Q&A with Massimo Romani, CEO, Argea
Q&A with Massimo Romani, CEO, Argea
The beverage sector has a very common dynamic with the changes of consumers preferences. It is easier for producers who are not anchored to traditional systems like wine, with its many traditions, to respond to changing consumer preferences. Producers of ready-to-drink beverages of spirits can adapt easier to changes in consumer preferences as they are more distant from agriculture and closer to industry. Post-pandemic, the ready-to-drink and spirits sectors have suffered less than the wine sector, as they have been able to move towards the final consumers and have had strong performances after COVID-19. The wine sector suffered slightly in the post-pandemic period.
It is relevant to mention that inside the beverage sector, there are some categories which are striving and others underperforming. This is because some of these categories have been very successful in understanding new consumer trends and habits. More specifically in the wine sector, in the past 18 months, “bubbly” wines have been performing strongly in all main markets and white wines have been gaining the support of wine lovers. However red wines, excluding the iconic brands and varieties, have been suffering a bit more.
When asking ourselves where the sector is going, issues with new generations are central. Mostly Gen Z, but also Millennials—these generations pay close attention to their health and wine consumption. They are also less interested in tradition, but more attracted by the story around the product. However, there has been an increase in the use of spirits like tequila, whisky, and gin. We need to comprehend why this is occurring, and the wine sector needs to have a more central presence in segments which are growing. We are paying close attention to those passionate about wine, but this is potentially causing us to miss out on a new generation with different consumption habits.
The overperforming product right now are champagne and prosecco, which are associated with party and social scenes. Today, bubbly wine is always associated with enjoyable or important moments. Regarding still wine, the only growing type is the white one, like Pinot Grigio, because it is the easiest to consumer. The average consumer is most likely not a “wine lover” or passionate about wine.
Hospitality is a complicated segment, as a part of it will always remain closely tied with tradition and great wine bottles, and this is likely to continue. From bartenders, it has emerged that the public is more oriented toward spirits than wine. High-end producers (e.g. Frescobaldi) are following luxury trends, while mid-premium producers are observing a fast change in consumer behaviors. High-end will be more successful by forcing a scarcity of their product. Many brands have started doing this.
Food trends are constantly influenced by other arenas and vice versa.
Regarding the first cluster—Artists—there is the potential of growth, but we must be careful not to create waves. We need to contain our product, and possibly implement forced scarcity.
There is a situation which is: pushing to have an exclusive product where the target is willing to pay more, especially with lower supply.
Regarding the second cluster—Narrators—it can be defined as a trend that will stay. This cluster has had fast and strong growth with mainstream wines that can easily be appreciated by a wide number of consumers, still maintaining a great value for money.
To develop our third Cluster instead – Explorers – It is fundamental to fully understand the new generation; what they like and dislike, what they want, how they would feel represented and satisfied. We are taking some risks, as we want to progress by giving attention to everyone and understanding what tomorrow looks like. In the short-term, this can leave us in no-man’s land while we wait for evidence for success, which I believe will come shortly. The wine sector is old, but it has the capacity to be part of the future.
For example, In the US the concept of low/no alcohol is very strong, and we need to understand this trend for the future. Individuals in younger generations, but also Boomers, who have decided to partake in a healthier lifestyle might drink spirits on the weekend, and no alcohol during the week.
“Health consciousness” and “better for you” are certainly two trends worth mentioning.
Sustainability and specifically sustainable packaging are also trends that are here to stay. There is a demand for lighter bottles. On one side of the spectrum, we have a part of the world that fully embraces sustainability principles (Nordic countries, Canada, Germany, Japan, etc.), and on the other side there is China, whose main objective is to grow regardless of sustainability.
The storytelling of a product is central. For example, the construction of a brand of Tequila may strive to make places fun at its core, but also focus on crowdfunding for social initiatives.
For a consumer today, it is not an issue not to drink wine. The mobility between beverage categories is greater, and this opens opportunities. We set upa round table in which the discussion focuses on innovation from an industrial and packaging/product perspective. It is a great opportunity to gain a first-mover advantage, and our international network will enable us to select which of these projects will be carried on.
We need to contextualize all innovations using different streams. We continuously read consumer trends and we want our products to be align with these trends and consumers’ needs/expectations. We know that if we launch 10 products, we need to monitor their success to determine which ones stick; it is the consumer that decides which innovation stays.
There is increasingly more attention on the story behind the product. There is a curiosity to better comprehend how to taste properly, using all senses. Informed research is factual, as there is the objective to associate with a value.
For the next three years, as a brand, we would like to represent the excellence of Italian products and make them accessible worldwide. In terms of distribution, we don’t have the possibility to export by ourself to the US (and are currently using third parties); in the next three years, we would like to overcome this limit. Beyond those three years, Argea should not be exclusive to Italian wine, but to all wine (the EU has three important wine producers: Italy, Spain, and France), and Argea should be able to scale its business model to all these three countries.