2023 better than expected for “top brand” Italian wineries, and growth in 2024

There is no crisis for the most virtuous Italian wine companies, as wine is one of Made in Italy’s brightest “good, beautiful and well made” gems that never loses its appeal. The top wine companies that have established brands on the markets, whose value and quality are recognized almost universally, have proven to be stronger than the challenges caused by difficult economic and geopolitical contexts. In most cases, turnovers have been growing, and even though a few have been hit hard, they are not wavering and instead they are looking rather optimistically to the immediate future. As a matter of fact, the vast majority predicted a growth in turnover in 2024 compared to 2023 (half the wineries surveyed said it was higher than 2022). They believe that the decline in consumption is cyclical, and linked to economic difficulties, rather than structural, due to growing health concerns or consumers generational turnover. There is also a profound awareness that one of the fundamental actions is “staying on the road”; that is to say, being constantly present and active on the markets, either in person or through sales networks. It is one of the aspects that companies will pay more attention to, together with company management control, because in a hyper-competitive scenario like wine, nothing can be left to chance. This is the picture as outlined in the WineNews survey, entitled, “Italian wine between 2023 and 2024: state of the art and prospects”. The survey gathered the sentiments of 27 leading Italian wine companies that together total an aggregate turnover of more than 2.5 billion euros (representing over 15% of the sector’s entire production turnover). The sample surveyed was well diversified, made up of small, well-known companies, large structured groups with wineries and brands of great prestige, as well as cooperatives that have long focused on quality and building important and well-positioned brands on the market. In other words, it was a cross-section, which obviously does not represent all of Italian wine. The Italian wine sector is like a large fleet that at the moment is sailing in stormy weather amidst inflation, high costs which are increasing once again (for instance, due to container freight rates, following the Red Sea crisis), consumption is not growing because many markets are having economic difficulties, and the underlying tension linked to wars and conflicts, primarily Ukraine and Russia, and Israel and Hamas, but not only, takes away serenity and optimism from many people, which normally would be a boost for “pleasurable” consumption, like wine. The Italian wine “fleet” is made up of many and diverse vessels, obviously. There are many small and large ships that are not very solid; in other words, small wineries that produce little-known brands or large companies that focus on low-priced wines and therefore have very low margins, and are very much caught in the middle of the storm. Instead, the “flagships”, in other words, the wineries that over the years have built valuable, well-positioned brands and have structured themselves both in internal management and on the markets in Italy and around the world, are traveling full speed ahead.
The WineNews survey data has revealed that 10 companies out of 27 registered a growth in turnover in 2023 compared to 2022, most (6) between +2% and +6.5%, but some have declared increases between 10% and 12% (3 companies) and in the extreme case, registered a +21% jump. Eight wineries out of 27, however, closed the year breaking even, while 9 companies registered a decline, although somewhat contained, between -3% and -9%, and only one case reported -20%.
Observing the markets, the diversity brought out one very clear fact. In 2023, in the majority of cases, Italy was the market that gave the most satisfactory performance, while some specified it was thanks to the HORECA (hotels, restaurants, catering) channel, and therefore outside the home. A myriad of companies, however, declared that the greatest satisfaction came from exports, which for almost all the companies surveyed in the sample, represent at least 50% of the turnover, reaching, in some cases, over 80%. It is not easy to give a precise sentiment on which foreign markets they have performed best. Some wineries have indicated strategic countries, such as the USA, Canada, the UK and Germany, for instance, while others, instead, have stated that these markets have penalized the budgets the most. Almost everyone, though, agrees on the poor results from the Asian area, China in the lead.
According to the participating companies, the most difficult factors to manage in 2023 (multiple answers offered), were; inflation in general, and all its direct and indirect effects (19 responses); followed by decline in consumption and sales (18 responses), and the increase in the cost of money due to various interest rate increases decided upon by the ECB also weighed heavily (12 responses). Then, the cost of energy and raw materials (10 responses) and wine list prices (9).
Looking ahead to 2024, which has just begun, the sentiment is almost universally positive. The reasons are, first of all, because less than 10% of the sampled companies share the vision that the drop in wine consumption, which many studies predict is structural because the younger generations have not replaced the more mature generations in consumption volumes, and the growing health-consciousness that is affecting all alcoholic beverages. As a matter of fact, instead, 90% believe, that the decline of uncorked bottles and toasts is cyclical, and linked to the economic situation, which, sooner or later, as it has always historically done, will improve again. Consequently, only one winery on the WineNews survey sample thinks that its 2024 turnover will decrease (around -10%), 9 say it will stay the same at 2023 levels, while 17 companies, almost 70% of the total, said business will grow between +5% and +10%. There is a condition to this growth, however, and that is we need to continue to invest, which sends a clear signal, namely the need to be present and proactive on the various markets, and to “pound the pavement”, as they used to say. Strengthening relationships on the sales network in Italy and abroad was the aspect that the companies will pay the most attention to in 2024 (19 responses), followed by corporate management control (17 responses) and advertising investments and participating in events (15 responses). They will also pay more attention to the relationship with banks and the financial world.
Regarding promotional events, 13 companies declared they will participate in the same ones as 2023, while 5 companies will try to participate in more event, and 5 companies will, instead, participate in fewer events, favoring large International Fairs such as Vinexpo Wine Paris, Vinitaly and ProWein, for instance. There are 4 companies that will cut out some events, giving more prominence to smaller ones in their territory. Finally, there were some considerations on the 2023 harvest, which at the National level, and in many Regions and territories, was one of the scarcest in recent years, especially because of downy mildew. However, 60% of the sample did not considerate it negative factor because it will help deplete some of the stocks and it will not cause prices to fall, in this market phase which, in any case, is not brilliant. Another fairly large portion of companies pointed out, on the contrary, that it is harmful, because there will be no product to place on the market, meaning less potential revenue for companies.
The picture of the sentiment the WineNews survey revealed, therefore, is not as dark as it would have seemed towards mid-2023. But, we need to reiterate that it represented in numerical terms, a small part of the Italian wine companies, the most virtuous, established and structured ones that boast strong and recognizable brands, which are, indeed, those, in every sector, we turn to in an economic crisis. Moreover, besides driving the bulk of the turnover, on a numerical level, they represent a small minority compared to the thousands of companies and wineries that make up the sector, and which are in their own way fundamental for the economy, sociality, and the work and life of many territories. Plus, they are probably facing definitely greater challenges in these difficult times, and their prospects are less bright.