Allegrini 2018

The challenges for wine in the future are: sustainability, innovation, and market de-globalization

The European Association of Wine Economists’ vision at “Vinitaly Special Edition”. “Sustainability will be a prerequisite to enter the market”

The challenges that the European wine system will have to face immediately are sustainability, innovation, market de-globalization and change in consumption habits. These are the four “megatrends” that Professor Jean-Marie Cardebat of the University of Bordeaux and president of the European Association of Wine Economists identified at the meeting on the evolution and adaptation of the organic system and sustainability in the main European producing countries, organized by Professor Davide Gaeta of the University of Verona. The parallels among markets are as fundamental as they are, instead, rare. Therefore, this is the reason that the meeting at Vinitaly Special Edition was especially valuable considering the target markets - Italy, Spain, France and Germany - which represent 85% of Europe and its market’s organic wine.
“We have understood that there are different tempos and sensitivities”, commented Davide Gaeta, “which are extremely interesting. Professor Bernd Frick of the University of Paderborn pointed out that on the German market, consumers are more willing to buy, in general. While compared to Italy, they found that consumers are more sensitive to price elasticity”.
Professors Giulio Malorgio and Massimo Canali of the University of Bologna illustrated a completely different situation. From a study conducted in Italy, they explained, an element has been revealed that can only discourage wine producers; that is, that wines with organic or sustainable certification have, on average, even lower prices than “conventional” wines. The professors explained, however, that the study covered an extremely broad area and took into consideration a large number of variables.
“We are riled up about the price issue, and verifying whether organic wine has a price differential, but we are most likely asking the wrong question”, Gaeta observed, “while we should be asking ourselves, will it be possible, tomorrow in the not too far future, to sell wines that are not recognized sustainable?”
The answer is no, because sustainability is imperative. “In the future, it will not be possible to sell wines that are not sustainable, organic or certified in some way”, underlined Cardebat, and “it will not be possible to produce unless in a different way, due to the exhaustion of non-renewable resources, such as water, and climate change. Therefore, innovation becomes essential to manage the entire modernization and transition process. From the market point of view, we will have to deal with “de-globalization”, and the challenges for exports caused by trade wars, duties imposed by countries to boost the consumption of their own domestic production as well as information campaigns that guide the choice of local wines. This is now happening in China, or in Russia with the “champagne” issue, for instance. On the other hand, in traditional wine-producing countries, like the European ones, consumption is decreasing, and it will be difficult to find the connection between growing foreign markets, that are “closing”, and domestic markets that are slowing down. Finally, we will also have to deal with the already ongoing change in consumption habits, referred to prevailing health issues, which will consolidate over the next decade”.

Sustainability in its various forms could become a prerequisite on the market, as it has been for other cases of certification. For instance, the certification of origin to HCCP, the hygienic and sanitary guarantee, which today is taken for granted and is a required condition for accessing markets.
“I found that the theme of conditions for accessing markets”, continued Gaeta, “was the most interesting and cross-sectional theme at the European Association Wine Economist conference. Awareness of the issue on the markets is very high, in every Country. On the other hand, it is very different to talk about the limits of the organic certification process, extremely critical in Italy, and not coordinated between certification bodies and authorities. It is a system that is not open to dialogue and does not take into account the very high costs, time-wise, to provide information and data to the supervisory authorities - which are certainly necessary - especially in case of small and medium enterprises that have limited human resources”.
Ilaria Nidini of the Venetian winery, Santa Maria Valverde, brought her testimony to the round table. She narrated her experience, first in a frustrated tone, but then she closed with a positive and optimistic vision towards the consumer, recognizing the sensitivity to sustainability and bio-species issues, on the part of young women.
“However”, added Gaeta, “there is an enormous need for information. We are still very far away from having solved the problem of information asymmetry between supply and demand”.
Facing future challenges will be difficult for all European countries, - Italy, as well as France and Spain, because they require so many economic and financial resources.
“The resources are available to companies of adequate size”, Cardebat emphasized, “while there is a trend to buy companies in crisis that are no longer able to stay on the market, or because of aggregation and collaboration processes. At any rate, the trend is already underway”.

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