It wasn't your usual press conference. OK, it did start with a diplomat regurgitating roughly the same speech he gave to a different group of people about two hours earlier, but from there it moved on to some very interesting people talking about Italian Wine.
I'm here in New York at the Vino2011 conference (no, not with James Suckling). Vino2011 is the third annual Italian Wine Week celebration that both celebrates and promotes Italian wine in the United States. Last year I moderated a panel, this year I've just been given a pass (and a plane flight and hotel room) so I can participate as an attendee.
Yesterday morning, Elin McCoy, the wine columnist for Bloomberg News and author of The Emperor of Wine, conducted a panel discussion on the future of Italian wine.
The assembled panelists were:
Jon A. Fredrickson, president of Gomberg, Fredrickson and Associates, a wine industry consulting firm.
Leonardo LoCascio, founder and CEO of Winebow, Inc., a leading importer of Italian wines.
Cristina Mariani-May, family proprietress of Castello Banfi and co-CEO of Banfi Vintners.
Tyler Colman, author and blogger at Drvino.Com.
Sergio Esposito, founder and owner of the Italian Wine Merchant retail store and restaurant.
Here are my notes. I try to write what people say verbatim, but I never quite get there. There are gaps, inconsistencies, and I try to summarize whenever possible to make my life easier, since I'm not a court stenographer. Errors, therefore, probably exist below, and I may not have typed (nor heard) what people said exactly, so please keep that in mind.
Elin McCoy -- Thanks to all of you out here on a very cold day. Honestly we all love Italy so that's why were here braving the cold. Is it the next best thing to being in Positano or Tuscany? Maybe not. But the wines are here! I want to start out saying that the theme of this press conference is future of Italian wine. We're going to look at it from five different perspectives here on this panel, the perspectives of a market researcher, an importer, a producer, a blogger, and a luxury wine retailer. Here's the way it's going to work: I'm going to introduce them, make a few remarks on the wine market and Italian wine market in particular. Then each panelist will speak for 5-10 minutes, and at the end we'll ask questions.
[she introduces the panelists]
Where is the market right now? The good news is that it's back. People are buying wine, and buying more wine. Unity Marketing recently released a report showing that the top 20% of wage earners increased spending on wine last year by 25%. This is a great statistic also duplicated elsewhere. The Financial Times reported earlier this month that wine outperformed all other asset classes with 32% annual growth.
How does Italian wine fit into this market? As the ambassador said, Italy has the number one market share in American imports. Of the top 25 imported wines, 11 are Italian. Italy is the largest table wine producing country in the world with more than 2500 different indigenous grapes and 20 official wine regions. In 2009 for the first time Italy overtook France to be the first country of origin for sparkling wine (thank you Prosecco!).
What are the issues? Just because we have stronger economic growth, that doesn't mean the boom is back. Many people have discovered for $25 they can get a wine that tastes as good as a $75 wine. What will that mean for luxury wines? We have a changing consumer base, the Millennials, which everyone likes to turn to as the hope for the future, but what will they be drinking? What will they care about? What varietals will excite them? Will Pinot Grigio, which seems to be growing with no end in sight, still be on top in 25 years? What will that landscape look like and how will it be received? I can only say that I'm looking forward to what my panelists predict.
Jon, I'd like to ask you, how might the current state of Italian wine in the United States lead you to predict a blue sky future?
Jon Frederickson - I can tell you that the future for Italian wines looks very strong in the US. Italian wine has been the leader for four decades and will be very strong moving forward.
You've got to look at things at the high level to understand trends. The US market has been growing slowly but steadily over the years. It's taken 40 years for per capita consumption to double to 9.6 liters per person per year. It's growing, still. It's slow, but continuing to gain. Italian wines became the largest selling import category of wines in 1974, and haven't stopped since then. Their popularity comes about because of diversity in all price segments and all different types. Italy offers value wines for consumers can't spend a lot and classic estates that are 9 centuries old.
In 2010, Italian wines grew more than any other import category. One of every 4 imported bottles sold last year was Italian. That represents a staggering 9% of the entire US wine market, which we estimate at roughly 331 million cases sold per year. Italian production techniques have changed in the last four decades. Italians have adapted, changing their laws and their production techniques to create far better quality over the years, creating a major advantage for the industry that will continue.
The US market outlook is strong. Prospects for growth in consumption are good. As mentioned, Millennials are drinking more than previous generations. Many are drinking wine instead of beer. Yet only 35% of Americans drink wine. There's a lot of opportunity in the remaining 65%.
There's a great expansion opportunity in middle America, where consumption is half of the coasts. This is a place for growth.
In 2011, I believe the US will be largest wine market in the world by volume. We have been on top in terms of dollars but this year I believe we will also be the biggest by volume. The biggest market in the world. We need future supply to deal with this growth, even when it is slow and steady. Italy produces about 18% of the wine in the world. There's limited planting going on in the US, and California in particularly.
All these factors come together to show that building this market, with a conference like this, bringing this whole basic industry down to make it easier for American consumers to understand the complex nature of a market with 20 denominations and many sub-factors, we will bring it all home.
Elin McCoy -- I'm going to ask our next panelist, Leonardo to speak. What are the kinds of wines that will be received best in the coming decade? Will Pinot Grigio continue to grow? What about Prosecco? What region's grapes will be the most popular and why?
Leonardo LoCascio -- Thanks for being here today. Before I get to the specifics, I want to focus on the fundamentals of the Italian wine business in the US. The fundamentals are strong no matter what perspective you're looking from. Italy continues to enjoy a unique position in the world. Because of its incredible diversity and in particular lots of diversity in the $25 and under category, there's no country in the world that comes close to the offering that Italy represents to the consumer.
Many countries are one varietal phenomenons. Argentina has Malbec, NZ with Sav Blanc, perhaps Australia with Shiraz. Nobody approaches Italy on a larger countrywide scale of diversity.
Combine with that Italian cuisine has and continues to have a unique position. Italian restaurants have been most popular places to eat in the US for every one of the last 50 years. No other wine producing country has such a food popularity. There's no such thing as Australian cuisine, if you know what I mean.
In Italy, wine and food are part of the same sentence, and there's no better way to make that statement with Italian restaurants. The Italian lifestyle also continues to be popular, France has great lifestyle, but is not as simpatico to Americans as Italian. Italy continues to be the prime destination for American overseas vacations, and I could go on.
In short the fundamentals are strong.
Jon mentions the consumption rate of 9.6 liters per capita - that's about 13 bottles per person, per year. Unlike western Europe, we have more population growth, with 5 to 6 million consumers joining population every year. With that growth, you're looking at demand for 300 million bottles of growth each year. Strong fundamentals.
But to your specific questions, Elin, let me start with Italian sparkling wine. I don't think we have an italian sparkling wine story. We have a Prosecco story. Sparkling wines from regions other than Prosecco don't do well, They are priced same league as Champagne. When people want to give a bottle for a special occasion, they want to go safe, they want to go to Champagne. The Prosecco phenomenon, though, is here to stay. People like to say they drink dry, but they like softer wines. I believe in Prosecco. It has the advantage also of being a relative simple appellation. It still remains fairly simple to explain. People like that and relate to that.
Let's turn to white wine. Elin you mentioned Pinot Grigio specifically. If you enlarge that to include unoaked wines with good acidity that are food friendly whites, Italy has no equal. Vermentino, Fiano de Avellino, Greco di Tufo, Trebbiano. Verdicchio. These wines are all doing much better in the marketplace. As far as Pinot Grigio is concerned I think we're going to see increasing sales. We don't see any let up in demand, and we think it is a phenomenon here to stay.
In terms of regions that are up and coming: they're already here. I'm a big believer in the wines of southern Italy. There's incredible diversity there in both white and red grapes at very attractive price points. Other regions that will do well are those regions that makes wines that are easy to understand. The Veneto is a perfect example. People get that Amarone comes from dried grapes. They can explain Ripasso. When people can identify wine and recognize that they like it, they buy. Veneto is in a unique position to do that.
Elin McCoy - Cristina, how is italian wine changing? How are production methods changing and what is the importance of environmental sensibility. Talk about what Banfi is doing and if it is of concern to others.
Cristina Mariani-May - I suppose it's a little funny that I have an American accent and I'm here representing the Italian winery. My role is to focus on Italian production. It's easy for me to look to the future, but let's look to the past first. This all happened so quickly. 30 years ago, Italians were drinking only their own wine within their regions. In the 70s there was a Renaissance of wine drinking and wine making. Leading consorzios drove innovation and change. A lot of the Italians started having love affairs with wines from outside their regions. We even imported wines from around the world. In short you had this new generation of drinkers realizing what is out there for them to try. As this love affair ended, and people came back home to the nest, so to speak, and there was a greater demand for higher quality wines. Those new consumers saw the global world around them, and drove the kind of innovation we saw in the 70s with Super Tuscans, and the Chianti Consorzio
We started focusing on the indigenous grapes, narrowing 650 clones of sangiovese down to 150 that we registered. The standards are being raised so high. Some producers that are larger that can experiment, as well as the Consorzios -- those who can invest in research -- are seeing what the global market is doing, seeing what quality is and where the sweet spot is for wine, in the $25 zone.
You're also hearing about organic and natural. It's expensive and challenging to be certified organic in Italy. But if producers are not doing biodynamic and organic, many are still using most natural processes. You're seeing that throughout the region. If you're not more pure and natural you're seeing difficulty selling your wine these days to the modern consumer.
The more natural you are the better, and then plus what Italy has to give to the soul, the more the wines will be sold around the world. Years ago we used to sell wines from Tuscany throughout the regions of Italy. Once again we are seeing more regionalization. We're seeing a fallback to the retro wines, like we're seeing a fallback to retro in fashion. The wines that were popular 30 years ago are now gaining prominence: Lambruscos, Soaves, Amarones, Frascati. What was old is new again. New, but in a better style or a purer style.
Really what we're seeing as well is a global wine market out there, and younger producers are paying attention to it. I'm fortunate enough to travel over the world and was just in Moscow where I got to see the love affair with all things Italian. People see Italian brands as both high end but also as something they can achieve and reach. We'll see the global perspective influence the italian winemakers. We need to continue to educate. If consumers can't understand all these wonderful indigenous varieties, they will have a hard time grasping Italian wine. It's outside their comfort zone. We need to bring people to come in and learn, and then the uniqueness of Italian wine can shine.
Elin McCoy - It's amazing to see the interest in indigenous varietals. It's going to be a huge growth area as it is already. My question for Tyler -- as a leading wine blogger -- is how important will internet and social media be in impacting style, price, etc.
Tyler Colman -- I have an exciting short story to tell you in my 5 minutes. As a wine writer, blogger, and book author, I feel we as journalists having a difficult time now given how many people have blogs and twitter accounts and Facebook pages. The print industry is at a crossroads. It's not news to anyone that over the past few years advertising revenues have plummeted, the print world is seeing mass layoffs, buyouts, and lots of newspapers have closed up shop entirely. It's a difficult time. Gourmet has ceased print publication. We're at a crossroads. In short, journalists can't offer much in the way of advice to anyone, we're still grasping at our own business model.
Having said that it's a bull market for free content. Give it away and people will come and read your stuff. If you look at wine journalism. we've had a dominant model in the past three decades relying on a limited number of voices speaking with great authority, to a certain extent speaking down to the reader, handing points down like manna from heaven for wines that fit a certain profile. This model is running out of gas, and we're seeing a lot of change right now. A lot of opportunities exist now for consumers to get information elsewhere, and producers that have historically produced wines outside this model are gaining traction.
Wine in America is shifting, as baby boomers came of age in the 70s we saw uptake in consumption, and consumption has ben steadily rising.
Young people are part of that growth. This is the very exciting part of the story. GenX, Millennials. These young people are really into wine. When I give classes to these folks at NYU, they are oversubscribed every time. People are thirsty for wine knowledge. It's drink of choice after the Sex and the City cosmopolitan lost its cachet.
How do these younger consumers get their wine recommendations? It's not from magazines and newsletters as a whole, but from shops, from sommeliers,but increasingly it's also from friends. Friends are a huge source of wine recommendations for consumers. And these are equally real life friends or online friends. The internet is a huge component of younger drinkers and core drinkers wine information sources. 60% of core drinkers are actively involved in researching and talking about wine online.
John Gillespie has just released a new study claiming that there are four million of these core wine consumers on twitter alone. Four million.
The hallmarks of the future of how we will talk about wine in the future is about discussion. Instead of top down, the new era is going to be more lateral. Consumers who are more confident, who try lots of wines, will want to talk with each other. Folks like the recent wine critic who started making videos showing himself proclaiming "I'm 93 points on that" are already subject to much derision. Today authority has to be worn more lightly in the past.
People are always asking who is going to be the next Robert Parker. He was sui generis. He came along at a certain time. He did a terrific job connecting thousands even millions of consumers with wines they enjoy. Wine consumers and industry owe him a huge debt.
But he won't be replaced. There will not be another single voice. Instead there will be more voices. They will be harder to follow, and more people will be engaged. For Italian wines with so much diversity, this can be celebrated. If you want to make a wine that doesn't conform to traditional expectations, there will be more voices out there in the future that will enjoy different styles of wine, it's an exciting time.
I will just flag two barriers. One is education. Because of the diversity of Italian wine there will need to be more education -- consumers will need to learn. The best way to learn is taste and talk. Unfortunately in this country, the retail channel is blocked, it's fair to say. We don't have a high degree of interstate shipping. As discussions about wine increasingly move online, consumers are going to want to transact there too. One thing that would be of a great benefit to Italian wine would be any help that could be lent to opening the channels for online wine purchasing. If you want to grow the market, get more people the ability to buy wine how and where they want to.
Elin McCoy -- Sergio is going to talk about the luxury segment. What will be the luxury Italian wines of the future, and what will be the market for those wines?
Sergio Esposito -- we spoke here today about so much change happening. To me the most amazing change since 2008 and the last couple years, is that Elin has invited me to speak on luxury. I saw a headline in 2009 that "luxury is the new ugly."
In 1997 I walked around a New York with a plan in my hands to build an Italian-only wine store that would cater only to collectors and sell only at the highest price points and I was laughed out of so many offices. People said "there aren't that many good Italian wines." "The collectors will block what you're doing. They want blue chip French." I guess it was the little Neapolitan kid in me that just kept swinging.
Now I've been walking around town for two years with an idea for a wine investment fund for only Italian wines. I've had a slightly better reception. People are now looking at wine as an asset, and perhaps, for the first time at Italian wines as an asset.
When we speak about Italian wines, we root for italy, and we root for the South, and we root for the inexpensive. That's what we champion. Italy will always hold that market. The way we Italians eat and drink every day is about fairly priced and honest wine that will please you.
We don't need to be afraid of the luxury. 49% of Italian wines sold in bulk, 35% is sold in supermarkets. The rest are the ones we here in this room consume. There is a tremendous amount of wine at fair price points.
In the US we have a real vested interest in what is going on in Italy. There are 25 million millionaires in the world, and 41% of them are in the US. We have such a high concentration of wealthy folks who are always looking for luxury products. Exclusivity is important. And price points often determine this.
Did you know that there are no numbers in the industry that recognize what Italian luxury wine is? The industry statistics say that luxury wine in Italy is anything over $15 is a luxury wine. That's not what Italian luxury is all about.
That last 2% of the wine production in Italy is truly world class. If we point to that and recognize that and put numbers and measures behind those wines, we can cater to that investment segment of the market.
I'm excited to start this bottled asset fund, but the industry is in its infancy. How much? Take a look at the LIV-EX wine investment index. Of the first top 50 wines in LIVE-EX industry, zero are from Italy. In the first 100 wines only two come from Italy, in the top 500, only 30 are from Italy. That's only 4.9% of the world's top wines.
OK, you say, but those wines are made in small quantities, right?
Burgundy makes less wine than Italy, and it represents 16.9% on the LIV-EX. An adjustment can and must be made. We cannot keep Italian wines pegged as those that should be consumed immediately.
Granted, it's an immediate market. The market is for immediate sales and immediate consumption. This has given us our gains in large volumes. As journalists, retailers, imports, restaurants, you want the next greatest thing. And of course when inventory comes in it needs to get out ASAP.
In the last two years we've learned that the luxury market is all about hard assets. About depleting assets. We have the luxury that the great Italian producers make only a small quantity, that is very controllable. Unlike some other wine region's top producers,we don't depend on new markets or emerging markets for the growth of these assets. Large producing countries are saying "how do we enter these new markets" but Italian producers don't have to do this. There's still so much demand. In the foreseeable future the US will continue to be the largest luxury Italian market in the world.
But we have a ways to go before we see the kind of auction market for Italian wine that we see for others. To make this happen, we need the right measures, we need to stress the importance of keeping a case of wine together. We need to treat the wine correctly. We need consistent use of refrigerated shipping containers. We need transparency and measures. Anyone know the sale price of a case of 1985 Sassicaia? 95? No. Even the highest end wines are sold bottle by bottle, opportunistically. There's nothing concrete to use for building a market with measures like those from the auction houses for France.
Above all, though, keep enjoying Italian wine with people that understand and appreciate it. Otherwise give them plonk.
Q: Tyler, after your Robert Parker piece last year, do you think it's changed any of the ethics under wine writers? Has anything changed with your friend Mr Parker?
Tyler Colman -- After the events of last year, he made policy changes at the Wine Advocate. He applied his standards to his contributors. As far as the larger question, ethics will remain an important topic in this new era. There are more voices and some of these voices are producers and importers, and PR folks as well. Independence will be an important topic going forward. I don't know that it's a bull market for journalistic independence, necessarily.. I think the best model is independence and I'm hopeful that this will remain the case.
Q: Are italian wine laws evolving towards EU regulations as quickly as France's seem to be?
Cristina Mariani-May -- I'm confused by the Italian wine laws. [editor's note: I did not get the rest of Cristina's response to this question into my notes]
Leonardo LoCascio -- One thing I can tell you from being involved with the marketplace, most of the regulations today are totally irrelevant to the American consumer. People frankly don't care. Pinot Grigio proves this. The idea of whether a wine is DOC is totally meaningless in people's buying decisions. The whole thing needs to be simplified. There are 280 appellations. That's insane.
Elin McCoy -- I'd like to reiterate that when I've done seminars with consumers, its clear to me these designations are meaningless to consumers.
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