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THE ECONOMIC PICTURE

Wine is a dynamic sector. Atradius: fewer unpaid debts, and profitability is expected to grow

WineNews talked to the world leader in credit recovery, focusing on the Italian sector (in 2021 record exports and stable value in mass retail)
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Atradius: wine, vital sector; fewer unpaid debts, and profitability is expected to grow

The future prospects are not quite as promising as had been expected in the summer. However, the Italian wine sector, overall, seems to have regained good health. Exports in 2021 are headed towards a record 7 billion euros (in the first 10 months, shipments reached 5.8 billion euros, + 13% compared to 2020 and + 10% compared to 2019, according to the Italian statistics agency, ISTAT data analyzed by WineNews). The away from home consumption is still far from 2019 levels but (awaiting official data) certainly better than 2020, while mass retail has remained stable (sales at 1.8 billion euros, + 2.6% compared to 2020, despite the -3.2%, fall in volume, according to IRI data). Data from Atradius, world leader in credit recovery, has confirmed the positive status on Italian wine to WineNews. In general, the data reveals “a dynamic sector, fewer unpaid debts in 2021, and stable in 2022”, at least as we are restarting.
It is, therefore, a dynamic sector, but as we all know quite well, very fragmented, where a few big names can boast turnovers of more than 100 million euros. Nevertheless, “the profit margins on average are satisfactory. The EBITDA of the majority of companies is between 4% and 8%”, explained Atradius. Moreover, their data foresee a further improvement on the fundamental profitability parameter, trusting in an upcoming full recovery and further growth in exports, “also in the context of raw material prices, which should fall in the next few months”. Atradius further pointed out that as in the entire agricultural sector, it is difficult to make predictions on future productions, until harvest time is near, and also the previous climate trend must be taken into account. In turn, prices will be conditioned by the level of production achieved at the end of the season, as well as the trend in energy and logistics costs”.
In this context, “the payment scenario does not present particularly negative elements. The number of unpaid debts in 2021 has decreased compared to the previous year as well as compared to the historical trend. However, in 2022 we should see a rebound in the claims rate, following the end of interventions to support liquidity that the Government issued in 2020/21. Specifically, the end of pre-amortization periods for guaranteed loans and moratoriums.
The positive fact is that the wine sector, which often uses bank loans to support production assets and to manage warehouses that have low turnover of goods, is well regarded by credit institutions. “The banks”, Atradius concluded, “show willingness towards the companies in the sector, which generally have a high degree of capitalization as collateral for the loans. The average value of net debt compared to capital is 55%”.

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