Italian wine will return to pre-Covid19 levels in 2022. Reconstructing value is fundamental

The strategic issues that the wine supply chain of today and tomorrow will need to address surfaced during the discussions focused on wine at the “Forum of Economies”, signed by UniCredit (in collaboration with the Consorzio del Vino Brunello di Montalcino). These issues are: Omnichannels, as mass retail has grown rapidly, online has soared while HORECA (hotels, restaurants, catering) has suffered, but is trying to restart; new formats, casting an eye particularly on the topic of wine in cans, a products still not much explored in Italy, but increasingly successful around the world, especially among young people; diversification and expansion of the product range, and lots of attention to the whole world of organic, natural and low-alcohol wine, which meets a demand where the issue of health and wholesomeness is increasingly transversal and important; sustainability, at 360 degrees, from the vineyard to the shelf, as well as socially and economically; digitization, because this is where, in every area and sector, the future is. The Forum engaged the participation and contributions of Andrea Burchi, Marco Wallner and Luigia Mirella Campagna of UniCredit, the president of the Consorzio del Brunello, Fabrizio Bindocci, as well as producers and managers of the Montalcino area, such as Giampiero Bertolini, CEO of Biondi Santi, Gabriele Mazzi, Chief Finance Officer of Castello Banfi, Giacomo Bartolommei, owner of Caprili, Stefano Cinelli Colombini, at the helm of the Fattoria dei Barbi, Renzo Cotarella, CEO of Marchesi Antinori, one of the wineries synonymous with great Italian wine around the world) .
The main objective, of course, will be recovery, in catering, tourism, and more. According to UniCredit, turnover in the wine sector, which will see a rebound this year, in 2021, will return to pre-Covid19 levels in 2022. That means, it will return to 13 billion euros of production value registered in 2019, the last “clean” year before the Pandemic, when the wine sector contributed 10% to the total turnover of Italian food & beverage. There are actually many factors that give hope to a new era of growth for Italian wine. It is undeniably true that the impact of Covid-19 was heavily negative (UniCredit estimates an average decline in turnover between -10% and -15%, though there are big differences from company to company; i.e., those focused on catering had much greater losses as they were closed for a long time in Italy, and all over the world, ed.). However, as history has shown many a time, the sector has proven to be more resistant than others. Exports, instead, were basically stable (6.3 billion euros, -2.2% in 2020 compared to 2019), but the resilience of consumption was really comforting, at least in volume, as household spending grew + 7% on an annual basis, against +1.2% in 2019 compared to 2018. This is a sign that Italians have not given up on a glass of good wine, and it is back, obviously the star of a new daily life style that will inevitably change again, once the Pandemic is over, while now it is an important basis for restarting.
On the other hand, Italy, whose original name was Enotria, is the country of wine, and has achieved many records, like in production (which is what it’s worth), 52 million hectoliters in 2020, according to ISTAT data and wine denominations, counting 526, of which 408 PDO and 118 PGI, compared to 436 in France or 139 in Spain. It is a heritage, UniCredit emphasizes, that is protected and promoted by 122 protection consortia. The biggest challenge, however, is constructing, or rather reconstructing value. The reason for this is that domestic consumption held its own in volume, but since catering was closed, value was damaged. The same goes for exports, too. As a matter of fact, the trend towards increasing average unit values ​​for exports has stopped, and in many European countries, sales, as UniCredit pointed out, closed at lower prices. The good news on foreign markets is that Italy has held up better than some of its competitors, maintaining and in some cases actually increasing market shares, especially in countries where it was already leader in wine imports pre-Covid19. Further, even this factor, if it is used well from now on, will make us look to the future with renewed confidence, after such challenging months. A large part of the world has already exited the crisis, and another part is leaving it quickly, like the USA and the UK, or more slowly, like Europe. We all have a great desire to make a toast, with a glass of good wine, to restarting.

Focus - The future of post-pandemic wine, according to producers and consortia

Managers of prestigious wineries, although different from each other in history and size, confirmed, at the Forum of Economies, signed by Unicredit (in collaboration with the Consorzio del Brunello di Montalcino), there is no doubt that something will change for the wine sector, which has endured the impact of the Pandemic. It is difficult to say exactly what will change, but the processes that were already underway and have been greatly accelerated, are definitely in place.
“It is true that the effect of the Pandemic has negatively impacted the wine sector”, underlined Renzo Cotarella, CEO of Marchesi Antinori, the most important private Italian wine company, led by the Antinori family for 26 generations. “It is equally true that the sector itself has shown a strong ability to adapt. The emergency has helped to speed up a process already underway, such as online sales, while at the same time it has helped to change the obsession of the great conflict between mass retailers and restaurants. It is obvious to everyone that today, it has become easy to find and know the price of wine, and therefore, this concern is a thing of the past, and must be overcome. In the future, competition will be more widespread and will influence various elements starting from sustainability, as now it has become imperative to find a definition. Regarding the other challenges concerning consumption models, such as, for instance, wine in cans, becoming more and more popular in the USA, it is evident that we will need structural evaluations because not all wines with appellations can go in cans. The same reasoning also affects the issue of alcohol content”.
“Two enormous incentives have come to us from the Pandemic. The first”, added Giampiero Bertolini, CEO of Biondi Santi, the winery, "cradle" of Brunello di Montalcino, where the great Italian red was created in the nineteenth century, and today it belongs to the EPI Group of the French Descours family, “concerns the consumer, with whom we must resume direct contact. We sell to restaurants and to buyers, but we have lost the personal relationship with our consumers. The second makes us realize that the Pandemic has highlighted the value of the brand more, which is a fundamental element for the consumers themselves who need to be reassured. Digitization must go in these two directions: restore personal contact with the consumer and create value on the brand”.
“As the manager of a wine company (Tenuta Il Poggione, ed.) and president of the Consortium of Brunello di Montalcino wine”, said Fabrizio Bindocci. “I feel like saying that there are some things to save in this last damnable year. The first one is the reaction on the leading wine market, and that of our producers, who managed to close on a positive note, despite the extremely negative economic situation. In my opinion, the second was the relationship with banking institutions, which have proved and are proving to be very close to a sector under obvious financial strain. Financial instruments, designed quickly and more dynamically than in the past, will certainly represent a substantial support. Especially, those that represent the backbone of the Italian production, i.e., the small quality companies that have had to close, like their main business partners in the catering and out-of-home channels. Montalcino, thanks to the last two super vintages (2015 and 2016, ed.), acclaimed by International critics, has managed not to let its guard down, especially in terms of product enhancement, growth plans and the commercial strength of our entrepreneurs and our brand. Now, first of all Italian wine needs to resume its journey and start again from where we left off. During a crisis, tried and true certainties are questioned, and voices are raised on many sides about the need to reform the business model of our sector. But I disagree. The truth is that in the recent past Italian wine has moved at a much higher rate than all its main competitors. National export has in the last decade by 60% and Tuscany’s exports almost 70%. Our sector must not change, but rather progress along the path it has taken, combining production quality with improved commercial and communication resources. And, this is precisely what we are doing in Montalcino, which managed to react to the year of Covid-19 on the strength of its global brand and the choices of its producers. That banking institutions such as UniCredit are interested in partnering with the wine sector shows that Italian wine companies are healthy and ready to restart, like our Brunello di Montalcino is doing, and which compared to the same period in 2020, in the first quarter of 2021, has registered + 37% in State tax seals delivered for ready for sale bottles”.
Stefano Cinelli Colombini, at the helm of the historic Fattoria dei Barbi of the Colombini Cinelli family, also took stock of the situation in Brunello di Montalcino. “In terms of the market, the last 12 months have been very positive for Brunello di Montalcino”, he said, “not only in terms of sales but also in terms of stocks, which have dropped considerably. Our flagship wine is experiencing an excellent moment, starting from the highest range of our products, and in general, the Tuscan appellations are showing signs of recovery, too, registering 11.4% growth in bottled wines in the first 4 months of 2021 , compared to the same period in 2020. The picture of our micro-situation is very different from the National one”.