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Allegrini 2018
SCENARIOS AND FUTURE

Vivite, wine cooperation resists pandemic, thanks to its biggest players

Turnover up +1% in 2020. But the smallest suffer. The future passes through restarting, sustainability and ethics
COOPERATIVES, EXPORT, HORECA, ITALY, LARGE - SCALE DISTRIBUTION, LUCA RIGOTTI, SUSTAINABILITY, WINE, News
Vivite, wine cooperation resists pandemic

In the year of the pandemic emergency, the cooperative wine system (423 wineries for a turnover of 4.9 billion euros and a production equal to 58% of Italian wine), showed its resilience, registering substantial stability of its turnover (+1%), positively affected by the increase in sales in the channel of large-scale distribution (+6%, IRI data, 2021) and exports (+3%). An overall figure that, however, is the result of the growth of the largest companies, given that, at an individual level, there are more companies that have recorded a drop in turnover, compared to those that have kept it stable or those that have grown. On the other hand, even in cooperatives fragmentation is a fact, just like in the whole Italian wine scene. It is enough to think that the first 25 wine cooperatives make up 65% of the turnover of Italian wine cooperatives. This is probably one of the reasons why the process of aggregation that “is already underway and has always been in the DNA of wine cooperatives” will be intensified, said Luca Rigotti, Coordinator of the wine sector of the Alleanza Cooperative Agroalimentari (who is also president of a leading player such as Mezzacorona of Trentino), responding to WineNews. This is the portrait of an important part of Italian wine (also made up of many small wineries focused on the horeca sector, which have been suffering for some time together with the restaurant sector, editor’s note), that emerged from the “Vivite Talk” of cooperative wine, an initiative organized by Alleanza Cooperative Agroalimentari.
“In 2020, 34% of wine cooperatives kept their turnover stable and 41% saw it decline”, explained Denis Pantini, head of Nomisma’s Wine Monitor, presenting the study on the performance of wine cooperatives during Covid. “The analysis also showed, on the other hand, how one cooperative out of four in the sample surveyed - which numerically represents over 50% of the overall turnover of wine cooperation - instead recorded an increase in turnover. These are the largest cooperatives, with turnovers of more than 25 million euros, which in 6% of cases have even recorded a significant increase, more than +15% compared to the performance recorded in 2019, before the arrival of Coronavirus”.

Looking at individual distribution channels, the study highlighted how the closure of the horeca has led to a reduction in sales for almost all cooperative companies, regardless of size. On the contrary, large-scale distribution and e-commerce have mainly favored the largest cooperatives, with over 25 million euros in sales. In detail, the Italian turnover of wine cooperatives, in 2020, decreased overall by -13% compared to 2019. And the important growths of +50% in large-scale distribution (which is worth 59% of cooperative turnover) and +72% in online (which, however, is still worth less than 1% of the total) did not at all compensate for the collapse of horeca (-95%), to which was added the sharp decline in other channels such as traditional wholesale and retail markets, direct sales and sales to other companies. Also in light of this, Rigotti stressed, although cooperation has shown its strength in large-scale distribution (which, moreover, continues to grow even in the first 3 months of 2021 at least in volume, by +11%, but also sees a return to growth in strong promotions and therefore not in values, pointed out Virgilio Romano of Iri, who at the end of the year estimates a balance more or less in line with 2020, ed), “the restart of the horeca, even for wine cooperatives, is desirable from tomorrow”. Another significant figure relative to the economic performance of cooperatives is that of sales on foreign markets. If Italian wine exports as a whole recorded a drop of -2.4% in value in 2020, that of cooperatives - despite the greater difficulties in the bulk wine segment - instead recorded growth of +3%.
And, according to wine cooperatives, the most promising markets to invest in over the next few years are, in order, the United States, Germany, China, Japan, the United Kingdom and Russia. “Having a multi-channel strategy has so far proved to be a winning choice that has allowed cooperation to hold up in a particularly difficult year like the pandemic”, Rigotti commented. “The data of the Nomisma study are the practical demonstration that companies operating in different channels have paid less for the crisis, thanks to a compensation that certainly has not solved the critical issues but has allowed to mitigate the negative effects of the pandemic and market contractions”.
As far as future prospects are concerned, for cooperatives, digital will be an important lever for recovery. The analysis showed that cooperatives are focusing on e-commerce sites and social channels, as well as wine tourism and hospitality, in addition to consolidating their presence in large-scale distribution. A sign of optimism comes from the conviction expressed by more than half of the cooperatives who believe that in 2022 sales in the horeca channel will return to the same levels of 2019 (while 21% look to 2023 for a full recovery, and 18% expect it later). With regard, on the other hand, to the strengthening of their presence on foreign markets, missions to physically meet international partners and the measure of promotion within the framework of the CMO represent the interventions that, in the opinion of the cooperatives, remain the most effective. The commitment of cooperatives on the sustainability front is growing: more than 50% of wineries interviewed have already adopted concrete actions to reduce the use of chemical inputs and actions for the valorization of by-products, reduction and recycling of processing waste. 51% have increased organic production and 20% say they have already started digital transition and Industry 4.0 processes. Yet we look to the future with optimism, but also with realism, because if it is true that the balance sheet data say that the cooperation has held, it is equally true that a part of those budgets (which for cooperatives almost always look at the business cycle and not the calendar year, ed.), as Rigotti himself pointed out, are often influenced by a good part of 2019 "which was a year of great growth and without pandemic. In perspective it will be necessary to reckon with the stocks in the cellar, altogether equal to 56 million hectoliters as of March 31, 2021 (+3.6% on an annual basis), a situation that, also in view of the next harvest, must make us think about the most adequate and effective measures useful to manage the offer. In any case, the data on cooperation demonstrate the adequacy of a system of governance of cooperation, but it is obvious that the future requires more training, among managers but also among the social base, strengthening that pact of co-responsibility that is structural in cooperation. The project of cooperation is to create value, cooperation was born to aggregate small companies that would not have arrived anywhere, not abroad, not at the quality that exists today. We have been able to adapt to the markets, to the changes in society, working on sustainability, which from environmental becomes also economic and social. The future of agriculture will depend on the answers we are able to give to the demands of a civil society, in which we live and work. We work for increasingly healthy products, for a work ethic that is increasingly important. For the future, I am optimistic but also cautious. The phase is critical, the wineries have done the impossible to resist. Promotion remains fundamental. And we are asking loudly, together with all the EU countries, that there be help for promotional initiatives within the European Union as well. Until now, we’ve always had negative responses from the Commission. Another important aspect is that the decree on the single national standard of sustainability and certification should go ahead. We have to get there, to then promote it in the world, and to tell the consumer, at the global level, that wine under that brand contains healthiness, work ethic, it must become a way of presenting itself, it will be extremely important. As it will be the restarting of tourism and wine tourism, which are not only direct trade, but also promotion that from territories tourists bring back to their countries. It will certainly need help from national politics. Help that is not only or necessarily made of money, but of many other things, such as the same single standard of sustainability, or help to make our voice heard in Europe where they talk about “Farm to Fork”, “Green Deal” and many other issues that will influence the future”.
Future to which, as always done, wine looks with courage and confidence, even if there are elements of concern, of course. According to the cooperatives, the most important one to consider is competition from low-cost products (especially from Spain and Chile, underlines Pantini), both on foreign and domestic markets, but also of concern are EU control policies on the consumption of alcoholic beverages, the increasing frequency of adverse weather conditions and diseases in the vineyard, customs barriers (tariffs and non-customs barriers) in non-EU markets, and international trade tensions, while issues such as Brexit, inefficiencies in logistics and transport, and the recruitment of seasonal and specialized labor, a topic that instead held sway in 2020 of the pandemic, seem less worrying.
In which, however, there are those who have grown, as told by the testimonies of some of the most important realities of all Italy, in a “virtual journey” led by the journalist of “Il Messaggero” Carlo Ottaviano. Like La Marca, one of the leading realities of Prosecco. “We closed 2020 in slight growth, as we thought would happen before Covid. Prosecco Docg, more oriented to domestic consumption and horeca - said president Valerio Cescon - despite everything closed which in line with 2019, while Prosecco Doc, which for more than 75% goes abroad and in modern distribution, grew +2.7% compared to 2019. There are many concerns, but the fundamental markets such as USA, UK and Germany have held, others have developed, such as France and Switzerland. If we have overcome this crisis, it means that we still have margins to work even more on added value”.
Among the case histories of those who have grown especially with certain classic products of Italian daily consumption, that of Cantine Riunite, one of the most important realities of Emilia Romagna and Italy, as told by president Vanni Lusetti. “Lambrusco, also thanks to fewer promotions, grew by 7.7% in value. And Pignoletto, which is an emerging product for us, also grew by 20%. For us, the modern channel and exports have brought great satisfaction”.
Witnessing two trends such as the growth of organic and the boom of organic, however, was Andrea di Fabio, managing director of Abruzzo-based Cantine Tollo. “We have always believed in organic, and our organic lines have increased by 20% in value. We have always believed in multichannel marketing, and this has allowed us to perform in line with expectations. E-commerce has been a lifeline for exports. Of course, when you go beyond national borders there are many complications, logistical and bureaucratic, and for this you need good partners, which we for example have had for some time in Germany, and this has allowed us to have an important buffer. But it must be remembered that e-commerce is complex. Also to the Italian level, there is already an important segmentation. There is the corporate e-commerce, in which many have jumped into, there are professional players such as Tannico, Vino.com and others, but another very interesting element is the e-commerce of large-scale retail trade, which is starting to play an important role”.
But, as mentioned, very important will be on the one hand the restart of tourism in the territories, and on the other hand the further development of all that is sustainability and ethics, as told by the heads of two other leading cooperatives, Terre del Barolo, in Langhe, and Colomba Bianca, in Sicily. “Ours is a territory trined by great wine - said Stefano Pesci, director of Terre del Barolo - that of the Langhe is a supply chain that brings together tourism, Unesco landscapes, great catering, and that over the years has been appreciated by the world has driven great investments, in the quality of wines, in the beauty of the landscape, in hospitality. We are the only cooperative in the Barolo area, but there are another 300 small or medium-sized companies, almost all family-owned, that have made history, together with the cooperation of this territory. Turnover has held up, taboos on channels have been broken, the large-scale retail trade is opening up to the high-end. But the thing that worries us most is the possible loss of value. We are going to offer the market wines that we have had in our cellars for 5, 6, 7 years, born in a different context with different values. But we have to defend the value, or we would destroy so much of what we have built over the years. In the Langhe, even during the pandemic, investments were made to improve reception and to make us ready for the restart”. “In the agricultural and viticultural sector, two words have dominated in recent years: organic and sustainability. And they will be more and more present - added Leonardo Tassetta, president of Colomba Bianca - even after the Pandemic, because now many people know that many of the problems of the planet and health depend on the quality of what we eat and drink. Now is the time to create synergies with all food, with services, with tourism, with the food and wine culture of the territories. All countries are moving towards the increase of organic farming, and Sicily is a candidate to be a leader, both for climatic reasons, which help us, but also for the yields per hectare, which are low, and then we must give value to the product, we must make quality and not quantity. Sustainability is environmental, but also economic and social. We need results. We need a better, healthier world, but also a good income for producers and farmers”.
Messages about a future, which will be different. “But one that will certainly return to see us meet in presence at all wine cooperation events, which will be called Vivite”, concluded Alliance of Cooperatives President Giorgio Mercuri.

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