Ep. 1845 Luxembourg and the Italian wine market | wine2wine Business Forum 2023

The Italian wine podcast is the community driven platform for Italian winegeeks around the world. Support the show by donating at italian wine podcast dot com. Donate five or more Euros, and we'll send you a copy of our latest book, my Italian Great Geek journal. Absolutely free. To get your free copy of my Italian GreatGeek journal, click support us at Italian One podcast dot com, or wherever you get your pods. Official media partner, the Italian One podcast is delighted to present a series of interviews and highlights from the twenty twenty three one to one business form, featuring Italian wine producers and bringing together some of the most influential voices in the sector to discuss the hottest top fix facing the industry today. Don't forget to tune in every Thursday at three PM, or visit the Italian wine podcast dot com for more information. Hi, sir. My name is Jeanette Cervideo. I'm the general manager of Petra in, Silvereto, which is on the coastal part of, Tuscany. And I'm here together with, Jessica Wanda she Vandache in order to introduce you a little bit more to the opportunities of, Italian wine sales in, Luxembourg. So, I think it's very, very interesting, considering, this very small country, which has, for my opinion, also really great opportunities. Everybody is looking on the countries around Luxembourg, which are Belgium, Netherlands, France, Germany, for getting that luck support can be effectively, very good opportunity. So please, Jessica. Introduce yourself. Thank you very much. So I'm Jess Vandreshae, and am an American, but I've lived in Luxembourg that past four years. I'm a wine and spirit education trust certified educator, and I'm also an Italian wine investor. I run a WSET school at Bernard massage, which is Luxembourg's largest privately owned winery, and they're also a large importer. And because I'm an Italian wine investor, I've gotten involved with sourcing of Italian wines. So the past year and a half, I've I've run some big tastings with the sales team, and we've significantly expanded our Italian wine list. So my, the data today comes from, the Luxembourg statistics, but also Bernara Messard's, specific sales data. I reached out to all of our competitors, but because we are a small country, nobody wanted to speak to me. So, unfortunately, I only have my company's data, but we're one of the bigger players, so hopefully it will be interesting. I just wanna set the scene a little bit about Luxembourg because sometimes, you know, people know it's in Europe. There's lots of castles, but they don't know much detail about it. So it is a very small country bordering Belgium, France, France, and Germany. It is eighty two kilometers north to south and only fifty seven kilometers east to west. So it's you can cover it easily in a day. However By walking. By walk. Yes. But it's very interesting because it tops the IMF's list of the highest GDP per capita, a hundred and thirty five thousand six hundred per person. So it is very interesting for statistics. That number is slightly skewed because there's lots of cross border workers, but it it it is a very affluent country. KEP Gemini's recent World Wealth Report estimated that one in fifteen residents are millionaires having one to five million US dollars in investable assets. So one in fifteen people, like you're at the grocery store and a significant amount of those people are probably millionaires. So that impacts the wines that we can buy in a supermarket. Total population is only six hundred and sixty thousand eight hundred and nine. So very small, but there are these two hundred thousand cross border workers who come into Luxembourg during the weekday. So traffic is not great in the weekdays going to and from the city, but it it it does increase in size significantly from cross border workers. Another interesting part about Luxembourg is that forty seven point four percent is foreign. So almost half of the country is not Luxembourg, which is quite interesting. Also, also because I'm an expat in Luxembourg, and I'm one of many. In terms of Italian links, Italy formed the first wave of immigration into Luxembourg. In the, late eighteen hundreds, early nineteen hundreds, the there was a lot of opportunities to work in the steel industry in Italy form the first wave. So there are lots of Italian surnames in Italians, second, third generation in Luxembourg. So in terms of statistics, it represents the third largest segment of the population in Luxembourg behind Portuguese and French citizens. But that also there are also the second generation who are Luxembourg, but of Italian origin. So there are lots of Italian restaurants, Italian shops, and uh-uh Italians speaking. So we have a a sales agent who just services the Italian market in Italian. In addition to the Europeans in Luxembourg, we there's lots of, I would say, transient expats. My neighbors are largely Amazon and Ferrero employees. So I had a neighbor who came from the US to Amazon for two years became very intrigued by European wine, and they were then moved to Singapore for Amazon, and loaded thousands of bottles. They they would say, what do we buy? Cause Amazon moved all their stuff to Singapore. So while they were in Luxembourg, they experienced and learned about European wines in a way they hadn't in the US. So it's it's an interesting place to be because people are exposed for a few years and then move move on with increased knowledge of potentially Italian wines and other other products. Another important part to understand about Luxembourg, if you're pitching your wines to a Luxembourg importer is that Luxembourg does have a strong wine production industry. So this map is tilted on its side, but it you can see the small picture. The the wine production is on the mosel. We call it the Mozelle in Luxembourg but it is an extension of the German Mosel river. So we we all know great rieslings from Germany. This is just extends down through Luxembourg, forty two kilometers, from you see the the map down here to the south, Scheyan So it's forty two kilometers. There's three hundred and forty producers, making it, Luxembourg wine. Ninety percent of the varieties planted are white grapes. So if you are making white wines and trying to pitch them to Luxembourg. That is more difficult because we produce is pretty high quality available of riesling, pinot blanc, pinot gris, for example. So it is hard. I I pitched some very beautiful alto Adi Jay wines, Pino Blanc, they that would have to retail around twenty euros. And my boss said, you know, we sometimes struggle to sell our best Pino Blanc at fourteen euros. We're not gonna be able to sell alto Adi J Pino Blanc for twenty. So beautiful wine, but we're not gonna import that. So it is a harder sell, especially, depending on the price point. If you're competing with the grapes grown in Luxembourg. Are you enjoying this podcast? There's so much more high quality wine content available for mama jumbo shrimp Check out our new wine study maps, our books on Italian wine, including Italian wine unplugged, the jumbo shrimp guide to Italian wine, Sanjay Lambrusco, and other stories, and much much more. On our website, mama jumbo shrimp dot com. Now back to the show. In terms of wine imported, the last year of statistics was two hundred and thirty four thousand hectoliters of imported wines And fifty two percent of that was red and rose. And that makes sense because we are producing lots of white wine. There's also twenty one percent sparkling, which is interesting because a large proportion of Luxembourg's production is Cremont, so sparkling traditional method. But French Champagne is very, very popular in city restaurants. Also, these white wines, burgundy is very popular. So still a heavy reliance on French wines, but red is really the the best opportunity for import. It's the most sought after import. In terms of individuals, the government statistics show that approximately forty one liters of wine is consumed each year by each person. And again, about fifty percent of that is foreign red and rose wines. So again, opportunity for Italy. Four and white and sparkling accounts for thirty percent, and my instinct is that is dominant by France. And then twenty one percent is the local wine, crema Mousseau, and other local wines. So It's kind of fifty, fifty red and white, but that fifty percent red tends to be foreign foreign imports. The palette of Luxembourg is interesting in the sense that they are very used to French wines. They have the the the legal language is French with a lot of synergies and, travel between the country. And I think their most comfortable drinking, bordeaux, burgundy, and provence Rose. So when I am pitching Italian wines, I have to be aware of that palate. For example, we had some beautiful verdicchio. It was very strong in grapefruit flavor and fennel. It was herbal. It was typical verdicchio. But the sales team said we appreciate it is a nice wine. We don't know who to sell this to. It is not what Luxembourgers people are used to drinking. So at the moment, it is still very fruity and French dominant in terms of the flavors. But also big names do sell at premium prices. So Quintarelli Sassakaya, one of my wine students who's also a restaurant client of Bernarmasad said he opened his restaurant. He had three bottles of Cuintorelli, a morone, three bottles of SASakaya. He thought nobody would buy them. All six bottles sold in the first week at very high restaurant markups. So he's like, okay. I need to go I need to get the big bigger brand names at higher prices. Part of that I think is due to lack of familiarity with the non brand names and non famous grapes. And as an educator, I'm running master classes on native grapes, and I hope to slowly increase the knowledge. But at the moment, Well, things that are familiar are the what sells the most, which makes sense at the moment. From my company's data, it is clear that from the imported wines, so we, obviously, we make over four million bottles a year of Cramont still still wines of Luxembourg wines, but of the so this is just the foreign wine sale. So this does not include Luxembourg wines. But there are three equal segments, which I thought was really interesting. So we're getting the same volume between five to ten euros, ten to twenty euros, and fifty euros and above. So there are, I would say, equal segments across different. So you have the by the glass segment. The five to ten euro, the restaurants get a large volume. You have the retail more ten to twenty of good quality, but you also have a strong sale of the fifty euro and over wines. So it's not just one or the other. You're we're getting a good, coverage across the different segments. Of the government statistics in terms of volume of imported wine, Italy's wine market share is rising, and it is the biggest riser in the past year by two percent overall. It's jumped from twenty five thousand hectoliters imported to thirty one thousand hectoliters imported over the past year. And you can see that Spain and Germany have gone up a little bit in Portugal, Belgium, Belgium and France have gone down. These statistics though are a little bit skewed because Belgium we buy a lot of wines from Belgium that are not Belgian wines. So it tends to be that Belgium will import a lot of foreign wines, and then we will then import from Belgium, but Luxembourg. So it could be that Italy has an even higher market share through Belgium because it's just logistically easier to buy wines that are already in Belgium because of the volumes in Luxembourg are smaller. So a different situation. We we import from the Jackson family in the US, but we buy from their Belgian warehouse because it's easier to buy the quantities we need from a European warehouse. So these figures, I when I saw these, I was googling Belgian wine, I was thinking like, you know, really do we buy that much Belgian, but it's not actually Belgian wine because that would be quite unusual. I mean, they do make wine, but I think not in the volumes that we are consuming here. Effectively, I think it's a little bit unclear for me because I know that Belgium has, quite high taxes, for importation of wine. So how about taxes in in Luxembourg? I'm not aware we get an export price from the winery and that's what we pay. So I don't I don't actually know more beyond that. It's, it's just within Europe. I'm I'm not to this different arrangement, but we the winery gives us an export price and that's what ends up on the the customers. So the So maybe it's better. I don't know. Yes. So we should go direct. In terms of my company's sales, from the year twenty twenty one to twenty twenty two, there was a nineteen percent increase in volume of Italian wine sales. And and I arrived in that time period, and then they asked me because I have more Italian dollars, thanks to the Italy. They said, okay. Let's help expand because we're seeing this this rise in interest in Italian wines So this year, we have well, last year, we increased the portfolio. And this year, we are now seeing a thirty two percent increase from January through October based on the same period last year. So it is it is a small but growing, market for us of importance. But as it is to statistics generally show the largest volume sales are red wines. And in particular, we get the highest volumes of between this, like, maybe eight to fifteen euro retail price points. Sangiovese, the IGT is a big seller, Kianti classic. It's a big seller, Primativo, Bara, multiple channel da brusso. These are wines that sell by the glass in restaurants that we get a lot of volume on, but we also do have prestigious Borrolos, etcetera, that sell in the more premium market. So if you're looking for volume, it's really being able to pitch a wine that is a very good quality at an export price of five, six, seven euros that can sell a restaurant by the glass if you want the volume. And we have a dedicated Italian sales agent to service the Italian restaurants. He estimates that there is about three hundred Italian restaurants in Luxembourg, and his business is just going to those restaurants in Italian with mainly the Italian portfolio. And there's a few other things to note about Luxembourg. Because it's so small, the importers do expect exclusivity. It is not a legal contract. It is just a mutual understanding. But if my boss will see wines that we import somewhere else. He will then not reorder because he, you know, there's this, you know, there's this mutual understanding. Sometimes we've had wines that are we import, and then we see them at Italian shops in town that buy direct, and then he's he's just doesn't just gets mad and doesn't reorder because there's there's this discussion that we're representing you in Luxembourg. It gets super, super small. So there tends to be, each importer then tends to have or at least expect exclusivity. It I think it is important to choose your importer Some are, Italian only, and that can be good because they have all the references, but then they tend to have more of a niche where other importers like my company will sell everything and then have a com more complete portfolio for a restaurant. So I just it's important to make sure you have the right fit. You can change if it's not working. And we do see producers changing importers. Different companies will work differently in in the market. So what you will say is also that, if you choose an Italian importer, he is selling the wines, the focus is Italian restaurants. And shops, and instead, a larger distributor importer, is offering the wines all over the country in every kind of restaurant. Right? Yes. I guess it depends if you want to just focus the volume on Italian restaurants or whether you want to be part of a larger sales portfolio because because my company sells Luxembourg wines, a lot of people want to put that on their wine list. So they will ask for the Luxembourg wines, and then the sales team says, hey, we have these French, we have these Italian. Do you wanna have some diversity in your wine list? So I think it's good to see where you're if you're at one important, but you wanna have other vol more volumes, you could try a different approach. But I know Bella Visa is at an Italian only importer, and but one of our restaurant clients sells it by the glass and then is doing well. So I think it just depends on how your relationships work. Yes. And what do you would like to obtain to a team. Yeah. Because, on the other hand, you told me, this morning also that, besides the distributors, there is a huge sale through the supermarkets, which are, buying by themselves, they're not going through an importer. Right? So that's my understanding is that the largest volume sales in Luxembourg are from supermarkets, and the supermarkets buy direct from the wine So they will buy our Luxembourg wines direct, but they won't buy our import portfolio. The biggest names in Luxembourg, the Luxembourg one is called cactus, like the plant. But then we have Cora, which is, I think, French in Belgium and Delhes through the Netherlands. So they will source large volumes through their importers, in their country of origin. And that does cause some problems because they often have very cheap pricing. So We have some supermarkets like Cora that will sell some of the prestige wines that we import at much cheaper prices that we're able to sell. So then we end up having difficult discussions with the producers saying, hey, we need to be able to sell your wines cheaper because the supermarket or it's just it just doesn't work. So it's there's a whole strategy. I mean, you'll probably get larger volume for the supermarket, but it could also impact how your wines are sold locally if we can't compete with the supermarket. Yes. And those on the image of, of your winery if, the prices are quite low. Okay. So a conclusion could be that, there's a very high potential for, Italian wines. People drink more and more, Italian wines, also not only because of the, large community of Italians in Luxembourg, but also because, travel attitudes, show that Italy is a force, force more important, travel destination. So lifestyle, fashion, food, and Endrine, obviously, create curiosity and people would be part of this. And so there's a good opportunity for Italian producers on the Luxembourgsenberg market, small market, because if you think the population is like, a city in Italy, including the workers which are coming in for the day, it's like Torino, one city in, in Italy, for population, but nevertheless, they the volumes are very, very interesting because people have money to spend. Mhmm. I agree. I think it's interesting. It is small, but it's interesting to be to at least be in the market and to have exposure. Wonderful. Good. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, Spotify, email ifm, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating through Italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time, chi ching.