Positive sentiment in 2023 for Italian wine bigwigs. Mediobanca’s sector study

Inflation still weighs on the shopping cart and consumption, in Italy and many other countries around the world, as do high energy and commodity prices, albeit with less intensity than a few months ago. And the tensions generated by the war from Russia and Ukraine are also not helping the markets. Still, major Italian wine producers look forward to 2023, according to which wine sales as a whole will grow, albeit by a modest +3.3%, as will exports, forecast at +3.1%, thanks, not even to say it, to optimism related to sparkling wines, a segment for which +5.2% in revenues and +4.2% in exports are estimated, while still wines are expected to grow around 2.8% in both sales and exports. This emerges from the “Survey of the Wine Sector in Italy” 2023 by the Mediobanca Study Area, which covers the 255 leading Italian corporations with 2021 turnover of more than 20 million euros and aggregate revenues of 10.7 billion euros, accounting for 89.3% of the sector’s national turnover (of which 155 Spa and Se, for a turnover of 5.8 million euros, 82 cooperatives, which total 4.1 billion euros, and 18 foreign companies, for 716 million euros, and still 203 producers of still wines and 52 of sparkling wines).
A reading of the near future that, as already recounted, comes after an all-too-positive 2022, in which the major Italian wine producers closed with an average increase in sales of 10% (+10.5% domestic market, +9.5% foreign), albeit losing something in profitability, as the Ebit margin, explains Mediobanca, reported a 7.6% drop on 2021, with a ratio of net income to sales of 8.7%. With sparkling and semi-sparkling wines growing more than twice as fast as still wines +16.9%, as has been the case for years now.
Looking at the performance of the companies, at the top in terms of turnover in 2022 is confirmed the Cantine Riunite-Giv group (Gruppo Italiano Vini), with 698.5 million (+10.1% over 2021), ahead of the newly formed Argea group, born under the aegis of the Clessidra Fund (and bringing together realities such as Botter, Mondodelvino and Zaccagnini, ed.), with 455.1 million euros, +9.6%, and Italia Wine Brands, with 430.3 million euros, up 5.2% over 2021. Just at the bottom of the podium is the Romagna giant Caviro, with 417.4 million euros, up 7.1% on 2021. Still, among the big names in the “top 10” is Trentino’s largest cooperative entity, Cavit, with 264.8 million euros (-2.3% over 2021), and then the Marzotto family’s Santa Margherita group, with 260.7 million euros, growing by a whopping +18.2% over 2021, and in fact the top private entity in Italian wine, closely followed by Antinori, the top brand of Italian wine, with 245.4 million euros, at +14.9% over 2021. Rounding out the list of the top 10 by volume of business are Piedmont-based Fratelli Martini (237.6 million, +8.2%), La Marca, a Treviso-based winery specializing in sparkling wine production, with 2022 sales of 235.2 million euros (+30.9%), Mezzacorona, another pillar of Trentino wine cooperation (213.4 million, +8.6%), and Veneto-based Zonin1821 (200.1 million, +0.8%).
In terms of profitability, on the other hand, 2022 sees the Tuscan Frescobaldi leading the way, with a 28.4% ratio of net profit to turnover, followed by the Veneto-based Santa Margherita (19.7%), and the Moretti family’s Terra Moretti with a 13.7% profit on turnover, up 4.4 percentage points on 2021, the second highest growth rate after that of Berlucchi (10.7%, +6% on 2021). On the other hand, at the level of export propensity, Fantini Group (formerly Farnese Vini, which, as of 2019, is owned by the U.S. Platinum fund, ed.) excels, with a 96.4% share of turnover realized abroad, and Ruffino, a historic Chianti reality, but with wineries and vineyards also in the land of Prosecco Doc, and owned by the American group Constellation Brands, with 93.2%, and then again Pasqua (90.9%) and Argea (90.2%).
Among the many aspects investigated by the survey is also that on the efficiency of companies with turnover above 50 million euros, a summary measurement that gives an account, through a consistent metric, of the income, equity and efficiency profiles examined through a battery of thirteen indicators surveyed in 2021. From which, with a “normalized z-score” score of 1, Antinori and Santero emerge at the top, ahead of Frescobaldi (0.9), Bottega (0.7) and Fratelli Castellani Holding (0.7), and then again Capetta Group, Cantina Vini Armani, Ruffino, Masi Agricola, Castelvero (Araldica Castelvero), Santa Margherita, Casa Vinicola Morando (Montalbera), Fratelli Martini Secondo Luigi, Mionetto, Astoria and Valdo Spumanti.
At the level of foreign markets, at the level of individual countries at the top remain the U.S. (1.8 billion euros), Germany (1.1), the U.K. (812 million euros), Canada (427) and Switzerland (426), which together weigh 60% of exports in value, the growth of France stands out, at +25.2% over 2021, for 289 million euros, almost entirely attributable to Prosecco, ahead of the Netherlands (239 million euros), Belgium (238), Sweden (209) and Japan (119 million euros, up +28.6 %, the best growth in the top 10). At the level of macro-areas, however, proximity markets (EU countries) prevail with 37.1% of exports, but the gap with North America (34.6%) narrows, while significant growth (+26.9%) is recorded for Central and South America. The analysis by export channel is interesting. The bulk, or 75.5% of the value, goes through an imported intermediary (+29.8%), a channel followed at a great distance by foreign large-scale distribution, which weighs in at 17.1% (but with a drop in value, compared to 2021, of -24.2%), while only 5.1% goes through foreign subsidiaries owned by wineries (with values up by +5.3%). Online platforms, whether specialized or generic, account for just 0.4% of the total exported.
In the domestic market, on the other hand, in 2022, the return to normal consumption habits and the recovery of the tourist flow, Mediobanca further explains, favored sales in the Horeca channel (+19.9%), which rises from 16.6% of the market in 2021 to 18.1% in 2022, disadvantaging the large-scale retail trade, (+3.3% in value) down from 37.7% to 36%. Inflationary dynamics in 2022, after all, have slowed sales in the large-scale retail sector, which has been more reluctant to pass on higher costs to price lists in order to preserve volumes. List increases affected Basic wines to a lesser extent (+6.6% in value); double-digit increases for Premium wines (+13.7%) and Icon wines (+11.1%). Focus on sustainability drives 2022 organic sales (+9.6% over 2021) confined, however, to 4.3% of the market. Downsizing, after booming at the Covid stage, is e-commerce: in 2022, online sales of major wine businesses are reduced by 3.7% (2.1% of national sales). In contrast, however, revenues from wine tourism services are growing in 2022 (+67% over 2021). In first place are visits to wineries (78.8% of companies), followed by hospitality at one’s own hotel (32.5%) and catering (27.5%). However, 17.5% of companies do not carry out any wine tourism activities.
Regional specificities emerge from company accounts. In 2021, the best Roi falls to companies in Piedmont (8.9%), to the Tuscans the highest Ebit margin (15.7%). Tuscany also has the highest financial strength, with financial debts amounting to just 22.1% of invested capital. Big exporters the Piedmontese producers (68.9% of turnover).
Lombardy shines (Ebit margin 2021 at 8.5%) with 2021 sales up 18.6% driven by bubbles (+29.9%), which account for half of total sales. In 2022 sparkling wines drive growth for companies in Veneto (+13.4%); above national average performance also for Puglia (+21.1% on 2021) and Sicily (+14.9%). Optimism for 2023 for Friuli-Venezia Giulia (+9.9% over 2022), Lombardy (+6.7%), Piedmont (+6.1%) and Sicily (+5.6%).
But as we have often reported in our daily chronicles, Mediobanca’s survey also testifies to an ongoing structural change at the level of ownership and governance: in 2022, the participation of private equity funds in the capital of major wine companies is still growing (+63.5% over 2020), standing at 4.6% of the total. Family control, on the other hand, is responsible for 65.8% of the ownership of Italian wineries. At the Board level, dry (86.6% of Boards of Directors do not exceed 5 members) and vertically oriented (52% of cases where operational proxies are concentrated in the hands of one person) structures prevail. Chairmanships (average age 62.5 years), especially when associated with the position of Managing Director (64.4 years), are held by relatively older individuals. The average age of the Director is 55. Gen X members are the most represented generational group (41.2%), followed by Baby Boomers (39.1%). Millennials occupy 13.1% of the positions. Women, on the other hand, make up 12.8% of boards (23.8% in non-cooperative companies) and 8.8% of presidents (15.7% among non-cooperatives). 68.6% of Italian directors hold their position in a company located in the same province of birth. More localism of directors in the Northeast (76.4%) and South and Islands (74.1%) regions.
The figure on communication is very interesting: in 2022, according to Mediobanca, advertising expenditures grew by 9% over the previous year (+22% in the case of sparkling wine producers) and accounted for 3% of total sales.