Wine producers in the post Covid-19 era are targeting the consumer, and no intermediaries

Innovation, courage, opportunities to be seized in times of crisis, but above all, one very clear target: the consumer. Wine producers in Italy and around the world must and want to reach the consumer in a more direct way, using fewer intermediaries, through the physical and digital means available today. Wine companies from all over the world have responded to the impact of the Covid-19 health emergency, and now are looking to the future. There are some differences in priorities, depending on the country, but there are also common goals, like, first, a reduction in costs in the vineyard and in the winery, where possible, then re-launching investments in digital and communication, to try to get over the obstacle, the Pandemic. These will make the difference between capable and structured companies and others that are less prepared. Consequently, the wine world, and not only, will be quite different from what we have experienced up to now. This is the message, in a nutshell, that came from the “Wine Business Forum”, organized by Silvana Ballotta’s Business Strategies. The forum is on stage this week during “Milan Wine Week”, as well as via web. It has brought together scholars, producers and critics from every corner of the world, including personalities such as the critic and founder of Vinous, Antonio Galloni, leaders of Italian wineries such as Riccardo Pasqua, CEO of Pasqua Vini, Cristina Ziliani of the Franciacorta Berlucchi brand, Chiara Soldati de La Scolca, historical reference of Gavi, Armando Serena, at the helm of Montelvini, and also, Aurélie Ringeval-Deluze (University of Reims), Gilles Brianceau, owner of Chȃteau de Plassan in Bordeaux, Daniel Daou, owner of Daou Family Estates in Paso Robles, USA, Rafael del Rey, General Manager of the Spanish Wine Market Observatory, Armando Maria Corsi (University of Adelaide), Jean-Marie Cardebat (University of Bordeaux) and Davide Gaeta (University of Verona), heads of the “European Association of Wine Economists”. The participants have sketched a partial picture, as research and studies are still in progress, which has explored the sentiments and concerns of producers from countries such as the USA, Germany, South Africa, Germany and Italy, “even though, mainly, in the north of the country”, specified Professor Davide Gaeta. “In short, the impact was felt heavier in countries like South Africa and Spain, not so much in Germany, while the US and Italy were positioned in the middle. In any case, however, everyone has been damaged and what is most worrisome for all is the cost aspect. In perspective, especially right now that we are facing a decisive quarter for the wine market, there is great concern about repercussions on international markets more so than on domestic ones. Obviously, what is most frightening is the decline in revenues, which have not yet been precisely estimated, but which might be more limited than we anticipated during the months of the lockdown”. Wine companies, as Cardebat underlined, “on the one hand, producers responded by cutting costs in the vineyard and in the winery. Then they started redirecting investments in communication and marketing, especially in e-commerce and direct sales, as well as hospitality in the winery, where it was possible. If there is one thing that Covid-19 has highlighted, it is that the value chain between producer and consumer was too long, which is a really important aspect, because investments in the future will focus on commercial efforts and direct consumer contact”.
The consumer is the true focus of wine producers, as Antonio Galloni, one of the most influential international critics and a superb connoisseur of Italian wine, interviewed by Silvana Ballotta, said: “I see this moment of crisis as a great opportunity. These are the moments that make the difference between well-managed companies, and those that are not. Here in the USA, low-priced wines in supermarkets, and top-of-the-range wines, are doing very well. We have seen it at Bordeaux en primeur, and at auctions like that at Bastianich’s Del Posto Winery, which reached very high prices. Mid-range wines are the ones struggling the most, because it is the range where it is most difficult to stand out. However, we are seeing, even at Vinous, that people still want to learn and experience, and that you have to go directly to the end customer. For a long time there was a lot of support on distribution channels, importers, distributors and agents, but now much of this work cannot be done due to the anti Covid-19 restrictions. Producers and agents cannot travel or hold meetings, so they have to reach the end consumer through brand loyalty. We need different channels to keep the business going, because we can’t stop working. I, for example, would not have canceled ProWein or Vinitaly. It's true”, continued Antonio Galloni, “that it was during the most difficult and dark moment when they decided to cancel, but I would have tried to make appointments somehow, as we need structure and consistency. I would also say that we must continue to focus on identity, because good wines are made all over the world, and therefore, I need to look for something unique, that cannot be duplicated, such as Chianti Classico, Brunello di Montalcino, Amarone della Valpolicella, Gavi, Soave, Barolo and local wines, of which Italy is the richest country, and it is fundamental that we have more specific wines linked to the territories. We need courage”.
Italian wineries have demonstrated courage, continuing to focus “on our strong brands linked to history, investing in product quality and human capital”, said Cristina Ziliani of Berlucchi, one of the Franciacorta brands. “Innovating historicity, designing strategies for the future but remaining faithful to the past, as the wineries have the social role of employment and innovation on the territories ”, said Chiara Soldati de La Scolca, from Gavi, a growing territory in the Covid-19 era. “Asolo has even grown in exports”, said Alberto Serena, at the helm of Montelvini (in Prosecco DOCG), reference for the territory, “and our customers have shown us deep fondness, which is where we will start again”.
“It is precisely in these phases that we must step on the accelerator. Evolution occurs when there are moments of rupture”, added Riccardo Pasqua, at Pasqua Vini, “and now we must really invest to get closer to end consumers, as the past few months have taught us. We need to use digital tools well, not just be there, because we're talking to consumers about the next 30 years. A lot of money will come from Europe to invest. So now it is up to us to do it in the best way possible, there are no more excuses about digital, nor on further improvement on the sustainability issue”. There are also those who look to the future, using innovative tools from a financial point of view for the sector, “such as the banking privilege, guaranteeing wine, in this case Brunello di Montalcino, even wine not yet produced, thanks to the work we have done together with Banco BPM and Valoritalia”, said the CEO of Castiglion del Bosco, Simone Pallesi, from Montalcino.
These stories on the Italian scenario are common to all the territories around the world. Those who were able to invest in digital in a constructive way, offering well-organized online tastings and “web dinners” have almost totally compensated for their losses in HORECA, said Daniel Daou, owner of Daou Family Estates, from Paso Robles, California.
The scenario of the producers who were mainly oriented towards consumption outside the home and parties, and perhaps also had experienced difficult years in the vineyard and had been penalized by difficult pre-Covid-19 economic situations, such as Brexit and US duties or the slowdown of the Chinese economy, as Ringeval-Deluze of the University of Reims-Champagne, and Gilles Brianceau, owner of Chȃteau de Plassan in Bordeaux, said, was much more challenging. Instead, following the first very hard months, things have also gone well in Australia, for domestic tourism and exports that to date have lost only -1%, for a total of 2.8 billion dollars, said Armando Maria Corsi of the University of Adelaide.
The global picture is very complicated, commented Rafael del Rey, managing director of the Spanish Wine Market Observatory. The world wine trade, between March and June 2020, compared to 2019, lost 1.8 billion euros, equal to -17%. We must go forward, though, identifying action priorities, that the producers have indicated. We have to create a system to face international markets by enhancing identities and the “stories” of the territories to maintain the value of our wines. We must narrate wines and their stories all over the world, even in countries where not even a single bottle of wine has been sent. Plus, we need to ensure job security in the sector, consolidate foreign markets, but not abandon the domestic market, and support the HORECA world. “Today, like never before we need visionary entrepreneurs; that is, capable of having a vision of the future and the courage to undertake paths of innovation and development”, concluded Silvana Ballotta, head of Business Strategies, who for years has organized the “Wine Business Forum”, definitely one of the most qualifying topics of “Milan Wine Week”.