This article was initially published in the March issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
While prosecco’s global exports have held firm, fierce competition is coming from other sparkling wine categories. This, alongside economic headwinds, is bringing a note of caution.
Search ‘prosecco’ on Instagram and you’ll notice two things: firstly, a sea of pink. Rosé prosecco has cut through to the masses and become a wildly popular serve. Curated images point to elevated drinking experiences, sleek lifestyles proudly splashed across screens for likes and shares. Then, there’s the ‘Two-for-one fizz Fridays!’ and ‘Free Prosecco for Valentine’s Day!’ messaging.
The cost of living crisis is undeniably affecting consumer spend, and as such, discounting is rife. Prosecco is seeing a polarisation like never before. Yet recent data suggest all is well. Figures from IWSR Drinks Market Analysis show global volumes climbed 14.6% in 2021, an impressive rebound from Covid-suppressed 2020.
The segment's home market of Italy accounts for just over a quarter of volumes (28.8%), with the UK (19.1%), the US (16.5%) and Germany (7.5%) the biggest export destinations. France is the fastest-growing of the major markets, with 2021'a volumes soaring 33.7% year on year.
But, a lot can happen in a short space of time. Look to Google Trends: Since January 2022, global searches for ‘cava’ have tracked higher than 'prosecco', with ‘crémant’ and ‘Asti’ growing too. It’s an early indicator that consumers are starting to look elsewhere.
“The most recent production figures published show a record 627m bottles of prosecco were produced in 2021,” says Amathus head of wine Jeremy Lithgow MW. His company has seen 25% growth year on year, but Lithgow believes that more consistent trading conditions are contributing to the success.
“Challenges have included increased pricing pressure due to a small 2021 vintage and also increased production costs, due to rising energy bills and the cost of glass," Lithgow adds. Many of these headwinds are also being felt by consumers. “While sales of prosecco have been buoyant, there is more price sensitivity than ever before at the entry level.”
The on-premise especially is looking at alternatives, according to Lithgow. There’s been an over-performance of Frizzante, for example, with its duty saving. Wines produced in a prosecco style but with fruit from outside the region, or made with large proportions of grape varieties other than Glera, are also proving popular. While 2022 is a more abundant vintage, “early signs suggest 2023 pricing will remain similar or rise just above 2022,” Lithgow predicts.
That's going to be tricky to weather when consumer spend is suppressed.
Challenge of rising costs
Bottega’s president, Sandro Bottega, also strikes a more tentative tone. While he thinks the category will “most likely” continue to grow in 2023, he’s unsure that the momentum built in 2022 will continue. “Rising energy costs is the main challenge to face,” he reckons. “With regard to raw materials, including glass for bottles, all producers are concerned not only about the increase in costs, but also about the difficulty of supplying.”
That consumer whims are so hard to predict is a challenge in itself for Sandra Janetzki, senior VP at Freixenet Global Export. But, she advises more nuanced growth expectations. “Depending on the economic environment in the markets, the development might be slightly less dynamic in some well-established markets,” she explains. “Anyhow, the prosecco category has just started its growth in multiple emerging markets, and will continue to be the growth driver of the sparkling development globally.”
Let’s not forget global travel retail, where wine often under-indexes in terms of shelf space. “In my opinion," says Flavio Geretto, commercial director at Villa Sandi, "there will be new opportunities in travel retail, in Asia and Africa. After Covid, people like to travel again.”
Meaningful premiumisation
With an early whisper of challenges ahead, prosecco brand owners are continuing to pursue proven growth strategies; rosé variants, sustainability messaging and premiumisation. And, despite the potential crunch in disposable income, it appears consumers are still willing to trade up.
“Premiumisation is one trend that we observe in the category globally,” Janetzki confirms. “Consumers are willing to spend more than they have in the past and are up-trading across various sparkling categories, including prosecco.”
There’s an education piece to be done here. A prime opportunity for brands is to shout about different labelling terms and quality levels. “It's important to continuously increase the awareness of the different quality levels and the characteristics between DOC and DOCG, for example,” Janetzki points out. Indeed, how many of those posting their snaps on Instagram actually know what type of prosecco they're drinking?
Increasing consumer understanding will also help when it comes to differentiation, which is essential when competition comes from other sparkling wine categories. Bottega’s Sandro shares some impressive statistics: “Our prosecco has a shelf life of over five years,” he says. “The selection of specific vineyards and lands means that our grapes have a cultivation cost higher than Champagne.”
Do consumers know this when they’re shopping and looking to trade up? Perhaps not - and this is an area where premium producers can bolster their own brand perceptions.
For the love of rosé
With social media now a significant driver of drinking trends (Negroni Sbagliato, anyone?) brands and marketers should ignore these platforms at their peril. Instagram posts tagged ‘#prosecco’ number 4.3m, (‘#cava’ garners 1.3m, ‘#asti’ just under 600,000), and a quick glance at the ‘top’ results shows that a significant proportion are rosé varieties.
Whether it’s because the colour pops more, or simply because it’s considered to be more desirable right now, consumers are showing off their pink fizzes. It’s not a new trend by any means - but it's an enduring one.
Elena Branda, from Perlino’s marketing department, sees the variant as a key part of prosecco’s “exponential” growth. “What could happen is the reinterpretation of prosecco rosé, in a ‘simpler’ key, to facilitate its consumption,” she says.
Why over-complicate it when it’s already proving so popular? Janetzki agrees, and sees the momentum as being critical to tap into. “The ongoing rosé trend - and extension of the prosecco category to prosecco rosé - offers additional growth potential in well-established and new prosecco markets,” she says. Across the board, rosé has the potential to ignite interest - even now.
Eco credentials
While every drinks category is cleaning up its act, prosecco producers are positioning themselves as bastions of sustainability. “The Bottega brand evokes the value of the company, which has always dedicated attention and resources to environmental and social sustainability issues,” Sandro states. Perlino’s Branda talks about a concerted move to organic and more ecologically-friendly grape production. “The consumer is becoming more attentive to these kinds of products,” she asserts. “Linked to this concept, Perlino offers Prosecco DOC BIO in its assortment.” Made from Glera with organic certification, the brand extension also uses bio yeasts. Villa Sandi’s Geretto, meanwhile, cites his company’s sustainability efforts as “the cherry on the cake” when it comes to consumer messaging.
Activity is clearly increasing in this area. But producers need to be sure they can back up their green claims with hard evidence - consumers are savvier than ever and greenwashing is not a good look.
The Italian lifestyle
What is working for Villa Sandi is tapping into lifestyle partnerships: especially high-end bars and sports sponsorship. Driving the lifestyle element “at events like Snow Polo World Cup in St Moritz, where we are one of the main sponsors and the only prosecco winery, elevates the brand and invites in a new audience”, says Geretto. The company’s La Gioiosa brand is “more democratic”, and aligned with MotoGP and Italy’s Serie A football league.
Ultimately, it’s the collective effort of prosecco brands to showcase authentic Italy that's cutting through to consumers. Inviting people in to experience “the lightness, the easy-drinking style and the spontaneous Italian lifestyle” - Janetzki’s words - is what’s sustaining growth.
Of course, consumers could opt for other sparkling wines, and early indications show that some do. But by going back to its roots, upping education efforts, pushing sustainability and driving social media engagement, prosecco can hold mindshare (and the all-important share of wallet).
“We offer dynamism while holding firmly to the branches of tradition,” says Perlino’s Branda. It’s a rocky path to tread - but prosecco is still managing to do it.
This article was initially published in the March issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
