Challenging 2022, return to growth in 2023. Italian wine will pass the “stress test”

After a triumphal rebound in 2021, 2022 instead will be very challenging for Italian wine. The war reduces consumer confidence and, consequently, consumer discretionary. Above all, the increase in the cost of raw materials will probably leave a small “minus sign” at the end of the year. Furthermore, marginality, which is a fundamental element to the growth of companies and investments, as well as key to facing international markets, will most likely suffer more than the overall turnover. However, the sector will be able to stand up to this “stress test”. Starting in 2023, in all probability, if the international scenario mellows out, it will be able to resume growth, because even though the market is dealing with some critical issues, such as the loss of young consumers in the US, it is still growing. Plus, it does need to be more diversified, because today, 3 big countries (the USA, the UK and Germany) account for 50% of exports, and Italian wine’s top 7 markets account for 70%. These are the results indicated on the focus “Stress Test: Italian wine under the economic test”, presented at Vinitaly, together with the consulting, tech, and research agency, Prometeia, Banco BPM, the Italian wines union, Unione Italiana Vini (UIV) and the federation of wine industries, Federvini.
“The first answer is always quality, because it primarily means higher margins, and greater propensity to export”, Claudio Colacurcio of Prometeia said, whose data emphasized that the costs of glass, paper, energy, transport, and so on, which grew +58% in 2021, will grow a further +31.9% in 2022, and then finally decrease (the forecast is updated to March 2022) in 2023.
This will obviously have repercussions on the market. “Italian wine will endure a 2.5% to 3% decrease in turnover this year, due to the combination of economic factors that have been further negatively accelerated because of the war”, Paolo Castelletti general secretary of Unione Italiana Vini ( UIV), said. “Sales in emerging markets involved in the conflict between Russia and Ukraine have been almost completely eliminated, “continued Castelletti, “but more than anything else the escalation of production costs, inflation and the collapse of consumer confidence is creating an exceptionally negative spiral on Italian wine”. Currently, UIV estimates a further increase in the average cost of production to 400 million euros, bringing the surplus on production costs over the 12 months of 2022 - which now account for over 30% of the average bottle value - to 1.7 billion euros.
“The economic situation is undoubtedly complicated. The Russian-Ukrainian conflict has further aggravated a picture marked by increases in logistics and in prices of raw materials (glass has increased + 25%, cardboard more than doubled, corks, + 40%), which put more and more of a strain on customers and workers every day”, Vittorio Cino, CEO of Federvini, added. “Federvini had immediately highlighted these aspects”, Cino added, “now it is necessary to support wineries using targeted promotional actions that facilitate access to new markets and provide serious support in internationalization. We cannot put a brake on the recovery that we were slowly regaining - I would like to remind you, that wine has reached 7.1 billion euros in export value - the companies in the sector are demonstrating extraordinary resilience, but there are many unknowns on the horizon”.
However, wine has what it takes to overcome this phase, as it always has done in major international crises. Its average weight of exports on turnover is 66%, underlined Banco BPM and Prometeia. Today, wine is the number one Made in Italy food product on many markets. A growing positioning has also positively affected Italy, compared to other international producers. Italy’s share of world imports in 2021, reached 22% of global demand, and an increasingly effective penetration, precisely in the highest quality segments.