Production and distribution: allies in the name of “value”

8 May 2017 Wine

“The new frontier of ‘quality’ perceived by consumers goes beyond the wine and invests the producer’s behaviour overall. In other words, transparency of the production process, ethics, sustainability, ingredients that we must learn to transfer to the consumer, together with modern distribution.”

A new alliance is being formed between production and distribution in the world of wine marked by the recovery of value in the distribution chain. The positive signs of growth in consumption, also confirmed in 2016 and the first few months of 2017, have clearly eased the need for promotional strategies focused on price, giving room to manoeuvre for promotion based on other factors (quality, territory, tradition, etc.) aimed at recovering wine value. In 2016, Italians purchased 500 million litres off the shelves, spending one and a half billion Euros. 60% of these purchases is represented by wines with territorial reference (DOCG, DOC, IGT), the sector that is growing most: +2.7% in 2016 and + 4.9% in the first two months of 2017 (per volume). Quality and ties to the territory are increasingly sought after, while purchases of 1.5-liter bottles, bulk wine, demijohns and cartons are decreasing, and the 75 cl bottle still reigns in the market. Still wines are more in demand than sparkling ones, which probably feel the effects of the spumante boom (+7% in 2016) and organic wines are also growing rapidly, although still remaining a niche product. Changes also influenced by the gradual generational change and by young people’s renewed interest in wine: 86% of them is willing to try new products, they find about what is new on the shelves, often surfing websites in the sector (33%). Production and distribution need to increase the value proposition and therefore move negotiations past the subject of price. The crisis of cartons, which does not move purchases to the lowest price range, is frightening because it marks a big loss in volumes consumed. If high-range wine continues to grow, the middle range will require recreating a different value dimension through new strategies between production and distribution. The various players in the wine production chain and large-scale distribution are ready to improve collaboration in order to meet new demand which is by now oriented toward large surfaces, quality and the search for product value.

The fundamental driver in consumers’ choices today is the security guaranteed by history and tradition represented by the denomination. This must also be joined by the brand, as the new frontier of the ‘quality’ perceived by the consumer goes beyond the wine and invests the producer’s behaviour overall. In other words, transparency of the production process, ethics, sustainability. All the ingredients to be transferred to the consumer.

From Il Corriere Vinicolo of 08/05/17