Large-scale retail trade lifeline for wine during the lockdown. The future is still uncertain

So far, at least on the shelves, wine has moved, with domestic consumption partly absorbing the drop in consumption outside the home, in bars and restaurants, which is dramatic for many small wineries in the Belpaese. The data related to the lockdown period (23 February - 17 May 2020) speak of a growth in value of +5% for PDO wines and +7.3% for PGI (IRI data). But from now on it is more than ever an unknown: we cling to the fact that Italians, in time of lockdown, have not given up wine, which has confirmed its role as a small daily luxury, but also as a cultural element to bring to the table, for many. However, the unknowns are many, first of all, the impact of the economic repercussions that there will be at the macroeconomic level, which will most likely turn into less purchasing power for Italian families. According to operators, it will also have to be seen how the recovery of the HORECA channel will work, and how many restaurants and bars will be able to recover consumption “sold” to distribution. Moreover, if up to now modern distribution has proved to be a solid and efficient channel, it will also have to take into account the pressure of many small Italian wineries that, when the restaurant taps are closed, are pressing to enter the shelves, which, however, have their dynamics in terms of the critical mass of the product, rotations, logistics, prices, assortment and so on. In short, a clearer scenario than that of catering, but with some uncertainty for the coming months, the one outlined to WineNews by several of the most important players in Italian wine, from Caviro to Gruppo Italiano Vini, from Cavit to Settesoli, from Mezzacorona to Codice Citra, from Feudi di San Gregorio to Cantina di Santadi, from Mondo del Vino to Cecchi and Piccini.
“There has been growth, both for the “daily” lines and for the premium products - explains Giorgio Forlani, Caviro’s Italian gdo manager, the absolute leader in the channel - but not exponentially. Even now the situation is normalizing, and May is in line with the historical one, the peak linked to COVID has been there, but it will stabilize. The problem is that until the unemployment insurance funds and salaries arrive, traveling will not restart and therefore a large part of the economy, for many people it will be difficult to go shopping. I am going to supermarkets, I don't see lines, and I see small expenses. Until there is an important return to real work by the people, I see a different period from the past, at least for this second part of the year. Nowadays, people think about where to bring children with closed schools and kindergartens, about whether or not to go on vacation, there is a social problem. We must hope not to lose what we have gained. Then, another important aspect, we will have to understand how the large-scale retail trade will act on the promotional, communication, and distribution policy aspect”.
“There has been a growth, overall, but if we look at the average price and the buying mix, there has not been much change. One clear thing is that the still wines sector has done much better in terms of large-scale distribution, perhaps more for meals, than the bubbles sector, Prosecco apart,” underlines Enrico Zanoni, at the helm of the Trentino giant Cavit. “It is difficult to make predictions,” adds Zanoni, “but I think we will return to certain normality, perhaps with phenomena that were already underway and that the COVID effect has accelerated, such as the return to shopping in nearby stores, for example. Wineries will also have to reckon with other aspects, starting with a restaurant that will probably review the management of wine, going even more on glass service, on increasingly “regionalized” lists, but also on doing less stock with smaller orders, which will impose great efficiency from a logistical point of view. But the big issue for everyone, from businesses to consumers, will be the lack of liquidity”.
“We are in line with 2019, the growth that there was at the beginning, but it was also due to a race for storage by the signs - underlines Antonio Capaldo, at the head of the Feudi di San Gregorio group, one of the most important realities in Campania - then there was a more regular trend. For the future we will see, but I do not think of a strong contraction in consumption. It is clear that the economic context is difficult, but a lot depends also on how the recovery in restaurants will work, on which there is a big question mark, between the return of the kitchen at home, lack of security, lack of money, although I think that many people will drink the bottle of wine at home anyway. Specifically on the large-scale distribution - adds Capaldo - much will depend on the commercial seriousness of the companies. Nobody is raising prices, but if there will also be caution not to sell off, things will keep more or less as they are, then it is clear that if some will make great promotional policy maybe they will gain now at the expense of others, but then they will lose value afterward. In this context in which everyone is suffering, there is no point in waging war between producers, on the contrary, we must try to accompany together a recovery that we hope will come. The large-scale distribution signs have behaved very well to date, I must say, we are all suffering, and we must all help each other. The signs so far have been correct, we producers must be correct, we will also try to be close to the restaurants, in terms of payment times and service, and we hope that the situation will start again. But to date I do not imagine a significant contraction. Wine has proven to be an essential part of our culture, and therefore it will not be the first thing we give up”.
We return to Trentino, with the testimony of Stefano Fambi, director of Nosio Spa, the sales manager of the Mezzacorona group: “at the beginning, there was an important growth, also linked to the desire of the distribution chains not to remain without product, also to face the very strong sales of the first weeks. We did even better than the market average. In recent weeks there has been a slowdown, but still growing compared to last year. From the data, in general, we can still see growth, albeit at a slower pace, more or less sustained also depending on the geographical area. In general, however, better still wines than bubbles”.
“There have been positive weeks - confirms Corrado Casoli, president of the Italian Wines Group (Giv) - we are in the average trend of the sector. In general, they signal us that with the fact that we can move out of the municipalities there is a recovery in the Hypermarket, which can be a positive sign. The great unknown is that of the future, of the purchasing spending capacity of families, it is difficult to make predictions, it is necessary to understand how the reopening of restaurants works, how the economy will recover. Of course, there will be repercussions, hopefully as little invasive as possible even on the wine front, but we have never seen such a scenario before. However, I still want to be optimistic”.
“Sales are still going well in the channel - comments Paolo D’Adamo, head of gdo Italia for Settesoli, one of the most important companies in Sicily - and the data are in line with the general trend. We will see what will happen, the measures have loosened, but the sentiment is that in many Italians there is still fear of the virus and contagion, there is the desire to go out, but in the coming months there will be no return to pre-COVID out-of-home consumption, and I think that for wine there will still be a fairly positive trend in large-scale distribution, for domestic consumption that has also been of evasion”.
“One aspect that has become clear is that the number of local shops has grown, an aspect that has brought back into the spotlight the importance of the territories also in the commercial network, where differentiating the channels is fundamental - underlines again Valentino Di Campli, at the head of Codice Citra, one of the leaders of Abruzzo wine, and president of Consorzio Vini d'Abruzzo - we have had a good relationship with the distribution, and indeed we have strengthened the existing relationships. From now on it will have to be understood whether this dynamic of growth, in modern distribution, will continue, whether there will be a general economic crisis and so on. We travel by sight and we must be able to respond promptly to changes that may occur. There are pushes everywhere, many who were not present want to enter the large-scale distribution, the competition will be very strong, we have to be careful. I hope there are no pressures on prices, which would also be unjustified”.
“With the return to substantial mobility, we are witnessing a progressive adjustment of consumption. The phenomenon recorded in the lockdown phase - comments Mario Piccini, at the helm of the Piccini wineries, one of the largest in Tuscany - was linked to storage purchases, definitively finished, and an increase in sales in proximity stores, to the detriment of superstores or large areas. The trend in the coming months will be mainly linked to the speed of the country's recovery, i.e. the purchasing power of consumers, and potential limitations on mobility. Lower purchasing power would require a response from us wine makers to reduce production costs through greater process efficiency and reduced packaging costs, see large formats or bag-in-boxes, so as not to affect product quality. On the other hand, greater mobility will allow consumers to return to large areas where prices, for the same quality, are certainly more competitive. This, combined with renewed promotional activities, we hope will compensate for a small reduction in purchasing power. We expect, therefore, that sales in large-scale distribution will remain at fair levels even in the second half of the year, continuing to drain part of consumption outside the home while, for the Horeca channel, the return to normal will be more gradual”.
“The gdo has taken the lion's share in the last 3 months, also for wine, with a generally positive trend, even if - points out, again from Chianti, Cesare Cecchi, at the head of the historical family reality, Cecchi - with differences between the various price ranges. The range between 3 and 5 euros per bottle has gone very well, the range from 5 to 7 euros has also gone very well and something has also moved in wines up to 10 euros. Above this price range, on the other hand, it's a bit more difficult, also because the lack of social moments, in general, has resulted in more “everyday” and less important wines. The positive thing is that wine continues to be consumed. The orders for the gdo continue to arrive. Maybe when the rest of the channels will start up again things will normalize. It should also be noted that this trend has been very similar in other countries around the world, such as the USA, where, however, the presence in modern distribution is concentrated in the hands of a few large groups, in a more evident way than in Italy”.
“GDO has been the only channel that has held together with online, which, however, is worth much less - points out Enrico Gobino of Mondo del Vino, one of the main Italian wine groups, with plants in Piedmont, Emilia Romagna, and Sicily - in fact registering a shift in volumes from out of the home. Many people today are pressing to enter, but talking with the various buyers, it emerges that, at this stage, there is no desire to introduce new products, even though there is great pressure. This must make you think a lot about the importance of multi-channel: in Italy, many people who work with the HORECA do not look favorably on living with the modern channel, today perhaps this paradigm should be reviewed, it is not true that only those who are in a certain channel is virtuous. However, it is necessary to think about a pricing policy that is consistent with the different channels, which are parts of a chain that can coexist. In any case, in terms of consumption, it is easy to expect that, in the coming months, growth will be reduced both in terms of values and volumes, because from now on we will feel the blows of the crisis on a product, wine, which is still non-essential.
“The gdo is a segment that we follow not directly but through our distributors, because our focus is Horeca - explains Raffaele Cani from Sardinia, at the helm of the Santadi Winery, among the reference realities of the Region - but we have seen that modern distribution in recent weeks has also been important to sell wines that normally go through other channels, more important wines that perhaps gratify the producer more. The gdo has understood that there is a part of the business that escapes them, on a certain target of wine, and I believe that even when everything returns to normal, the important brands of wine will continue to invest in large-scale distribution.
It is difficult to say what the future will bring, but multi-channel will be more and more important, especially for complex realities with large assortments as we can be, even for important wines. At the restaurant people will return with difficulty, the tranquility will be there when there will be a drug, the premises are not filled by law. Italians do not usually drink large bottles at home, unlike Switzerland, for example. But maybe that will change too”.