Op Ed: Prosecco’s Waterloo, a financial model at risk

The following article appeared in Italian yesterday on the SlowFood blog. Translation by Bele Casel.

Prosecco’s Waterloo: A financial model at risk

Until a few years ago, 95 percent of Prosecco was produced in Treviso province. There were two DOCs: Montello e Colli Asolani (today known as Asolo DOCG) and Conegliano-Valdobbiadene. And there was also an IGT.

Fruit grown in the DOCs was well paid and growers were limited to a maximum yield of 12 (metric) tons per hectare. Growers in the IGT were limited to 25 tons per hectare and the prices for their grapes were lower.

Over time, the margin in pricing has continued to shrink and this year, something is happening that I have long suspected to be unavoidable.

The production area doesn’t matter to the global market. And buyers across the world continue to base their purchases on the price and the name that appears on the label. In a recent article by Italian wine writer Angelo Peretti, he illustrates how difficult it is for the average consumer outside of Italy to perceive the difference in quality between the top and middle-of-the-road Prosecco.

No one is in a hurry to distinguish between wines made from grapes grown on cool ventilated hillsides where all work is carried out by hand and grapes grown on the valley floor where it is easy to mechanize labor thanks to level landscape and where growers obtain a product much different from those in the DOCG. The majority of end consumers doesn’t pay attention to the growing zone and the quality of the wine is rarely even discussed.

All of these factors will have a significant impact on the prices of grapes in the 2015 harvest, which will begin this week. In some cases, at least according to news that I receive daily, the price of valley floor Glera (the primary grape used in Prosecco) has already surpassed that of hillside Glera. This has resulted in wholly legal speculation that feeds the demoralization of growers who spend up to four to five times as many hours working in the vineyards than those who use machines to tend their vines.

Many attribute some of the responsibility for this to the Consortium of Prosecco DOC growers. Thanks to its high revenues, it has the luxury of begin able to afford highly targeted and highly effective marketing. There’s no doubt in anyone’s mind that profit is what drives the market but I think the blame for this goes beyond this fact.

Every single one of us (DOCG producers) needs to ask her/himself the following questions:

How many grape growers think solely of quick profit without considering the long term?

How many producers sell of their wines without taking stock of the back-breaking work that it takes to work hillside vineyards?

When we consider the differences between DOC and DOCG wines, do we really take into account the characteristics of the different appellations or do we concentrate exclusively on the word “Prosecco”?

An appellation cannot grow without adequately fostering viticulture and without paying proper attention its potential for quality.

Buyers need to be conscious of their fundamental role with respect to sellers and to the market. And they need pay a fair price and avoid speculation.

Here are the estimated prices for grapes for the current vintage:

Prosecco DOC: 18 tons per hectare, 70-80 cents per kilo; profit for grape growers who don’t bottle €14,400 per hectare.

DOCG Asolo: 135 tons per hectare, €1.05-1.10 per kilo; profit for grape growers who don’t bottle €14,850 per hectare.

DOCG Conegliano Valdobbiadene: 135 tons per hectare, €1.30 per kilo; profit for grape growers who don’t bottle €17,550 per hectare.

It’s important to remember that these are not the actual prices (as of today August, 25, 2015).

The earliest contracts that have been signed are for €1 for the DOC and €1.15 for the DOCG Asolo. Last year’s price for Conegliano Valdobbiadene was €1.30.

Based on these prices, a valley floor grower would early €18,000 per hectare, €3,000 more than a hillside grower in Asolo.

Luca Ferraro

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