Can they keep it up? How do they manage it? The wine world is watching developments in Italy’s turbo denomination with eagle eyes. The graphs for Prosecco have so far only gone in one direction: production and sales have shot up. And the potential is far from exhausted. The “Prosecco revolution” was a stroke of genius in spite of all the naysayers. And so it will remain if the guardians of the Prosecco denominations are able to maintain the highly sensitive market equilibrium, protect their product and its quality, and if they also manage to communicate all this properly.
Sparkling gold rush
The vast area of the Prosecco DOC covers nine provinces in Veneto and Friuli. In 2013, the DOC put 241m bottles into circulation. Output has doubled in just five years. And it would be even higher if the Consorzio di Tutela del Prosecco DOC had not slowed down the gold rush of producers with some EU legislative instruments and common sense. Although for the 2014 harvest all the new plantings will go into full production, the yield is expected to be about the same as the previous year’s level due to the weather, with little sun and lots of rain. But will the market absorb a volume of 1.9m hL or will the price fall?
To address these dangers, the Consorzio has ordered part of the harvest to be held back. This means that, initially, only the wine from 145 quintals of grapes per hectare may be sold as Prosecco DOC, despite the fact that the production regulations allow for a yield of 180 quintals per hectare. The remaining wine will be stored until the market has absorbed the existing quantity and is crying out for more. However, if the volume meets the demand, the blocked goods cannot even be marketed under the name of the Glera grape variety and can only be sold as Vino Bianco IGT or simple table wine, so as not to undermine the Prosecco markets. The Consorzio had already resorted to using quotas by 2012 and 2013; in 2012, the full amount was released – in 2013, only just under a third. “We need to monitor the situation at times of production growth. This is the only way we can guarantee a positioning of the product that is consistent and can provide all those involved in the production chain with an income. The quota mechanism allows us to keep positive tension in the market,” as Consorzio president Stefano Zanette explained in the summer at a conference on the subject of Prosecco.
Thanks to the Consorzio policy, prices are currently stable at €1.10 ($1.41) to €1.20 per litre and are likely to remain so. However, there is concern over some wineries selling off the wine at knock-down prices, in the booming markets in the UK and the USA of all places. But then one man’s pain is another man’s pleasure. “We were lucky this year in the UK market. We were able to take the place of a wine producer that had miscalculated,” says Federico Dal Bianco, marketing manager of Masottina in Conegliano. “It sold out early because the producer had sold its entire stock at very low prices, perhaps for fear of a production surplus. However, demand was so strong that the importer bought at our normal list prices.” Adriano Dal Bianco, winemaker, remembers the times before the explosion of Prosecco almost wistfully. “We have always been sparkling wine producers, but using Pinot varieties. There was not much value in Prosecco at that time,” he says, adding that its low alcohol content – now a strength – was once a weakness. “And before, no wine was grown on the plain; that only started in the 90s. Now everywhere is full.
Prosecco has swept away almost all the other varieties,” says the 62-year-old. The ‘plain’ is code for the Prosecco DOC that stretches over the flat countryside. (The Prosecco Superiore DOCG thrives on the hills of the historic core zone between Valdobbiadene and Conegliano.)
The Dal Biancos are a good example of this generation of Prosecco boomers. The core of their business emerged in the post-war period, and then little by little, additional vineyards were purchased and contracts were signed with grape suppliers. Today, they have access to 130 ha of vineyards. Their course is set firmly on growth, and a huge new high-tech winery has just been completed. The family sells their top wines under the Masottina brand, including around a million bottles of Prosecco DOC and Prosecco Superiore DOCG, as well as still wines. Their aim is to double production. The export ratio has already risen to 70%, and in Hong Kong, the aim is to expand the market leadership already achieved for the Prosecco Superiore DOCG segment.
The second business owned by the Dal Biancos is MaSpa. It operates as a pure service company, bottling trademark brands and for third parties. MaSpa has an output of 8m bottles annually. The family is fundamentally in favour of the quotas for DOC production, although they have never experienced any difficulties in selling their wine. “However, I believe that the Prosecco DOC could accommodate the entire production if the production of a Prosecco Rosé was allowed. For example, Prosecco could be blended with our indigenous red variety Raboso or with Pinot Nero, which is already permitted up to 15%, but which has to be cultivated white. But this subject is totally taboo,” says Adriano Dal Bianco, who is also on the board of directors of the Prosecco DOC Consorzio.
There is not just one, but two historic noble origins of Prosecco, which were upgraded to DOCG during the reorganisation of the Prosecco region known as the ‘Prosecco revolution’. In addition to Conegliano Valdobbiadene, the little-known area around Asolo, which has little market relevance as yet, also enjoys the ‘Garantita’ status. Asolo has a production capacity of 12m to 15m bottles of Prosecco DOCG, but only about 1.2m are so classified. The rest are put onto the market as Prosecco DOC. Up to now, this has been far more profitable for producers. For one thing, the market only recognises Valdobbiadene and Conegliano as the cornerstones of top-quality production, and on the other hand, the permitted yields of 120 quintals per hectare are less than between Valdobbiadene and Conegliano. The Asolo Consorzio intends to amend its regulations for 2015 in line with the larger DOCG and at least double its production during 2015.
The cradle of Prosecco is the beautiful hilly countryside between the two municipalities with their unwieldy names. This beautiful green landscape is currently being considered for inclusion as a UNESCO World Heritage Site and was where the flagship brands developed and paved the way for this uncomplicated, lifestyle wine on the international stage.
One pioneer was the Carpenè Malvolti winery, which was established in 1868 in Conegliano. Antonio Carpenè devised the method of producing sparkling wine using a pressure tank. This estate was the first winery to put Prosecco on its label in 1924. In 1887 came Francesco Mionetto, who exercised his talents in Valdobbiadene and was one of the first producers to export to America. Today, Carpenè Malvolti still operates as a family business and has a turnover of around €20m per annum. Since 2008, Mionetto has belonged to Henkell & Co Sektkellerei KG, the second-largest producer of sparkling wine in Germany, and has a turnover of around €58m. In the US, Mionetto has run its own sales company since 1998 and ranks among the top 10 on the sparkling wine market. The La Marca cooperative, the Valdobbiadene cooperative, La Gioiosa-Villa Sandi, Valdo and Viticoltori Ponte are other big players in the Prosecco business. They all sell both DOCG and DOC wines.
The opportunities for growth are much more limited for the Conegliano Valdobbiadene DOCG than they are for the DOC, but a few new vineyards are going into production as of the 2014 harvest. The extra 180 ha will offset the grape losses caused by the bad weather. There are no plans for a quota system to regulate the market as in the DOC. Here, production and sales have been increasing continuously for decades – and at a much more leisurely pace.
But 73m bottles of Prosecco Superiore need to be sold to the public. The cooperative wineries of course also have the advantage of being able to offer DOCG wines more cheaply than private wineries. For the private companies, it is difficult to set ex-cellar prices of €4.50 to €5.00 per bottle, whereas the members of the cooperatives have no problems offering their wine for €3.00. In this unequal competitive environment, private companies have to offer special qualities and use every possible means to raise their profile.
The Ruggeri winery in Valdobbiadene, for example, has earned a good reputation through its excellent basic quality wines and a multi-award-winning top range. Its two Proseccos Superiore DOCG, Giustino B. and Vecchie Viti (from 80- to 100-year-old vines), serve as a prime example of the territorial supremacy of the DOCG compared to the DOC. “With Prosecco, people always think of industrial quantities of grapes, but everything has changed in the last 10 years,” says Paolo Bisol, owner of the Ruggeri winery. “Today’s grape producers have a very different mindset and a different lifestyle to earlier winegrowers. They hardly drink, they no longer smoke, and they only harvest the volume of grapes that can sell as Glera for Prosecco DOCG. The excess grapes have very little value. All the work involved is not worth it if they only get 20 cents a kilo.” He says that 130 to 140 quintals is perfect for the quality of the grapes because, with a significantly reduced yield of 80 or 90 quintals, the wine from this particular grape variety becomes bitter.
In vintages with very favourable weather conditions and large volumes, the DOCG production rules allow 20% of the excess to be classified as Prosecco DOC. But no reasonably intelligent producer between Valdobbiadene and Conegliano would reveal if he had declassified DOCG wines. This would ultimately endanger sales of their top wines, which are at least one euro per bottle more expensive than the DOC wines.
Keeping the price steady
Steering growth and the market to allow this sparkling wine to continue to realise its potential without a drop in price is one of the tasks of the Consorzia. They are also responsible for protecting the denomination of origin – and consumers – worldwide against counterfeiting and free riders. In order to join forces to combat issues such as ‘Prosecco Wine Kits’ which are popular on the UK market or the many Seccos that suggest Prosecco in Germany, the Consorzia of the DOC and the DOCG have this year jointly founded the ‘Sistema Prosecco’ association. From this autumn, this association will monitor the markets around the world, something each organisation has done separately up to now. The market is currently booming most strongly in the UK, and this is fuelling the creativity of the criminal element.
However, business in fake Prosecco is also flourishing in Eastern Europe and Germany, and even in Italy itself. “This year alone, we have spent €250,000 on protecting our denomination. In England, so-called Prosecco is served in pubs from a tap. Even simple, carbonated white wines are offered as Prosecco. This has taken on worrying proportions. And in Germany, we are constantly discovering attempts to register trademarks or even bring onto the market brands that imitate or could be associated with the word Prosecco. This is done with complete disregard for current EU standards. For this reason, we have decided to take legal action,” says Luca Giavi, director of the Prosecco DOC Consorzio. “The word ‘secco’ may only be applied to legally defined residual sugar levels. When we check the levels, we find again and again that they are nowhere near the stipulated standard.”
Another problem is protecting the denomination in non-European countries. For example, Australia is a country that produces Prosecco as a grape variety, and Prosecco is also on the label. This is no longer permitted in Europe or among the signatories of the Lisbon Treaty since Italy made Prosecco a DOC and changed the name of the grape variety to its old synonym of Glera. The EU Commission tried to register the Prosecco DOC as a denomination in Australia. This failed due to resistance from the Winemakers’ Federation of Australia (WFA). This September, a delegation travelled from the Prosecco region to Australia to state their case personally and to work with Australian producers to try and find a solution to the problem. The chances of reaching an agreement have improved since then.