Allegrini 2018

Italian wine starts again, looking at new opportunities in large-scale distribution and in China

Requests to the policy for liquidity and a shared position on alcohol-free wine. The growth of large-scale distribution. The need to accelerate in Chi
Italian wine also starts from China

Italian wine, the main sector of the agro-food industry that is worth over 16 billion euros in turnover and is a “business card” of Made in Italy in the world, is starting again. A sector that has suffered from the pandemic, in particular, due to the exposure that the medium-high segments of production have towards the horeca channel, which has been closed for a long time, in Italy and abroad, but that has also fielded its resilience, with 2020 exports that have marked a 2.3% drop for a turnover that has exceeded 6 billion euros, a better performance than competitors such as France. Now it is the scenarios that the sector is looking at, which have changed, as emerged today from the virtual “Food Industry Summit” of “Il Sole 24 Ore”, but offer new opportunities starting with international markets.
Despite the pandemic leaving on the field the problem of the closure of the horeca and in particular of the restaurant channel and the consequent lack of liquidity of the companies, “wine has been able to react with innovative tools such as e-commerce - said the president of UIV/Unione Italiana Vini Ernesto Abbona - in this way the presence on international markets has not failed, in the face of declining turnover especially in the horeca, with its sporadic and sometimes paradoxical closures. So much so that, today, what is alarming is not so much the stocks of wines, which are even less than last year despite having had a 3% richer harvest. But there is a need to help the horeca and the wine companies that work with the sector, and that over the years have created value on wines. The sharp drop in sales due to closures has not been absorbed by the other channels, but what has dropped is the value of the wines, also understood as the set of elements such as culture and sociality that travels with the bottles around the world. This has led to bad debts that we estimate to be as high as 500 million euros, with a lost work in the sector of 1.5-1.8 billion. This is why we would like to see a non-repayable contribution from politics for the wineries to strengthen the measure introduced last year, exempting them from the payment of social security contributions and above all, and this is the innovative proposal, to avoid suspending the payment of taxes on stranded credits that in large part will not be paid. But also to avoid the advance payment of VAT: in this way the State does not take on a cost, but gives liquidity to companies putting them in a position, without intermediaries, to give immediate liquidity to the horeca which, when it reopens, must not only propose the wine it has in its cellar, but also the new vintages”.
International markets have substantially held up and Italy, despite all the difficulties involved, has managed to limit the damage. In addition to their restart, however, it is necessary to take advantage of new opportunities. Like in China, where, as a result of a round of duties on imports of Australian wines that had ousted France as the first suppliers of the Chinese market and are now losing positions, new spaces are opening up for Italian wine as well, although it is lagging behind its competitors. “The numbers confirm that the lack of Australian wines creates an effective opportunity for whoever is willing to seize it - explained Silvana Ballotta, CEO of Business Strategies - the French, who were lagging behind Australian wines, have made up for their gap, returning as leaders in the sector. Wines from New Zealand and other countries are arriving, while for Italy the pandemic has highlighted the deficits of our wine system. Those whose development strategy included speeding up tools such as digital technology and getting closer to the end consumer with communication and training are already ahead. And in fact even Italian producers who are already well positioned on these fronts, in terms of budget in 2020 have gained more from China than from the United States and other countries”. We must ask ourselves why we have not succeeded in creating a defined identity of Italian wine. “In China - added the CEO of Pasqua Vigneti e Cantine, Riccardo Pasqua - the per capita consumption of wine is 0.5 liters per year compared to 11 in the US. The space is enormous and Italian wine can follow the successful path already taken by the automotive and fashion made in Italy. But it is necessary to completely change strategy and go with a unique and univocal message of the country system and rely on local consultants who can suggest the way the Chinese look at wine. In short, we need completely different methods from those used in Western markets”. The other path to be activated is training: the Wset courses that have brought many Chinese wine educators closer to wine but in which Italy is less present than other countries, have been blocked, and here too there is a space to be filled.
Examples of the resilience of Italian companies in the pandemic come from the cooperative system, which represents more than 50% of Italian wine produced and marketed, and in 2020 recorded an increase in turnover of 1% and exports of 3%, bucking the trend. “Many of the large cooperative companies turn to the large-scale distribution channel where things have gone well - recalled Simon Pietro Felice, Caviro's managing director - a channel that has transformed a great deal over the years, from being poor to being very rich, and where even "precious" products can find their space, in Italy but especially abroad. Where large international retailers have developed a wide and evolved display of products on their shelves. I would like to remind you that abroad the majority of wine consumption is outside the home, from the English to the Americans, from the Chinese to the Japanese. With the lockdown they have been forced to try consumption at home, buying it in supermarkets, and this has opened a market that was not there before. And tomorrow, even when the horeca will restart, there will be a great opportunity for wine that could also lead to an increase in per capita consumption. Caviro is the main player in English distribution, and we had to double our sales to the English large-scale retail trade overnight. And that's where the ability to know how to do it comes in”.
In the meantime, Italy has to deal with alcohol-free wine. “The controversy about alcohol-free wine is specious - concluded Abbona in the Summit (which also launched Agribusiness24. com, the new online editorial platform of Gruppo 24 Ore that integrates the contents dedicated to the agro-food sector, from daily to online, from Agrisole to Radiocor, ed.) - and UIV is not in tune with the position of our institutions and we will ask for an urgent meeting with the Minister of Agriculture Stefano Patuanelli to reiterate the line shared by wine entrepreneurs in view of the discussion on the reform of the CAP in Brussels on May 25 and 26. We are talking about an oenological practice already regulated in Europe in 2018 where alcoholization is allowed up to 20% of the degree and used, instead, by Germany and Spain for the production of totally alcohol-free wines. Products that open a new market opportunity that we want to anchor in the world of wine and not leave it to beverage multinationals. Not only because it is an opportunity for development from the commercial point of view, but also to guarantee the consumer: the wine sector has certifications and controls much more stringent than other sectors. And we are not talking about totally alcohol-free PDO and PGI wines, nor about adding water to wine: some techniques foresee the reintroduction of endogenous water extracted from the wine itself during the alcoholization process, a practice that we want to limit to table wines and varietal wines, which are the same products for which distillation is requested because they are in excess”.

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