Primo and Anna Maria Banelli have been making wines at their estate Il Palazzo outside Arezzo since the 1970s. Lorenzo Pitirra, who heads up exports for the brand, spoke to WiC about the opportunities of selling into the Chinese market – particularly in the context of the Covid-19 pandemic and the restrictions on travel.
Have Italian wines been growing in popularity in China?
I think so. In the past it was just French wine. Italian wines only began to become popular in the last 10 years. They will win more market share in the future. Tourism is a factor, because in the last few years a lot of Chinese people visited Italy and had the opportunity to sample our wines.
There was also the problem of the Australian wines because they were paying no tax. Now with the political problems [with Australia], the Chinese market will be a bigger opportunity for Italian wines. The volumes increase very fast every year and the middle-class becomes bigger and bigger and they start to drink wine, for sure. We have big production in Italy. I think among imported wines in China, the future is for French and Italian wines.
Will French wines still dominate, particularly at the high end?
I think so. The French wineries started to do promotion and marketing decades ago in China, unlike the Italians who only started a decade ago.
What has been the impact of Covid-19 on your China sales over the past year or so?
It has had a very high impact. We have not exported any wine to mainland China for a year. We are arranging a wine shipment next month. But for a year we didn’t sell any wine – nothing, nothing, nothing.
Was that because of shipping difficulties? What was the reason?
The reason was that our importer had a lot of wine in its warehouse because of the pandemic. With so much stock it was difficult for it to buy any more wine. There wasn’t an opportunity to sell wine for some time.
Have travel restrictions proven detrimental to your growth plans in China?
Yes, I would travel a lot in a normal year. But in the past year I flew just two times in Europe.
For us it is a big problem. When you sell wine, you don’t just sell the wine, you sell the history. You have to create a lot of empathy with your customer, which requires personal contact. Just organising meetings on Zoom is not enough for a winemaker. You must travel to taste the wine and tell its story. I hope I can travel again soon.
What are your expansion plans in China?
I hope to begin travelling to China as soon as possible. Otherwise it is really difficult for us to find new market opportunities. We have just one importer and we need more. It is impossible for us to give exclusivity to one distributor in the China market.
To increase our sales we need importers in Beijing and Shanghai and other areas, not just in Guangdong – where our current importer is based. So it is really important I start travelling again.
In Guangdong we sell our wine under the private label of the importer. We produce for him. We have our name on the back label, where it says it is bottled by the Il Palazzo winery. But on the front it is different, it’s not our label.
So we are looking into working with other distributors to use our own label. You need to have good distribution with your own labels.
Tell us more about Il Palazzo and its wines…
It is a family firm and the owner is the family of my wife. I started to work here five years ago. We are located about an hour south of Florence.
We have 10 different kinds of wine. Two are white wines. The first is made of Vermentino, the second white is made with a blend of Trebbiano and Grechetto and is stored for six months in a French barrel. It is an interesting wine which has a body like red wine.
Then we have one rosé, which is made with a blend of Sangiovese and Syrah but in a white style. The remainder are all red.
How many of them are distributed in China?
Among the most interesting for the China market are the second white that I referred to. For the red we are concentrating on the international grapes such as our Syrah, which is stored for a couple of years in a French barrel. You can taste the wood. Chinese people love wine with the wood.
We have two kinds of Super Tuscan. The most important one is Sal Terrae, our newest label. The other is a regular one, Il Palazzo Moro Rosso. It is not stored in a French barrel and is a blend of Sangiovese, Syrah and Merlot.
For us the most interesting area in China is still Guangdong province. In Guangdong we sell the Il Palazzo Moro Rosso [under the private label]. We also sell a Chianti Riserva in Taiwan and Hong Kong as well. Moro Rosso is more of a middle- market wine. Our philosophy is to produce wine with a good compromise between quality and price – so for us it is important to have a middle-range price to push hard in the market. However, the wine is still very expensive when it arrives in China. In Italy it sells for about €8 ($9.60) and in China it sells for about €40.
What year did you begin selling in the mainland China market?
We started around seven years ago. It is a really difficult market in our opinion. You must find a really good wine importer and it is difficult to find an importer with nationwide distribution. As I mentioned, we are looking to find another distributor because at the moment we are only in the Guangdong area.
Our Sal Terrae Super Tuscan wine is a great opportunity for us in China because it is made in the French style. If it is just made with Sangiovese it is more difficult to sell, because the tastes of the Chinese people and the food they eat means you need the perfect wine to match. More balanced wines, with tannins that are not so hard, are ideal. This is impossible without using international grapes, rather than Italy’s Sangiovese.
Sal Terrae is being marketed as a high-end Super Tuscan. Can you talk about that?
We just started with our Sal Terrae project. The first vintage was 2018 and we started selling it at the end of last year. At the moment we have only sold it in Europe. But in the next six months we’ll begin selling in Taiwan.
Sal Terrae is made from Cabernet Sauvignon, Cabernet Franc and a small part Merlot and Petit Verdot. It is stored for 18 months in a French barrel. So it is very balanced and in my opinion has the perfect taste for Chinese drinkers. It is a perfect match with Chinese food – it doesn’t have aggressive tannins.
It will be your most expensive wine when you begin selling it in mainland China?
Yes, I think we will price it at more than €100 a bottle. We intend to sell 10,000 bottles a year – although we plan to increase production. I hope to sell a lot in China, but in the current situation it is hard to have a target. The first bottling was last November and it is already drinkable. But to be perfect, in my opinion, the best time to open it would be three years after bottling.
Are Zoom-based tastings like the La Grande Bellezza event held in April by Italian wine critic Raffaele Vecchione a good substitute for in-person events? Do you think they are here to stay even as travel becomes less restricted (hopefully) in the months ahead?
I have two different answers. If you have an importer you know well, for sure Zoom tastings are interesting as you can taste the wines and discuss them over the internet. You also save money from not travelling. But if you are trying to win new customers it is difficult. After the pandemic I think vineyards will do business more like in the past. But maybe we can use Zoom a bit more as well.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.