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Allegrini 2018
SCENARIOS

Wine: a storm is coming. Serious problems and aspects need different and complex answers

Comments from the supply chain at “Wine2Wine”. Francesco Lollobrigida, Minister of Agriculture and Food Sovereignty: “we must defend wine”

Is it true that a dark period for wine is returning? The forecasts for 2023 are rather gloomy, reveal data from the Observatory of the Italian Wine Union (UIV) and Vinitaly, which have predicted 16% decrease in turnover and 3 million hectoliters of too much wine (as described here). Representatives of the entire Italian wine industry were united at the Veronafiere “Wine2Wine” event and discussed Carlo Flamini’s brilliant, but frightening presentation of the scenario. A series of problematic issues, concerning all sectors, were on the table, such as skyrocketing production costs, and climate change. There were also issues specific to the wine sector, such as the disparity between supply and demand since stocks have a bad impact on improving products as well as the "campaign" that demonizes wine as an alcoholic beverage. The upshot of all of this is that the competitiveness of our wine is in a state of crisis, “and it must be defended, together with all quality products, by sharing European Union actions with other producing countries”, Francesco Lollobrigida, Minister of Agriculture and Food Sovereignty, said. “To be competitive, Italian wine must act on reducing production costs, while still maintaining high quality. We will take action Nationally, and in Europe, on regulations at the economic level as well, by reducing energy costs, and we are also considering excise duties”. Wine Cooperatives produce 60% of Italian wine, which like other segments, could be damaged by an unfavorable economic situation. “During the Pandemic emergency, the Cooperatives managed to maintain jobs. Plus, the price of grapes from the 2021 harvest was, on average, satisfactory”, Luca Rigotti, Coordinator of the wine sector of Alleanza delle Cooperative, said, expressing a note of optimism. “I do not believe that overproduction is the problem in the Italian wine sector. The COPA-COGECA data indicated + 2% increase compared to the harvests over the last 5 years. I believe that the problem is insufficient organization in the companies, because organization is the only way costs can be contained, and, therefore, be more competitive. There are many other problems that we must deal with, such as the dispute over wine as an alcoholic beverage, and labeling it as such. We can only deal with these issues by teaming up in the supply chain”. Riccardo Cotarella, president of the winemakers association, Assoenologi, focused instead on the issue of stocks and excessive production of wine, real or only feared. “It is true that we cannot remove the vineyards”, he said, “and it is also true that we cannot continue planting too much, either. Many people start producing without actually knowing how or where to sell the final product. The real damage to our sector is the gap between supply and demand. There are some denominations that produce significantly more than the demand has requested. Quality has grown, but it will only be by rebalancing supply and demand that we can give value to our wine’s attributes. As the French have taught us, we should not talk about the grapes, but rather about our territory, which no one can steal from us. In other words, we must give more importance to what is ours”. The sector has invested heavily in economic resources and energy, and no one will agree to take steps backwards to remove even one hectare of the current 670.000. “We must grow Italian wine sales by teaming up as a Country system through focusing on paths not yet traveled or valued abroad”, Luca Brunelli, vice president of the Italian farmers, CIA-Agricoltori Italiani, said. “What is more, the wine world represents a sector that compared to other agricultural activities has kept our territories and rural areas alive. It takes work, purpose and continuity, and the role that agriculture plays is fundamental because it makes rural areas livable”. Francesco Ferreri, member of the Coldiretti National Council and president of Coldiretti Sicily, preferred to use the word "complexity" instead of crisis. “Companies are challenged by the increase in energy costs as well as the increases in everything that is part of production in the wine world. Our wine system is unique in the world, because of its many varieties, which are distributed all over our Country, from north to south. This is what we must protect today, because this is precisely what allows the sector to be one of the top items of Italy's exports. The vineyard is the most important thing we have. We are now experiencing a very serious attack on the entire Mediterranean diet”. Wine is experiencing difficulties in other Countries, too. In European countries, for instance,France is trying to limit AOC productions, as they are not working very well on the market. and also Australia is in a difficult moment. “I believe that the current situation is the result of a post-Covid physiological adaptation exasperated by the conflict”, Giordano Emo Capodilista, vice president of Confagricoltura, stated, “and only if we manage to be united will we be able to address the issues on the table in Brussels; that is, promotion, Cancer Plan and Nutriscore, where we will need to put forward our demands in a concise manner. The new national recovery and resilience plan, PNRR, projects will be an opportunity for growth and making the system more efficient, especially energy-wise, while instead, according to data not yet confirmed, the agrisolar parks only used 33%”. The Consortiums, which represent the entire supply chain, have a privileged observation point giving them an important role. “some of the Consortiums are playing their roles very well, helping to find a balance between supply and demand”, Giangiacomo Gallarati Scotti Bonaldi, president of Federdoc, confirmed, “for instance, defining production strategies, yield on the field, and blocking installations. The Italian wine panorama is diverse, and only a few are actually doing it well, such as Prosecco DOC, which even manages to reconcile conflicting interests. In order to do this efficiently, however, we need to have a common vision and try to stay ahead of the game. Measurable sustainability may indeed prove to be an unavoidable element in the future. We are convinced that certified sustainable wines will have a greater appeal on foreign markets”. Micaela Pallini, president of Federvini, said she was worried about inflation affecting some of Italian wine’s main markets. “When it comes to anti-inflation measures, and therefore working on interest rates, Italian wine must necessarily consider its three reference markets — the United States, Germany and the United Kingdom, which are starting to show signs of struggling. In 2023, the rates should grow 5-7% and could even reach 10%. This is a very important issue because it will affect American consumers. The main theme next year will be alcohol and health. The Irish health warning, unfortunately, has gone ahead, even though many have expressed contrary opinions. The CAP promotional funds and free trade agreements are among the priority issues”. FIVI, the federation of independent winegrowers, represents 1.500 companies, some of which are very small in size. In most cases, these businesses have no International outlets, and trade on only local markets. They are often not in the mass retail trade channel, and are consequently among the most penalized in the current economic situation. “Besides the increase in costs, caused by the crisis that affects everyone”, Andrea Pieropan, director of FIVI (Independent Winegrowers), pointed out, “we believe it is important to also reduce "other" burdens for companies. We have drawn up a "Bureaucracy dossier", as one of our proposals, which we had already presented to the previous Minister. We need to intervene on everything that generates costs and reduces margins”. It is especially in periods such as the one that lies ahead, not only for wine but also for many sectors in our economy, that we need to have the courage to make decisions to accelerate ever more necessary evolutionary dynamics. “And, especially since a " perfect storm " is rapidly approaching”, Lamberto Frescobaldi, president of Unione Italiana Vini (UIV) emphasized, “it is becoming increasingly clear that those who make more wine not only are not winning but they risk making others lose. This is why it is urgent to intervene to reorganize the numerous PDOs and PGIs that sell only part of what they have declared, and to review the rules governing market management of denomination wines. It will also be important to act on placing a limit, no exceptions, of 300 quintals per hectare of yields on table wines, subjecting them also to strict controls, since they weigh heavily on the total”. Speaking about exports, “the ICE Agency is ready to accelerate system action in support of exporting companies”, the president, Carlo Ferro reiterated, and “strengthening the collaboration with Veronafiere and Vinitaly is taking this direction. And, so are the twenty new initiatives that the ICE Agency has put in place over the past few years to tackle the totally unusual geopolitical dynamics that are pushing to reshape towards individual markets. These include the use of blockchain technology with related services, which ICE has made available free of charge. These are new opportunities to be followed closely from marketing to training, another preparatory element for foreign markets”. Italian wine is not just a flagship product, but it is a healthy sector that contributes significantly to the economic development and the social sector of Italy. “Thoroughly and carefully addressing the dynamics of a sector in its evolutionary phases ”, said Maurizio Danese, at Veronafiere, “is a service that Vinitaly will increasingly want to pursue. On one hand, they will be putting these studies at the service of companies and stakeholders, while on the other, the new course of an event comes from the analysis of needs and priorities, which aims to be more and more practical and in tune with the reality of the sector”.

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