This article was initially published in the October issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
The consumption of white spirits is driving market growth in Italy, but there are also interesting developments in the flavoured spirits category. Sandra Newman reports.
Buoyed by the return of international tourism, the spirits category bounced back well in Italy last year from the impact of the COVID-19 pandemic in 2020-21. The country’s total spirits consumption in 2021 reached about 15m nine-litre cases (+24.5% on 2020), according to IWSR Drinks Market Analysis. Gin/genever was the fastest-growing spirits segment, with volumes increasing by 85.8%, followed by the small cane sector (+75%).
Rum and vodka both grew by more than 30% by volume (+36.6% and +30.6%, respectively), while agave-based and flavoured spirits, including liqueurs, bitters and aniseed, also enjoyed strong growth of over 20%, followed by whisky with an 18.9% increase in volumes. The brandy category was flat, inching up by only 0.9%.
Growth continued to accelerate after the lifting of entry restrictions on 1 June last year. Data from market research firm IRI for the 12 months to the end of June, covering retail outlets in Italy, show a 32.1% increase in spirits sales by volume and a 38.5% rise in value versus 2020-21. Molinari marketing director Anna Ballirano believes this confirms the market has recovered well this year and notes that growth is stronger in the on-premise. “Growth is more evident in the HORECA channel as a consequence of reopening bars and restaurants and tourists returning to Italy,” she says.
Luxardo export director Matteo Luxardo concurs: “The return of tourism has given a big boost to sales,” he says. “We look forward to the final summer data, but we certainly expect a good result.”
Bottega president Sandro Bottega elaborates on tourism’s impact: “The spirits market recovered in 2021 and is maintaining that trend this year. The presence of foreign tourists in Italy guarantees a boost for sales of Italian spirits, wine and cocktails, not just during the holiday time, but also at home when they want to recreate the experiences they have lived.”
While growth in off-premise and e-commerce sales has slowed recently, Pallini president & CEO Micaela Pallini says tourism has provided a boost to the on-premise channel. “Business has been solid and is showing growth in the on-premise sector, thanks to the complete reopening of bars and restaurants,” she observes.
IRI’s data shows volumes of +65.4% and value of +77.9% for spirits in on-premise outlets, with vodka and white spirits enjoying the strongest growth. Molinari’s Ballirano says there are several factors behind the channel’s performance. “The reasons are the comeback in the new normal way and the desire of consumers to share moments of conviviality together and away from home,” she says. “The fastest-growing spirits categories this year are white spirits, especially gin and Tequila, thanks to great consumer interest and new cocktails made with these products. The other category that is growing is vodka, in particular clear vodka, and, given the culture of cocktails … another growing category could be the alcoholic aperitif.”
Gin may have peaked in UK, but remains strong in Italy
The key gin markets of the UK and Spain may have topped out — IWSR Drinks Market Analysis predicts that gin in the UK will decline at a CAGR of -4% between 2021-26, while Spain will have a relatively lacklustre CAGR of +2% — but the category is strong in Italy.
IRI’s retail data to the end of June reveals gin soared in the country, by 73.9% in volume and by 81.8% in value, compared with the previous year. “At the moment, gin is still the leading product on the market with huge product and price segmentation,” confirms Matteo Luxardo.
There are many factors behind gin’s numbers, according to Sandro Bottega. “The consumption and popularity of gin is growing rapidly in Italy,” he says. “This distillate is highly appreciated by consumers and is becoming a consolidated trend and a driving factor for the spirits category.”
Six years ago, Bottega launched a Mediterranean-style gin that has proved popular with Italian consumers. “Gin Bacûr, produced in Italy using botanicals like juniper berries, sage and lemon zest, and pure water from the Alps, represents one of the most recent successes for Bottega,” he says. “The origin of the botanicals is certified: juniper berries from Tuscany, sage leaves from the Veneto countryside and lemons from Sicily. The distillate is contained in the original copper-coloured bottle.”
At Rossi d’Asiago, which produces Antica Sambuca, the Volare range of liqueurs for cocktails and botanical gin liqueur Kranebet, marketing manager Cinzia Tosato reveals that interest in botanicals has moved beyond gin and is also evident in the liqueur sector. “Besides premiumisation, one of the most interesting trends for us is the focus on botanicals in liqueurs,” she says. “Our company pays great attention to the sourcing of high-quality raw materials for our artisanal production process. We’re very proud of our traditional distillation method and believe that consumers can taste the … care we put into our products.”
Tosato feels that provenance plays an important role in consumers’ choice of spirits in Italy. “Consumer appeal based on heritage, trust and quality is as important as ever to the spirits market. For a company with more than 150 years of history, it was crucial to create a fruitful dialogue between tradition and innovation.”
Rossi d’Asiago has seen an uplift since the reopening of the on-premise. “All our brands are experiencing a very strong recovery and significant growth,” says Cinzia. “That said, the liqueur market continues to be very competitive and, in order to succeed, it’s vital to build trustful relationships with the trade and meet the real needs of the bartenders.”
Limoncello and bitters lead flavoured spirits’ growth
Bottega has a strong footprint in flavoured spirits — besides Gin Bacûr, its portfolio also includes grappa and a recently-expanded range of fruit and cream liqueurs. “In the liqueur category,” says Sandro Bottega, “our best-sellers are Limoncino and Pistachio Cream.”
The company has just launched a second citrus line — Limoncello di Sorrento Bottega. “Besides our limoncino from Sicilian lemons, we decided to offer a limoncello that has a strong identity with the Sorrento peninsula. In this way, we offer consumers two liqueurs with great personality: one originating from Sicilian lemons, the other from those of Sorrento.”
Bottega has also added three new variants to its cream liqueur range: Pannacotta, Cappuccino and Tiramisù, as well as Gianduia Fondente, a vegan dark chocolate-flavoured liqueur.
Luxardo, which celebrated its 200th anniversary in 2021, has also been busy with NPD — it recently extended its range with Maraschino Perla Dry special-edition liqueur and Antico, a vermouth-style aperitif made from fermented cherry juice. “We made only 2,000 bottles of the Maraschino Perla Dry and sold them almost immediately,” says Matteo Luxardo. “The product is a 50-year-old maraschino distillate with some new distillate; it isn’t a maraschino because it has less sugar and is bottled at 40% ABV.”
Flavoured spirits also represent a key category for Molinari, whose range includes liqueurs and sambuca. In the 12 months to the end of June, notes marketing director Anna Ballirano, consumption of liqueurs rose by more than 20% by volume and value (IRI data). Of the well-established sambuca sector, she says: “This year, the performances are positive, growing both in terms of volume and value.” The aniseed sector, which includes sambuca, is “quite stable”, she says, but has stopped growing as the after-dinner trend has moved more towards the Amaro herbal liqueur.
Pallini aims to capitalise on this trend with a new addition to its portfolio. “Pallini has acquired an amaro brand called Amaro Formidable,” says CEO Micaela Pallini, “a craft brand that has very good recognition among consumers and bartenders. The product is … completely handcrafted, from the infusion of botanicals to bottling.”
In the first six months of last year, Italy-based multinational Campari Group reported strong growth for its bitters portfolio of 39%, which was partly attributed to “renewed strength in the on-premise”. The country accounts for 19% of group sales and posted a 29.6% leap in H1, driven by “continued ‘revenge conviviality’ in the on-premise” and “boosted by very good weather”.
Sandro Bottega says it is still too early to evaluate the performance of his company’s newest spirits product, Bottega Bitter, which launched at the end of 2021. “Bottega Bitter was introduced mainly to offer a quality bitter to match with our Bottega Vermouth in preparing traditional cocktails, such as the Negroni and Americano”, he says.
DIY cocktails, RTDs, low-ABV and food-pairing trends dominate
As elsewhere, consumption trends in Italy have been affected by COVID-19 rules, says Molinari’s Ballirano. “The main trends in the spirits market reflect the influence that the pandemic has had on consumption modes,” she says. “Due to the restrictions imposed by lockdowns, many people have recreated outdoor moments at home, preparing homemade cocktails or buying products such as RTDs or RTSs for aperitif time. This trend has continued because cocktails at home is becoming a real consumption habit.”
Health and sustainability are also key trends. “In particular, consumers are interested in choosing a low-alcohol drink or a product made with organic raw materials,” explains Ballirano. “Linked to the healthy trend is a consumer focus on environmental sustainability, which has led many companies to offer products with reduced environmental impact, for example, with different types of recyclable packaging and the implementation of more sustainable production methods.”
Micaela Pallini also notes a growing consumer preference for healthier spirits-based drinks. “The spirits business in Italy in recent months has confirmed the trend towards the aperitivo moment,” she reveals. “Consumers look for simple drinks with a lower ABV and refreshing taste, hence the strong trend of the Spritz, which is now served with many different alcoholic bases, including limoncello.”
There have been other interesting changes to consumption habits as a result of the pandemic, notes Pallini. “Consumers now show less interest in complex drinks that require lengthy preparations and prefer lower-alcoholic cocktails as long drinks and spritzes,” she says. “Consumption has grown in the aperitivo moment when the younger crowd also enjoy food with their drinks. Many bars are now investing in creating food-pairing menus to go with cocktails and to be enjoyed in what we call ‘apericena’ (a mix between aperitivo and dinner in Italian).”
Sandro Bottega agrees that pairing cocktails with food has taken hold. “Food-pairing has helped cocktails to make their presence stronger, even in restaurants,” he points out.
Agave, liqueurs, amaro and gin categories set for future growth
Spirits volumes in Italy are forecast to grow at a CAGR of +2.6% until 2026, according to IWSR, based on 2021 data. Over the coming years, gin’s strong performance is set to continue, with IWSR forecasting CAGR growth of +7.6% until 2026. Vodka (+4.9% CAGR), agave-based spirits (+3%) and flavoured spirits (+2.9%) are also predicted to be among the fastest-growing categories in the near future, reinforcing current category trends.
Gin is still growing this year, says Matteo Luxardo, but “Tequila is rising and will be the biggest hit of 2022”. Sandro Bottega also expects the segment to stay strong, along with limoncino and cream liqueurs.
“The amaro category is also growing steadily, as are liqueurs, with aperitivi and bitters the most animated, since they’re used in many pre-dinner drinks,” concludes Micaela Pallini. She singles out gin and agave-based spirits as future highlights: “New Italian gin labels keep emerging and, in the agave segment, mezcal shows the most interesting growth.”
This article was initially published in the October issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
