifty), Heini Zachariassien (founder and CEO of Vivino), and Kristina Kelley (Wine and Spirits PR and Communications Director for E J Gallo Winery).

President Colangelo: how has American consumption changed in the wake of the new tariffs that hit France rather than Italy and the lockdown?
“These tariffs understandably had a major impact on countries now penalised by additional tax, especially France, Spain, Portugal and Germany. German wine sales in the United States, for example, have fallen significantly, as well as sales of French table wines. On the contrary, Italy has won a larger share of the market because Italian wines, in comparison, are now more competitive in terms of price. Domestic wines have also resumed sales."

Has consumption been affected?
"The lockdown did not reduce overall consumption, it simply changed the way Americans buy wines and the wines they buy."

In which direction?
“Retail and online sales have both increased significantly, more than offsetting the drop in sales through Horeca channels. In truth, wine sales by volume actually increased after the lockdown. Wines with strong brand recognition and better distribution through retail channels are performing very well. Wines that traditionally relied on sommelier endorsements and distribution through restaurants, on the other hand, have been hit hard. Wines that are active on social media and digital platforms are also doing well compared to those marketed in more conventional ways."

Which wines and what price ranges are growing as regards e-commerce? What is the average purchase cost?
“Wines above $20 are performing fairly well overall and most growth has involved this category, in line with the pre-Covid scenario. E-commerce is expanding, with many online retailers reporting three-figure growth. Interestingly, the price per bottle for online sales is about 20% lower, since casual consumers buy wines online every single day. Previously, online sales were driven by wine lovers, who purchased more particular wines."

Where does consumers find information and what are they looking for?
“Consumers spend more time online and obtain more information from online sources. There is a convergence between commerce and communication, whereby many consumers find information through marketplaces such as Wine Searcher and Vivino, as well as online retailers such as Wine.com. These companies compete with traditional media such as Wine Spectator and Wine Enthusiast, until now the customary vehicles for promoting the popularity of brands and wine denominations among consumers.”

How have the lockdown and the growth of e-commerce changed the role of importers in the USA?
"Importers most in step with the times are working harder than ever to collaborate throughout the supply chain - with suppliers, distributors, retail clients and even, in some cases, consumers in order to increase sales and build foundations for their brands. Old-fashioned importers, who view e-commerce as an obstacle to the normal supply chain actually hinder rather than support sales. Furthermore, many traditional importers lack the technological skills needed to run online business smoothly. This means that advanced importers who adopt alternative sales models have a competitive advantage." 

What is the most important issue for Italian wine: Price, brand, production region, label? And how do these aspects work together?
“It is impossible to say which aspect is the most important, since wines in different price ranges or different denominations are all affected by these factors in varying proportions. Price is always very important - yet, sometimes, too low a price can be just as bad as being too high. Building a brand for a company with limited production may not be financially feasible but, for example, if the producer makes Chianti Classico, that may become the brand on which to promote this producer. Labels are important to some consumers, generally younger ones, more than others. Quality is always a critical factor and the basis for the success or otherwise of any wine."

What is Italian wine associated with and what differences are perceived by consumers compared to French, Spanish, Australian, South African, Chilean or Argentine wines?
“Italian wines enjoy a huge competitive advantage in the United States thanks to the popularity of Italian food. Italian wines are also more familiar to Americans since so many of them have travelled to Italy and love visiting the country. Italian wine marketing institutions (consortia, Vinitaly, etc.) have worked hard to build regional brands (such as Prosecco, Barolo, Chianti Classico, Brunello di Montalcino) that help distinguish Italian wines from competitors. Americans now have a better understanding of the quality of Italian wines and this supports growth in sales.”

What is the most effective way to promote Italian wine today? Cooking courses? Videos? Competitive prices? Hits of luxury? The Mediterranean diet? Italian style?
"It all depends on the type of wine, the company that makes it, the region it comes from, price, style and the target audience: far too many individual factors to answer briefly. A wine from a well-known region or denomination, such as Barolo, must be marketed differently compared to Pecorino white wine from the Marches region."

Wine in cans is on sale in wine stores. Is this still a growing phenomenon? Has Covid, by moving wine consumption into the home, encouraged further growth, given this practical and informal style of consumption?
“Wines in cans continues to grow but it is still a niche product. Unless a company is willing to invest a great deal in marketing, 'wine in a can' is unlikely to be successful."

Consumers today can choose between Pinot Grigio and Sauvignon Blanc from New Zealand: does competition remain in the wine field, as people explore new varieties/denominations and terroirs, or does involve choosing between Pinot Grigio and a cocktail/beer because the scenarios have changed?
“Cocktails, craft liqueurs and hard seltzer are trendy by now and gained market shares, especially among young consumers, to the detriment of wine and beer. Wine-makers need marketing if they are to be relevant to younger consumers and communicate the advantages of wine: the social nature of wine, compatibility with food, (relative) health benefits, produce of the land made with natural ingredients and differentiation of taste. As for other countries and other grape varieties, such as Sauvignon Blanc from New Zealand or Tempranillo from Spain, Italian wine-makers must always be well aware of the competition and continue their marketing effort with American consumers. The good news is that the average price per bottle continues to improve. It is always preferable to compete on quality and origin (where wines come from, how they are made) than on price."