The wine and spirits supply chain, worth 40 billion, reduced by a third, between duties and Covid-19

The impact of Covid-19 on the Italian wine and spirits supply chain is devastating. We are talking about a supply chain worth 40 billion euros a year, between overall and related turnover, that has now been reduced by a third. The sector is worth 2% of the national GDP, which is the equivalent of the budget the Government has planned for 2021. And, it is 6 times the amount the Government made available in its Relief Decree. The Italian Federation of Wine Industries, Federvini, wrote down these numbers, black on white, and also emphasized how the sector is undergoing “a raging storm that began in October 2019, and cannot go unnoticed, especially in the eyes of institutions. In addition to the very complicated scenario, there are the difficulties of the wine sector/ spirits sector, which, for a year now, has been enduring an ad valorem duty of 25% on its exports to the USA, its first target market. And there is more, besides the United States tariffs, there are the very recent European Union duties on American spirits, a clear sign of escalation in a dispute that is continuing to create victims in sectors that have nothing to do with the aerospace industry, where it all started”, pointed out Sandro Boscaini, at the helm of the organization.
“It is unthinkable to not speak out clearly. The situation at the local economy level is gradually getting worse”, stated Maurizio Cibrario, honorary president of Martini & Rossi. “The current scenario is compromising direct and indirect economic impulses, the business network is suffering enormously, and there are no glimmers of light, in the short term. The overall value, generated by sectors connected to our sector as well, is undergoing a net loss, which, at the moment, we are able to estimate at around -30%, but this percentage risks being revised even lower. The Covid-19 health emergency and the extremely difficult international scenarios are gigantic obstacles that our companies cannot face alone. We are hoping that our government will intervene rapidly and effectively”.
It is an unsustainable situation for the sector, and it is harmful for the State, too, since in 2019, the sector paid almost 10 billion euros in taxes to the State. This is the reason we need structural support measures and effective relief. “The effects of the pandemic are only adding to an already very critical situation,” said Bob Kunze-Concewitz, CEO of the Campari Group. “In a truly unprecedented context, I believe a close dialogue and fruitful collaboration between public and private sectors is essential. Never before have our institutions been asked to listen to a sector that has also proved it is capable of making its own contribution in the phase of an extreme health emergency. The spirit sector has repeatedly requested the repeal of the State Alcohol Tax Seal, an obsolete and outdated tracking tool, as an initial relief measure, especially in support of small and medium-sized producers. Then, of course, it is very clear that as the situation continues to get worse, a much more substantial intervention will be required”.
In this context of great hardships, restrictive measures on catering and public establishments adopted on the basis of the trend of infections and the capacity of the health system in managing them have been added as well. “The wine sector, intimately linked to territories, artistic beauty and tourism, has been dealt a very heavy blow”, emphasized Albiera Antinori, president of the historic Marchesi Antinori, the number one private Italian wine company and one of the most prestigious brands in the world. “The restrictive measures, related to the second wave of the coronavirus, on the hospitality and catering sectors are seriously impacting our sector as well. New strategies must be devised to bring support and effective relief measures. We must overcome the emergency logic, and re-launch the image and consumption of sectors that are emblematic of the most authentic Italian hospitality. As for the wine sector, we want measures that are able to find the right balance between supply and demand, keeping the relationship with consumers alive also through well-designed promotion campaigns”.
The Made in Italy wine & spirits supply chain has undergone heavy losses that are being registered on the domestic market and in exports. They are, together and forcefully, asking the institutions to listen to their specific requests, not only because it is an extremely important sector for the value it represents for Italian economy, but also because it is an ambassador of Made in Italy in the world, and an emblem of the inimitable Italian lifestyle.
“Our sectors”, concluded Sandro Boscaini, president of Federvini, “are undergoing a very significant slowdown over the entire economic cycle, both in domestic consumption and in foreign trade. The effects and consequences of this scenario are already measurable and the extent of losses is significant. Unfortunately, it is difficult to foresee countertrend movements. The institutions need to work to adequately support our companies to avoid that the value they give to our economy continues to weaken. What has been done so far for the wine market is not enough, while the spirits sector, to date, has not received support measures. Provided there is export support for all sectors represented, in addition to the request for the repeal of the State alcohol tax seal, the spirits sector now also needs measures that have greater impact, such as a reduction of at least 5% of excise duties on spirits and intermediate products, which could, especially in the future, favor a possible recovery of the sector”.