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Allegrini 2018
FUTURE SCENARIOS

A myriad of challenges for Italian wine, from the vineyard to the shelves, beyond the Pandemic

CIA-Agricoltori and UIV- Unione Italiana Vini on CAP, labeling, markets and wine potential at the “Wine Forum”

At the "Wine Forum", held yesterday in Rome, UIV-Italian Wines Union, CIA - Italian farmers, and the Ministry of Agricultural Policies identified a myriad of themes and objectives for Italian wine in the future. Among these are the challenges facing markets, which have probably been irreversibly changed by the Pandemic that it is proving very difficult to overcome, the path of sustainability, which is fundamental but requires foresight and investments, the value of promotion that is vital to truly restart the wine market, but which must be reorganized and not waste more resources, both private and public. They also specified to urgently consider the Italian vineyard that for innumerable reasons, in spite of Italian wine’s significant growth on world markets, has seen risking a downward evolution of its offer, the real possibility of destroying value, rather than creating it, and raising the position of Italian wine. It is necessary to find a new point of balance, between denomination wines and table wines, which is not easy. “The long-lasting Pandemic crisis has marked a breaking point in the sector, and to be able to really re-launch it, we must get out of the emergency relief funds logic”, explained Luca Brunelli, head of CIA - Italian Farmers in the Viticultural Policy Area. “To overcome this stalemate, it is necessary to focus on promotion, using all the funds and resources available, at the National and EU levels, aiming to compete better and better on foreign markets. France has less wine, but has more than double our turnover”. “It is essential to take note of the domestic changes in the wine market at the National and International level, to get to know the new players in the field”, underlined Dino Scanavino, president of CIA-Agricoltori Italiani, “and understand the evolution of consumer needs. It will take time, but restarting will only happen by changing methods. We need to team up, think on a system perspective, and create an organic supply chain. We must be able to improve the uniqueness of small and medium-sized enterprises, promoters of territory and culture, as well as focus on new alliances within the exhibition sector, and more innovative and targeted ways of exchange with foreign buyers”.
“We are urgently asking that the EU promotion tool be defended at the European level, in the reform that Brussels has been working on over the past few months, because the prohibitionist policies of the Commission could exclude funding wine and other sectors of our agro-food sector to promote agricultural products. Team work is essential in the upcoming months to prevent this plan, using leverage on the irreplaceable role of wine and its PDO and PGI wine on the development and sustainability of the territories”, relaunched Ernesto Abbona, president of Unione Italiana Vini (UIV). Abbona recommended that the Minister of Agricultural Policies, Stefano Patuanelli, “become a promoter to launch an institutional campaign and thus relaunching the image of our Country through the narrative of its wine-growing territories and its typical agro-food products”.
“We often compare Italy to France when talking about wine”, said Abbona, “but let's not forget that at the beginning of the 19TH century France was already a unified state; it had roads, and flourishing businesses, while Italy was still divided into small, independent states and had no infrastructures. The division still exists, in the Regions, which may enhance differences, but they also complicate things from a regulation point of view. In Brussels, they sometimes ask us which Region we are speaking for. We must get beyond this limitation. We have written a single standard of sustainability, and are the first in Europe to have done so, because when we move together, we are good. Of course, promotion is fundamental. Communicating a brand is easier than communicating many denominations, which, though, are our wealth, and the reason that more resources are needed -more money for promotion, not for distillation, where there is product excess, due to mistaken policies. Funds are very important, and they must be managed well. Politics must choose, it cannot satisfy everyone”. Patuanelli totally agrees on this issue stating “we must no longer waste resources, we must make choices that perhaps will not please all, but they must be made. It is clear that wine is one of the sectors to be upheld, because it is the best at creating added value and redistributing it, it links many elements, from wine production to tourism to its linked industries, and an immense image. We must address issues related to agriculture. I am worried about our sector, because I see the strength of those starting up using consumption models different than ours, and who, to avoid some health issues, for example, say certain products should no longer be produced. No product is unhealthy in itself, if it is consumed in a conscientious way - awareness is created through communication and propaganda. But that's not the only risk. I am thinking about the issues of labeling, the attempt to promote mass retail agro-food productions and turn them into commodities, and of switching to synthetic food. We will have to feed 10 billion people and there will be less and less farmland. On the one hand, we must make people understand the value of our productions, and consequently more resources are needed to promote them. On the other, we must increase production with less land and water available to us, which forces us to rethink the world in which it is produced today. This was clear two years ago when we made the 4.0 tax credit for investments in technology and innovation on farms. Another pivotal issue”, underlined Patuanelli, “is water management. Either we think about it today, or in 30 years we will have enormous problems accessing water. The NRP has made 880 million euros available for this issue, and this is the first step. In the meantime, however, today there are many technologies in place that permit a more rational use of resources”.
Although we have so many challenges ahead of us, some good news has come from the market. In 2020, the Pandemic caused companies to lose 15% in turnover, and the loss in turnover along the supply chain equaled 3 billion euros (negative peaks registered in the catering channel, -40% and wine shops, -23%), while 2021 confirmed not only the dynamic growth of e-commerce (+120% in the first half of 2021), but exports restarted, too (in the first 4 months of 2021, up +4.2% compared to 2020, according to ISTAT data evaluated by WineNews). By the end of 2021, exports should close at an overall rebound of +9%, and then return to pre-Covid19 levels (13 billion euros in production value) in 2022, Covid19 willing.
Sparkling wines represent almost a quarter of the National wine exports, for 2 billion euros in value, 70% thanks to the Prosecco system, which once again is leading the recovery of Made in Italy exports, according to data from the Italian Wine Union Observatory (UIV). Sparklings are a constantly growing trend, so much so that it has been estimated 1 billion bottles of bubbles will be produced by 2024, or more than 30% of the current National production of 750 million bottles. Then, there is the new phenomenon of rosé wines, 120 million bottles in 2020 alone, totaling 450 million euros in value, while the driving force of the new Prosecco Rosé is more than +10%.
Restarting wine Fairs, such as Vinitaly, will also be fundamental, and Giovanni Mantovani, General Manager of Veronafiere said, “we started up again in June with Opera Wine. The feedback was fantastic and has given us a lot of confidence for the future, in view of Vinitaly Special Edition (October 2021), which will be in a much smarter format from the management and economic point of view, according to what companies are requesting today. Obviously, major events are still needed, but they will change again, and strategic platforms owned abroad will be increasingly important. For instance, in August, the platform we have in Asia will stage the second edition of Wine2Asia, or the one we have in Brazil, Wine South America, or like the one that we will start working on next year in North America, our number one wine market. Strategic digital tools, such as VinitalyPlus will also be more and more important, to keep in touch with the markets, 365 days a year, as well as have data to analyze, which will be more and more essential”.
“In order to face the future”, added Lamberto Frescobaldi, at the helm of the Frescobaldi Group, one of the top Italian wine groups, and vice-president of the Italian Wines Union (UIV), “companies must keep their antennas up, and be organized, not only in terms of size. One thing that our sector has underestimated, because things were going well, is keeping the company's indicators under control. We at Frescobaldi have always done so, meticulously. Then there are emergencies like Covid19, when you need to know what to do to be able to manage the crisis. Our export quota is 65%, which is a safety barrier. Diversifying is the answer, not putting all your eggs in one basket. And, when a market is doing well, you can’t just stop there, but you need to look for another one. We produce wine every year and we have to look far ahead to sell it at its best”.
A central issue needs to be addressed that starts in the vineyard, because of the phenomena involved that must be observed, noted the Observatory of the Italian Wines Union (UIV), directed by Carlo Flamini. Sixty percent of Italy’s annual wine production is PDO and PGI, starting from the vineyard, but then it drops to 50% in the bottle, because part of the wine is downgraded to table wine. This phenomenon, involving an average of 10 million hectoliters per year, destroys value. Further, the Italian viticulture potential says it will be possible to reach 60 million hectoliters in 2025. This means it will return, at the vineyard level, to 2008, when the CMO began financing vine-planting rights, which, due to the new system have returned to +1% growth per year. “The situation will be different, though, because many of the DOC registers are closed, and those who are planting new vineyards today, in many cases, cannot claim denomination wine, only table wine”, which obviously, in general, is worth less, and risks creating even more surpluses.
“Rather than thinking about reaching 60 million hectoliters, it is more important to organize ourselves and manage growth, because these numbers”, emphasized Claudio Conterno, at the helm of the historic Piedmont brand, Conterno Fantino, “tell us there is chaos. We have to grow in value. This is a pivotal moment, as was the methanol crisis, and the economic crisis in 2008. Nothing will ever be the same again. We need more streamlined, comprehensible laws, and we need to get out of this bureaucratic swamp. We have the tool of overriding denominations, so we must use it to control production beyond the market. Each denomination has 20% of the production ceiling, which can go over the top or be downgraded, and must be used to manage the market. We have to study the numbers and predict them, and not always be late, either having too much wine or too little. We need people who know how to organize all of this”.
“We need to coordinate promotion”, reiterated Francesca Planeta, at the helm of the family winery, one of the star players that has consecrated Sicilian wine, “perhaps creating a working group including producers, promotional entities, Vinitaly and institutions that are convinced of this promotional plan. We need renewed thinking, because markets have changed, channels have changed, HO.RE.CA. must be supported, but also to be aware that consumption between online and mass retail channels has changed. We need to relaunch the territories on the beauty of our country, to bring people back to drinking Italian and getting to know Italy. And, we must not forget the value of sustainability, which we have focused a lot on in Sicily, creating the SosTain foundation, which sees the Consortia Della DOC Sicilia and Asotin together”.
In a new scenario, the consumer is still upfront and center, as Francesca Benini, Sales & Marketing Director of the largest Italian wine company, Cantine Riunite & CIV, pointed out, “the consumer”, she said, “is different in every market, but there are some common trends. As far as health and safety are concerned, which in the wine world translates into naturalness, meaning attention to calories, and alcohol content, some consumers are asking for wines that have 7-8% alcohol content. People are interested in everything that is local, and for Italian producers, this means working on the value of denominations, which we need to narrate better. Plus, alternative packaging to the bottle is rapidly growing, which is good not only on the shelves but also for e-commerce that has grown a lot. The tetra brick and bag-in-box have begun popping up again everywhere, as well as formats like the can, which are also very trendy. Whether you like it or not, it is a reality that we have to take into consideration”.

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