Is the Prosecco bubble about to burst?
Hindsight is a wonderful thing. At the moment it’s difficult to predict whether the current Prosecco boom will turn out to be one of the great success stories to have come out of the recession, or whether the bubble will spectacularly burst, leaving consumers feeling flat and producers picking up the pieces.
Certainly, the current rate of growth that Italian sparkling wine is enjoying not only in the UK but globally will be hard to sustain for much longer, so changes are surely afoot. Last year, Prosecco sales in the UK were up 75% year-on-year and overtook Champagne for the first time as Brits splashed out an estimated £1 billion on the stuff in the on- and off-trade.
Sales of the fizz are currently up by around 40% in supermarkets, with Tesco, Sainsbury’s, Waitrose and M&S all reporting strong growth as consumers sought out Prosecco over Champagne or Cava with which to toast the arrival of 2015. It’s a similarly rosy picture in the on-trade, where year-on-year sales are up by 32% due to Prosecco’s image as an affordable luxury that suits all occasions.
While the boom continues to gather speed, Mark Atkins of Nielsen predicts continued growth this year. “The most logical view is to assume a continuation of this popular trend. Growth is being sourced from other categories including spirits and is likely to continue, with prices remaining very attractive for the shopper,” he says.
Though, while more bottles of Prosecco are being sold in the UK than ever before, the average sale price of the liquid has fallen by 40p due to the emergence of sub-£6 Prosecco at discount retailers Aldi and Lidl, which is harming the sparkler’s image as a quality product. The former is selling its Belletti Prosecco Spumante DOC for £5.29, while the latter flogs Allini Prosecco Spumante for 10p more at £5.39.
Both of these prices have been undercut by Asda, which is selling its own-label Prosecco Spumante Extra Dry for £5. “A lot of growers don’t understand how low the retail price of Prosecco is in the UK – if they knew they would be shocked,” believes Nick Bielak, director of London-based Italian specialist agent Vinexus.
“Discount retailers are making decisions that affect hundreds of small producers and are unravelling the hard work they’ve put into building the Prosecco brand,” he adds. Cristian Maddalena, export manager for Andreola, is concerned that the low cost puts Prosecco in danger of becoming a commodity.
Unusually for Prosecco, the family-run Andreola owns 90% of its vines and the majority of its production is DOCG Prosecco. “It’s not a good situation,” he says. “In the same way that alcopops have damaged the image of some spirits, Prosecco is in danger of being associated with the cheap end of the market rather than representing an area of origin.”
Race to the bottom
Last year’s modest crop and a rise in bulk wine prices are likely to stamp out sub £6 Prosecco. While it may not sound like much on paper, the rising cost of bulk Prosecco from €1.10 per litre in 2014 to €1.40 per litre this year will have a dramatic effect on pricing at the lower end of the market. Paolo Lasagni, managing director of Bosco Viticultori, believes £5 Prosecco will soon be a thing of the past.
“The cheapest you will see Prosecco in the UK this year is £6.49 on offer if the supermarkets are to still make some margin,” he says, highlighting that it will be the grape growers rather than the producers or retailers who will benefit from the price rises.
And while it’s important that Prosecco’s image isn’t tarnished by cut-priced offerings, the sparkler is in danger of losing market share to Cava and crémant if its average price edges towards the £8 mark.
“We have this fantastic commercial toy but we have to keep the price consistent otherwise the success won’t last,” Lasagni warns, predicting that the entire 2014 crop will have sold out by the middle of the year if current global consumption rates continue.
Despite concerns surrounding the sale of sub-£6 Prosecco in the UK, the sweet spot for supermarkets is within the £6-8 bracket, with 70% of the Prosecco sold at multiples in the last year falling within this price point and only 5% of sales coming in at £8+.
Prosecco ticks all the boxes with consumers: it’s light, fresh, lower in alcohol, slightly sweet, and has an appealing price point, meaning guilt-free cork popping from living room to bar. The recession brought about a change of mindset, meaning a certain kudos is now attached to bargain hunting. It’s no longer shameful to admit that you shop in TK Maxx and buy Parmesan in bulk from shops like Aldi.
An Affordable Luxury
In the same way, consumers are now proud about taking Prosecco to a dinner party rather than surrepticiously hiding it behind the Champagne. Over the last few years, the strength of “brand Prosecco” has solidified to the point where it now seems bulletproof. “People like Prosecco’s simple, fruity, refreshing style, which appeals to mums, dads and grannies.” believes Vinexus’ Bielak.
“Consumers have bought into the Prosecco brand in a big way.” Giuseppe Di Gioia, Zonin’s export sales director, is equally enthusiastic: “Producers have created a revolution in the sparkling wine category. Luxury is prohibitive for most consumers, but Prosecco is an affordable luxury. It is no longer seen as a cheap alternative to Champagne and has carved a niche as a delicate, stylish sparkling wine,” he says.
It’s important to understand the different levels of quality within the wider Prosecco region. In 2009, the Conegliano-Valdobbiadene region north of Treviso where grapes are hand-harvested from steep, south-facing hillside slopes, was elevated to DOCG status, while the DOC name was extended to the wider Veneto and Friuli Venezia Giulia regions, marking a crossroads for quality.
At the same time, Glera became the official name for the grape variety used in Prosecco production and the practice of selling Prosecco on tap was banned. Produced as either a fully sparkling (spumante) or lightly sparkling (frizzante) wine, Prosecco is increasingly being made in a brut style with up to 15g/l of residual sugar, with “dry” Proseccos confusingly containing 20-35g/l of sugar and demi-sec 35-50g/l.
In a bid to counterbalance the sub-£6 examples flooding the UK market, family-owned producers such as Bisol and Nino Franco are keen to promote high-end Prosecco. The latter makes 3,000 cases of each of its two single-vineyard examples that undergo extended lees contact for up to six months.
“It’s time to educate consumers about single-vineyard Prosecco,” says owner Nino Franco. “Now consumers are interested in the category, we need to get them to venture deeper inside it and trade up.” His daughter Silvia believes this will be achieved through education and getting consumers to taste the difference in quality.
“People need to understand the difference in quality between DOC and DOCG Prosecco,” she says. “At the end of the day, you can’t buy a Lamborghini for the price of a Fiat 500.
Bisol, meanwhile, has a number of single-vineyard sparklers, including one from Cartizze, a 106-hectare “grand cru” seen as the jewel in Prosecco’s crown.
“Consumers are always on the lookout for high quality products and sales of our top Proseccos are on the rise as consumers learn to accept that in order to get a significantly higher quality product they have to pay a slightly higher price,” says Bisol’s president, Gianluca Bisol, adding, “It’s fundamental that we make sure consumers know the difference between a DOC Prosecco from the flat plains and Valdobbiadene Prosecco DOCG from the Alpine foothills.”
While the pursuit of quality on the part of small, family-owned estates is admirable, not everyone is convinced that the single vineyard approach is the right move for the region.
“Cartizze Prosecco has built up a strong brand image in Italy over the last decade, but the wines are high in residual sugar, which doesn’t suit the British palate,” believes Bielak of Vinexus, adding, “Prosecco producers have no desire to ape Champagne. They’ve experimented with traditional method Proseccos but have realised what they’re good at and are sticking to what they know best. The important thing now is to protect what they’ve got and build on it.”
An interest in DOCG Prosecco is on the rise in UK restaurants, with Liberty’s managing director David Gleave MW reporting “greater demand” for the region’s top drops as consumers seek to trade up.
Giancarlo Vettorello, director of the Prosecco DOCG Consortium, believes consumers are starting to latch on to Prosecco’s food matching capabilities. “UK consumers are becoming increasingly oriented towards DOCG Prosecco and are learning to appreciate it as an excellent accompaniment for food,” he says.
Meanwhile, Bruno Cernecca of Italian specialist merchant Vini Italiani in South Kensington is confident of Prosecco’s future in the UK as consumer palates become more sophisticated. “People came to Prosecco as an easygoing drink but are starting to trade up – a lot of people are happy to pay over £10 for a bottle of Prosecco,” he says.
“UK consumers are very discerning now – we’ve come a long way in the last few years and people are seeking out boutique Proseccos, some specifically to pair with food.” Britain’s love affair with Prosecco has intensified over the last year. The big battle now is to rid the supermarkets of sub-£6 Prosecco before it does further damage to the northern Italian sparkler’s carefully crafted brand image.