Mergers & acquisitions, the Pandemic has accelerated the process on the Italian wine scene

The first half of 2021 has been characterized by a very intense activity of merger & acquisitions transactions. Some of the largest transactions were those of Botter and MondodelVino, which passed under the aegis of the Clessidra fund, Antinori, which acquired the majority of the Friuli brand Jermann, from Coppo, which joined the Dosio Group, in a transaction between Langhe and Monferrato and Italian Wine Brands, which incorporated Enoitalia by Renzo Rosso, owner of Diesel, who, with his Red Circle Investment, rose to 7.5% (and joined the Board of Directors) of Masi Agricola, in Torrevento, formerly in the Prosit Group (fund controlled by Quadrivio & Pambianco), which acquired the majority of Oria Wine.
Each of these transactions was different from the others, because of the type of players involved (in some cases, large commercial and industrial companies, in others, financial investment companies, and still others leading brands focused on production, from the vineyard to the cellar, often selling the property, but remaining in the management of the company that bought it). However, they all recount a process of aggregation that has been underway for some time on the Italian panorama. The Pandemic, its contingent complications and the increasingly complex scenarios that will appear when it is finally over, have accelerated the process further, in what seems to be a new beginning of an inevitable phenomenon. Lorenzo Tersi, one of the leading experts in the field, and at the helm of LT Wine & Food Advisory, explained it to WineNews.
“Covid-19 has only accelerated a path that had begun some time ago. From now to 2022, we will see many more transactions like the ones we have already witnessed, involving private capital companies and cooperatives, as well as the large wine “industries”. It’s only the beginning. We will also see similar companies that do not have large tangible assets such as vineyards or wineries, but have a market and critical mass product, unifying. Or, companies that are “best in class”, highly prestigious companies, seeking to diversify and integrate territories and offers, while maintaining a consistent positioning, and working, however, on shared values. This”, underlined Tersi, “is simply common sense to enhance one's assets under all aspects: organizational, managerial, distribution, dimensional. Then, there are the Cooperatives, which must maintain their aspect of social impact on the territories, but that to grow will have to invest more and more in already established brands as well. For instance, like Caviro did some time ago with Cesari, in Veneto; that is, incorporating a brand that is already a territorial umbrella on the supply chain. We have been registering this trend towards aggregation for years, and it will characterize the coming years even more so. We must also pay attention to the integration between different agro-food chains. We will see more and more food companies also invest in wine, where there is the possibility of sharing and integrating target markets, distribution channels and similar values. Further, we must not forget investment funds, which are continuing to look to Italian wine. Great excitement is brewing, which will be good for this sector that has suffered, but is still performing, sustainable, has medium-long term returns, and represents community and local social business, which is not at all a secondary aspect”.
It would therefore appear that the road to aggregation is irreversible. Further, due to the growth of mass retail and e-commerce, the post-pandemic market scenario will be even more complex, and will require not only numbers, but also more advanced skills than in the past. “Due to the pandemic, mass retail, a channel that for wine has grown significantly all over the world, because the catering channel was closed, has had the opportunity to treasure customer service policy, and has become a competitor in traditional wine distribution. Plus, there is the online channel, both for mass retail and specific platforms, which still has small numbers but will grow, thanks to increasingly efficient service and logistics, as well as the vital aspect of product availability that is becoming almost limitless. Wine producers will have to know how to adapt to all of this. Mass retail will be more expensive to approach because it has raised the bar, in terms of product, but not only. Many things are changing. It is a complex scenario to read for companies, because our productive fabric is made up of many structured companies, as well as many not very well organized ones. And, small producers, even 100-200.000 bottles, are interrogating themselves on the future, since they will have to deal with new distribution models, innovation, positioning errors made in the past, on the shelf and online, as identical bottles often have significant price differences from one retailer to another, and this is confusing. Furthermore, the distribution model, by now, is a worldwide reference”, pointed out Tersi, “because this is what allows online sales and is the reason why analyses such as the one we carried out for the Consortium of Bolgheri and Bolgheri Sassicaia are important. The Consortium asked us to monitor at what prices its wines are sold in the world, meaning that being aware of your market is necessary in an increasingly complex and crowded market. Returning to the theme of aggregations, this is the reason that dialogues with entrepreneurs who do the same job in different geographies, and in different sectors, will become fundamental for the wine world”.
Up to now, we have been talking about “territories” as the target for investments, but this, too, is changing. “The focus, rather than on the territories, will be on the “best in class” companies in the territories, which have strong brands, are local, have often built the territorial brand as well as their own, and have found a place on the wine lists and the most famous wine bars in the world. In some territories, values ​​of the vineyards have become almost speculative, like those of Barolo or Montalcino, or Bolgheri, where it is difficult to invest “only” in the vineyard. We are not talking about thousands of companies, rather a few dozen per territory, those that are also leaders of lesser known Regions or denominations. These companies may have no intention or need to sell, but if there is a possibility of growing, or perhaps even opening a minority stake in their capital, they will not hold back. Italian wine”, concluded Tersi, “continues to have great appeal, Made in Italy will be the star player of the rebound, and perhaps those who invest in Italian wine, in addition to a winery with vineyards and a leading brand, will also want a wine resort, in order to combine wine production economy with that of hospitality, which will be increasingly important”.