Milan-listed producer and wholesaler Italian Wine Brands owns more than 70 wine brands, with 80% of sales coming from exports. It manages five cellar and bottling facilities across the country, plus a wholesale department in Trentino.

The group has engaged in several M&A moves in recent years, from its $180m deal for the Enoitalia winery in 2021 to its acquisition of the Barbanera and Fossalto wine companies in 2022.

Just Drinks sat down at London Wine Fair with Alessandro Vella, general manager of the group’s B2B division IWB Italia, which manages its production sites and wholesales channel, to discuss the outlook for Italian and global wine consumption, tariffs and the company’s ambition to become an international “market leader” for Italian wine.

Fiona Holland (FH): Data released in May by the Unione Italiana Vini (UIV) called out a decline in consumption of Italian wine. What are your thoughts on this?

Alessandro Vella (AV): First of all, yes, it’s true there are some markets, not all markets, where the consumption is declining. But it’s also true Italian wines are performing better than the benchmark and especially boosted by sparkling wine and Prosecco. We are the second-largest producer of Prosecco in Italy. For us, it is a less painful [decline in] consumption.

Second, we are in 95 different markets, plus [our] domestic market Italy and we are present in all the channels: travel retail, supermarkets, on-premise/off-premise, independent stores, supermarket, horeca all over the world.

Even if we are quite big – we are the third-biggest company in Italy – we are very flexible… and this helps us a lot in order to balance the transaction. We sub-divided our portfolios, it’s like a pyramid, so we are able to offer different price positioning in different channels.

It’s important to be able to understand what is happening, we act very fast, and we are able to do this also because we have a very huge structure in terms of production: seven different lines in three different locations in Italy. We are able to produce many different SKUs.

We also have to be competitive. Innovation, value for money – this what people and consumers are looking [for]. That’s why we are not decreasing our sales. Actually, we are a little bit up… last year, in terms of volume and turnover. The first quarter is okay for us.

There are a lot of [challenges]: tariffs in the US, Generation Z… also the capacity of spending in Europe and in the United States. A lot of threats but, also in in this situation, there are opportunities for company like us that have this strength and this kind of organisation that we have. Why? Because we don’t just export our products. Our philosophy is of an internationalisation. We have our subsidiary in the United States, our subsidiary in Switzerland, our commercial office here in UK, one commercial office in China, one in New Zealand and one in Brazil. It’s not only exportation… this job is an internationalisation. That is very different. You react faster and you move faster.

FH: Where are the main markets for Italian Wine Brands?

AV: Main market is UK, then we are very strong in Italy. Let’s say, Italy number two, Germany, United States, Switzerland is another [important market] so those are the five big markets. Eastern Europe is growing very fast. We are growing in China, Japan, South-East Asia. We are present already in Africa. We are strong in Brazil and other Caribbean and southern Latin American markets. Canada is another important market for us.

We are present in big markets but also in what we call the future or prospective future markets. Nigeria, Ivory Coast, Ghana, Mozambique, South Africa. Those new markets are very strong. Also the CIS [Commonwealth of Independent States], Kazakhstan, they are all very interesting for us. The Baltic area, Dubai is quite good also because it’s a harbour for the travel retail… We started only a few years ago in the travel retail market but we are growing double digit every year.

FH: Where in your current markets are you looking to grow your presence? Are you looking to enter any new markets?

AV: [In] Eastern Europe, it’s not really a new market but Poland is doing a great job again in double digits, Bulgaria, Romania, two very interesting markets, Czech Republic and Slovakia.

Now we are also dedicated to small markets, but [it is] quite interesting because of tourism. You have a very positive [result] when people go back home. Cyprus, Malta, Greece Turkey… those markets are small but very interesting because it gives you visibility. People go back to Holland, to Belgium, to Italy, to UK etc., they bring the memory of our Prosecco, of our pinot grigio, that they bring from there, that’s also very important. Many times we underestimate the potential of touristic spots, but actually they are very important, especially in this world that is more and more connected.

FH: You mentioned Gen Z earlier. How is Italian Wine Brands approaching this generation?

AV: First of all, we need to change how to communicate the wine. Keep it simple, easier. Try to make wine consumption [tied to] consumption occasions but also speaking with a different language.

These people are not very interested in how many kilos per plant, which canopy management [is used], how long in barrels etc. We need to change to focus the attention on the benefits you have drinking a good glass of wine: quality, sustainability, [a] clear message, [socialising] with friends, lower in alcohol, lower sugar.

Instead of 13/14% abv, have a wine 9.5/10% in alcohol, less sugar. [Finding new] consumption occasions, aperitivo, food pairings with what these people eat, like poke or sushi. It’s a different lifestyle, so different communications, different wines, plus all the innovation like zero-alcohol. So, low-and-no, we are starting to launch in many countries our line of zero-alcohol. Also, we are launching a new line of aperitivi, ready-to-drink, ready-to-serve etc.

Our pillars are value, in everything we do. I mean value in terms of product, in terms of service, in terms of marketing, communication, the internationalisation… Innovation is extremely important, to be able to understand the micro trends today that will become macro trends in the future. For a company like us, we are always open to new, mergers and acquisitions, because we are [listed on] the stock exchange in Milan, so we are not looking for now, but we keep our eyes open.

FH: There’s a growing opportunity in low-and-no alcohol wine. Is the business looking to grow in that area?

AV: At the moment, a lot of curiosity, a lot of investment… For sure, now it’s really scaling. Everybody wants … a portfolio of no-alcohol wine.

I don’t know. I mean, there are some forecasts that say in the future it will be [worth] $5bn or $6bn. The total market for wine is $215/220bn, so $5bn is still a niche. We are doing a sparkling zero, a still white wine and a red.

FH: How do you expect US tariffs to affect the business?

AV: For sure, the tariffs have a psychological impact, especially from the importer and distributor side. Because immediately, when President Trump announced the [threat of] 200%, everybody was in panic, so they stopped the container in the port or in our warehouse.

Then after a few days, a few weeks, the announcement of 10%, [which] changed completely the situation. With the 10% we can start with to negotiate with the distributor and say ‘Okay, what are we going to do?’

On the more price-sensitive wine, we cannot give [them] the 10%, maybe nothing, maybe 2-4% or 5%, so it’s a matter of negotiation… Of course, if you are $12.99 on the shelf, 10% brings your wine to $14.99, because 10% here means much more on the shelf, also the three-tier system in the United States. We need to be very, very careful with this one.

Of course, wine that already cost a $50 suggested retail price in the US, [the tariffs] are less effective.

We agreed with our importer, with our distribution system in US, what we need to do in order to keep the business. The first thing is always stay close and help your client, your distributor, your importer. There is an impact in terms of profitability but when you have a long story, a long-term partnership, what is more important [is] to keep this partnership more than a few dollars less in terms of profitability. There is an impact on the margin [of] profitability, but [it is] important the relation you have.

Second, it is also true that, if people, after six months, one year, two years of a higher price, get used to the new level of prices and when the tariffs will finish, maybe you can get back that profitability we are losing now because you have a higher price.

Eventually in the medium to long-term, the market will equilibrate by itself. I’m not so worried about the tariffs. Maybe it’s more important that the US economy [and] European economy will recover better and faster.

We want to become [a] leader in the US and in Italy, such as we are in the UK [and] in many other markets…The value of production of Italian wine is €15bn: €8bn is export and another €7bn is the domestic market.

This is our long-term ambition and, of course, to consolidate and organically grow in all the other markets.

FH: You mentioned that Italian Wine Brands operates in private label. Is this a small portion of the business?

AV: No, it’s an important portion of our business. In Italy and all over the world, the private-label [products] are increasing. In terms of value, our brands are more important but, again, because we are flexible and also because these are the [demands] of the importers and distributors… so they have a portfolio with their own brands with wine from all over the world.

Sometimes these are requests from our importers and distributors and we are flexible to do that. It is also good for us because we give a private-label [product] and then we introduce also our brand to another channel that they cover. It’s always important to also be able to give a 360 [degree] service to your partner.

FH: Do you offer private label in all your markets?

AV: It depends on the size of the market (in volume and value), the trend of the market, the partners that we have.

Of course, our target in all the markets is to be the market leader in Italian wine, so to have 10% market share… Some markets it could be 5%, some markets 12% etc., but our target is to be the leader of Italian.

FH: In which countries is private label most important or relevant for the business?

AV: In the UK, in Italy it is quite important. Holland. The US is growing, but… our brand is much more important [there].

FH: Overall, how do you see the wine market take shape in the next few years?

AV: [Wine] has been here for more than a thousand years. I believe there will be innovation, maybe consumption will decrease and then can increase again, probably when this new generation will reach 30 years old, depending on the economy.

My grandfather used to drink more wine than I or my father drank. Maybe in the future there will be a [switch], and the new generation will see wine not anymore like a special beverage but again like something that is part of our diet, like in the past.

Again, there are many, many markets… Probably we need to understand [consumers want] value for money. Maybe it’s not time anymore for the ultra-premium, “super plus” wine.

In the next five years for sure you will see white wine [more]. That’s also because of climate change, the warmer weather of course [lends better] to white wine.

Red wine, yes, but less alcohol, more fruity, more fresh notes.