The search goes on: Getting a foothold in the U.S. wine market
NEW YORK – Romano Baruzzi took a breath and looked out at the sea of faces in front of him.
“Buona sera a tutti, welcome everyone,” said Baruzzi, deputy trade commissioner for the Italian Trade Commission in New York City. “Welcome to the biggest event promoting Italian wines in the U.S.”
Baruzzi had the opening podium on Feb. 8 for the start of Italian Wine Week/Vino 2016, just ahead of the much-awaited panel discussion titled “On the Bright Side: What’s Ahead for 2016.”
This first-night talk promised to give the many producers, importers and the occasional journalist insights into what the immediate future may hold for Italian wine. While providing a suitable answer for such a complex question is akin to stuffing an elephant into a suitcase, Baruzzi and the other speakers were giving it their best.
Vino 2016 attracted more than 160 Italian wine makers and their representatives, most of them proudly showing off their latest vintages to almost that many importers and buyers while other winemakers, reported as high as nearly one-third of those present, simply were seeking someone trustworthy in whom to entrust their wines.
“We have more than 1,000 labels here this year,” Baruzzi said during his opening remarks. “I hope everyone can find a (business) partner in the U.S.”
But as many smaller Italian winemakers learned during the two-day event, hope may be their best hope.
Despite the growing popularity of Italian wines in the U.S. – imports from Italy now make up 31.5 percent of all wine coming into the U.S., worth an estimated $1.3 billion Euros ($1.45 billion), said Baruzzi – several speakers cautiously suggested many Italian winemakers underestimated the hurdles of doing business in the U.S.
“It’s extremely difficult for you to get into the U.S. market,” warned Chad Turnbull, president and founder of Savorian, Inc., an East Coast wine importer. “There are many legal ramifications, but I have a few tips.”
After running down such basic business practices as watching costs and market losses, Turnbull got to the main point.
“You can’t get into the U.S. if you only want to get into New York,” he said. “There are other places in America that have money, and you should look at those areas. Start in New York, sure, but don’t limit yourself to New York.”
Which means wine producers must have enough volume to keep several markets satisfied.
“If you can send me a pallet of wine (56 cases), that’s great,” said Turnbull. “But can you do that next week, too, and the week after that?”
That’s means not only the U.S. market, which many Europeans forget spans 3,000 miles, at least 48 states and consumes 13 percent of the world’s wine, but also being able to meet the demands of existing Italian and other European markets. For winemakers who may make only 2,500-5,000 cases a year, that’s a significant, and daunting, requirement.
Wine consumption is down across Italy as younger generations forgo their parents’ daily wine habits, thanks to the weak economy and the temptations of soft drinks and beer. Meanwhile, the U.S. ranks No. 1 in the world in wine consumption, ahead of France (2) and Italy (3) with an estimated 38 million wine drinkers.
As you might guess, two age groups – boomers (between 51-69) and millennials (21-38) – are the biggest shares.
But boomers are starting to slow down while millennials are narrowing the gap.
Jason Eckenroth of the Boulder-based ShipCompliant said Direct-to-Consumer sales is the answer for Italians with small budgets looking to build their market share.
Or would be, he said, if the law allowed it.
“Only 11 states allow importers to do DTC sales,” said Eckenroth. “Right now, DTC sales are around $1.97 billion and that could grow three times in 10 years if we can get (legislation changed to allow direct-to-consumer sales). And that means your share of sales could grow that much.”
Which brightened the evening for many Italian wine makers.