Terre d’Oltrepò is relaunching the territory, adopting the Champagne model

“Fusse che fusse la vorta bbona” (maybe this time) was a catchphrase that Nino Manfredi, one of the greatest Italian actors ever in the mid nineteenth century, invented. And the phrase with its positive connotations adapts to the immense and unfulfilled potential of Oltrepò Pavese wine-growing. Finally, Terre D’Oltrepò, the largest wine Cooperative in Lombardy, which, for better or worse, represents around 50% of Oltrepò production, is being relaunched, The relaunch operation strengthens the widespread determination of producers to reclaim the excellence of the territory, to invest in important brands, to make changes in the Classic Method regulations, and the “reorganization” projects of the denominations.
These notions could change the future of Oltrepò Pavese DOC, which boasts a total 26 million bottles as well as an enormous amount in bulk, obtained from various grape vines such as Bonarda, Sangue di Giuda, Pinot Grigio, Pinot Noir vinified in red, as well as Reserve mention, and the Classic Method (white and rosé), and, since the 2007 harvest, has received DOCG recognition. There are 3.000 hectares of Pinot Noir, making Oltrepò the third largest district in the world for hectares of vineyards planted with this variety. It is one of the most loved all over the world, and number one in Italy, totaling 75% of National production. There are, therefore, many strong points. However, there are also great weaknesses, such as its flagship wine the Oltrepò traditional method DOCG is not well known due to the limited appeal of the collective brand among the producers, the modest price of grapes and wines, and consequently, low profitability, accompanied by a negligible land value (8.000 euros per hectare). The land however, is attracting investors from other production areas, such as Cordero, Tommasi, Berlucchi and Masi, to name a few, which will contribute to the visibility of the territory. Umberto Callegari, CEO of Terre d’Oltrepò, started by outlining these weak points when he illustrated the “Cooperative’s five-year strategic plan”, included in the general study of the global reference context for the wine market.
“Exports”, Callegari, who can boast the experience of Worldwide Commercial Lead by Microsoft Customer Transformation, emphasized, “have increased the average profitability per hectare of the “Italian Vineyards”, which reached 27.000 euros, in third place among the top global players, behind France and New Zealand. In Oltrepò, instead, it is around 5.000 euros. Wine is experiencing a period of pronounced discontinuity, influenced by climatic, economic, geopolitical, generational and regulatory factors. I believe it is a transitional moment and not a crisis, as instead many others believe. It is in this context that I accepted the task, or rather, the challenge of relaunching the Terre d’Oltrepò Group, after yet another Board of Directors failed. I also realized that the company was healthy in a suitable area, and that the problem was not a lack of market, but rather bad management. There are several problems: inefficiency and serious industrial backwardness, poor management competence, absence of industrial accounting, lack of positioning in the mass retail trade and exports, an old-fashioned operating model producing negative margins, mistrusting banks and institutions, unreliable behavior of shareholders. I made a heartfelt choice. I was born here, and the greatest aspiration for a manager is to revive a company in crisis”.
The Terre di Oltrepò Group was founded in 2008. It was a merger between Cantina di Casteggio (founded in 1907) and the Cantina Sociale Intercomunale di Broni (founded in 1960). In 2017, La Versa, a historic brand dating back to 1905 joined. It had been acquired together with Cavit, and in 2020 was taken over entirely by Terre d’Oltrepò. The Group has 660 members, 5.000 hectares of vineyards, 100 employees, 450.000 quintals of grapes harvested and a production of 4 million bottles. Incidentally, before its acquisition, La Versa had been at the center of scandals that did not help its reputation. In 2015, 16 million liters of bulk wine and 700.000 bottles of DOC, PGI and TGI Oltrepò Pavese wine were seized because they did not match the actual quantity and quality of the grapes produced and delivered by the members. And, in 2016 a precautionary custody order was issued against their then CEO, for bankruptcy and money laundering crimes.
“The mission of Terre D’Oltrepò now”, Callegari explained, “is to create a unified and sustainable industrial wine hub that will be able to effectively enhance the unexpressed resources of the territory. Relaunching the Group is focusing mainly on increasing production and industrial capacity, expanding to new members not only in the Oltrepò Pavese, but also in the Piacentini Hills, and especially focusing on the quality of the production process, which must be transparent and certified every step of the way”. Terre d'Oltrepò has recently obtained ministerial mandates for winemaking operations, which include second fermentation, re-fermentation in the bottle as well as in large containers, aging, refinement in the bottle and bottling DOC Colli Piacentini and Ortrugo dei Colli Piacentini wines.
“It is not an easy task to invent something new in economics, however, there are many models to draw inspiration from”, the CEO continued, “and our reference is the Champagne model, where a single pressing center concentrates and increases the production capacity of the entire area. Either we create an industrial hub capable of catalyzing our production capacity and also generating a cultural change in the operating model, i.e., moving from pure product logics to end-to-end service logics, added to investing in operational excellence and branding, or we will not be looking at a rosy future. Brands that have come to Oltrepò, such as Berlucchi for instance, and other local entities, will be able to find service in Terre d’Oltrepò without having to take on heavy investments that the sparkling wine production entails, plus we will have greater control of the value chain”.
Another change is increasing bottled products, “to get away from the dichotomy of bulk versus bottled (now equal to 85% of production, ed.), and adequately remunerate members, transforming ourselves into an end-to-end industrial winemaking platform, satisfying the requests of importers who are more and more looking for “wholly produced” wines. The average margin of a bottle of Terre d’Oltrepò wine is 40%. This means that a 10 million euro turnover corresponds to a 4 million euro margin, which is impossible for bulk wines. The market attributes little value to native grapes such as Bonarda, Croatina, Sangue di Giuda, Riesling, while “tactical” grapes, such as Pinot Grigio and Moscato that have international certifications and indisputable quality standards, are appealing on foreign markets and are open to internationalization, so we will adopt the strategy of the wholly produced supply chain to increase to the maximum the value of raw material and wine, taking it away from the bottlers. Classic Method Pinot Noir is produced only by La Versa, and the margins are very high, so we will sell it exclusively on premium chains, under the La Versa brand, while Method Martinotti sparkling wines will be released with the Rocca Versa brand”. Long-term strategic collaborations with distribution chains have already been successfully initiated, thereby cutting out the bottlers, and adapting products to the requests of the various brands by price segments as well, such as the supply chain contract with Mack & Schühle Italia of an annual supply for 9-12 million bottles marketed between Italy and abroad.
These are definitely not easy to achieve steps, but since the new management team that has international experience and the same vision, took office in July 2023, results are already tangible. Turnover has grown by almost 1 million euros for the same number of liters sold since the management change began in the first months of the new fiscal year. There has been an increase in bottled and bulk products (30/70 versus 21/79), growth in bottled sales (+5.2%), total average sales prices increased +20%, thanks also to the increase in the HORECA (hotel, restaurant, catering) sales (+89%, of which 55% for number of bottles and 22% increase in the average price). The Classic Method represents 49%, an increase of 250% over the last fiscal year on the HORECA channel. Mass retail sales are growing, in terms of number of bottles (+22.6%) and price adjustments, while specially Esselunga and Eurospin have registered excellent performances, and thanks to signing a new contract with Autogrill for bottles of 1905 brut sparkling wine.
“Terre d’Oltrepò has made its choice”, Umberto Callegari conclude, “and has decided to keep up with reality. A joint approach among companies, unions, associations and politics is necessary to fulfill the vision of Terre d’Oltrepò, certifying the company as the leader of the first unified and circular wine supply chain in Lombardy. We are about to renew the Consortium’s top management, and I believe there will have to be a sign of important discontinuity with the past. We will ask for decisive positions on the part of the producers and the territory. Otherwise, we are not interested in being part of it”. And, this is not a small consideration, since Terre d'Oltrepò represents half of the wine produced in Oltrepò, and the everyone is included policy of the Consortium would be forfeited.