Internationalization with tiny bubbles: the Ricci Curbastro case

For a small company, shifting gears from the domestic to international markets is a big change. The first critical step is to clearly identify the characteristics that would make your products stand out on foreign markets; next comes finding the right channels to promote and distribute your offering beyond national borders. Finally, it’s essential to view internationalization not through a blurry generic lens, but instead with laser vision, focusing your efforts on specific markets where your products are most likely to succeed. This is the strategy recently embraced by Ricci Curbastro, a sparkling wine producer from Franciacortathat’s small in size but long in history.

The company’s deep roots in this particular wine-producing region of Italy representboth an enormous resource and huge challenge at the same time. The distinguishing feature of Franciacorta sparkling wines is that they’re produced with the ‘classic method’ (metodoclassico), originally invented in the Champagne region of France. This is what puts the sparkle in sparkling wine, which undergoes a second fermentation phase directly in the bottle, and aging for no less than 18 months. This is a labor-intensive process, more costly than the alternative fermentation method (Martinotti-Charmat), which is used for proseccos and other sparkling wines.

The Frianciacorta Consortium is the body that certifies production methods and standards of quality for producers in the eponymous region; Ricci Curbastro has been a member since its foundation. Franciacorta earned its DOCG designation in 1995, but today as a wine producing region it has yet to win an international reputation that can contend with Champagne, as the numbers clearly show. Total annual production in 2017 was 18 billion bottles of Franciacorta vs 308 billion bottles of Champagne; the ratio of exports over total sales was 10 percent for Franciacorta compared to 48 percent for Champagne.

Ricci Curbastro, whose current exports outpace the Consortium average, aims to boost foreign sales up to half of total turnover. But there are plenty of obstacles standing in the way of that goal.

First of all, before embarking on the internationalization process, companies need to verify the relevant legislation in each target market. This is all the more true when exporting wine. In fact, in many countries the sale of alcoholic beverages is very strictly regulated, if not actually controlled by a state monopoly, which means producers must obtain ad hoc concessions. What’s more, the level of complexity in terms of administration and distribution can be extremely high. In some individual states in the US, for example, three different licenses are required (one for importing, one for distributing, and one for selling alcohol), with a sizable impact on the retail price that consumers pay.

The second consideration hasto do with the relative promotional costs, via intermediary networks (primarily specialized stores and restaurants). To connect with these players, producers need to participate in international fairs and also do follow-up visits with their contacts on a fairly regular basis.

For small companies in particular,which might not have the necessary organizational and financial resources for rapid growth, the key is to concentrate on certain select markets that offer the best growth opportunities. To discern which ones they are, it’s essential to keep in mind these factors:

• The general market conditions of each country in terms of size, propensity to import wine, and growth rate in imports in recent years, paying special attention to current and future trends. For example, in the past decade the US has seen an appreciable uptick in wine sales, especially for the premium segment and for at-home consumption.
• The specific appeal of the value proposition on different markets. From this perspective, Ricci Curbastro wines can leverage the general appeal of Italian food and wine abroad (the made-in-Italy effect),of the Franciacorta region, and of the unique characteristics of their winesin terms of quality and perceived luxury. But different product types can be more or less attractive depending on the market. (For instance, in Japan and China, prestigious aged wines are particularly popular, while in the UK and Germany rosés are in high demand.)

The overall strategy of Ricci Curbastro was twofold: to establish a substantial presence on strong markets (which for the company coincide with the biggest importers of Champagne and Franciacorta Consortium wines), and to seize opportunities that occasionally arise on specific markets such as the Philippines, and Trinidad and Tobago.

A third aspect, closely related to the previous one, has to do with the need to fully convey to foreign markets the value of a wine like Franciacorta produced with the metodo classico, which outside of Italy is too often confused with prosecco. That’s why it becomes critically important to have communication that centers on product quality. In the case of Ricci Curbastro, this message is delivered personally by the owners, who participate in international trade fairs and organize on-site visits to their key customers (importers, wine dealers, restaurants, bars, etc.)

Added to all this was a rampup in new digital sales, distribution and communication channels. Since 2014, Ricci Curbastro opened its own online shop, andmarketed its products on specialized Italian portals, offering international shipping as well (in particular in Europe). These e-commerce portals also allow for user feedback and expert advice, servicesthat haveenabled the company to enhance awareness of Ricci Curbastro products, which in turn leads to search engine optimization. The next step is to set up similar partnerships with foreign web portals specializing in wines to internationalize the company’s online presence as well.

• A small company that wants to embark on the path of internationalization can take two different routes: (a) branching out onto several markets at the same time togrow the size of the company,(if productive, financial, and distributive resources allow); or (b) targeting a few select markets that are particularly well-aligned with the specific type of offering and are consistent with the company’s current resources.

• In choosing export markets, it’s critical to factor in legislative restrictions (which can represent a major barrier to entry), general market trends, and compatibility with the company’s specific offering and value proposition.

• When products are high quality, the company needs to focus special attention on communication for its offering: the key is to convey an accurate perception of the value of the corporate offering on foreign and domestic markets alike.