Wine, the complicated picture of 2022 risks to cancel the recovery of 2021. Federvini alarm

Paraphrasing the legendary Gino Bartali, it’s not all (or almost) to be redone. The recovery of Italian wine in 2021, at least in aggregate numbers, was evident, both on the domestic market and those of the world, with a record export of more than 7 billion euros. But the picture of these first 3 months of 2022, immediately marked by the important theme of the increase in production costs and the scarcity of some raw materials, then aggravated by the war from Russia and Ukraine with all its consequences, and with a pandemic still not completely overcome in the background, it cannot leave producers and the markets calm. And so, the recovery of 2021, recorded also by Federvini Observatory, risks being thwarted by new threats, with the sector struggling with a sort of “perfect storm”, with production costs increasing dramatically, as well as raw materials which, moreover, are scarce, making it difficult for companies to fulfill orders that arrive, according to the reports of hundreds of operators in the world of wines, aperitifs, spirits, liqueurs and vineyards, explains Federvini.
“2022 has all the conditions to become the year of the “perfect storm” – declares the president Micaela Pallini - for many months we complain about an intolerable situation with respect to transport costs, which has heavily damaged our exports. Added to this is the progressive increase in the costs of raw materials and energy and the international crisis that has exploded the shortage of essential components for our sector. It is useless to accept orders when we do not have the bottles to fill them with our products, nor do we have the cardboard to pack them – continues the president Pallini - The theme is mainly the cost, which is constantly increasing, but today we are also talking about availability. Many paper mills are either shutting down or slowing down production. For glass, the situation is dramatic. in this regard, we discovered, thanks to the tragedy of the war, that countries like Ukraine are precious sources of supplies for some components of our supply chain. Some sectors, I am thinking of distilleries, use a lot of energy, and therefore the continuous increase in the price of energy has dramatic effects. In the coming weeks, the world of wine will have to turn on the refrigerators for the conservation of wines, with electricity supply costs that risk undermining the sustainability of many productions. A real shame, because 2021 ended in positive terms”.
As confirmed by the data from the Federvini Observatory, with a value of 2.8 billion euros in 2021, wine sales in the large-scale retail trademarked a 3.7% growth on the previous year, driven mainly by sparkling wines, up 18.4%, and, marginally, by vermouths, + 1.4%. the revenues generated by still and sparkling wines were substantially stable. Spirits sales grew by 6.5% in 2021 vs 2020 reaching 1.2 billion euros, recording progress in all categories: the best performers are alcoholic aperitifs (+17.3%), followed by bitters (+7.1%), sweet liqueurs (+ 3.3%) and spirits (+3%). A negative sign, however, for the vinegars sector which recorded sales of 133 million euros, with the positive exception of balsamic vinegar, whose sales grew by 3.5% in value. As mentioned, if the domestic market has confirmed its growth, 2021 has seen a new record for domestic alcohol beverages outside our borders.
Exports of Italian wine exceeded 7 billion euros, up 13% on 2020. Also in this case, the greatest growth was marked by bubbles, thanks to the excellent performance of Prosecco which achieved a +31.5 % compared to 2020; followed by the still red Dop from Tuscany (+ 15%), the reds Dop from Piedmont (+ 17.4%), the whites Dop from Veneto (+ 12.9%) and the reds Dop from Veneto (+ 8.9%) . Even more significant is the growth in the export of spirits which exceeded 1.3 billion euros in 2021, + 23% compared to the previous year, with Italy that confirm itself as the second exporter of spirits after Germany but before of Ireland, France and the United Kingdom.
And this despite the pandemic, which in 2021, still slowed the resumption of consumption outside the home. Within the channel, explains Federvini, the consumption of wines and spirits recorded better trends than the market and the entire beverage sector, closing 2021 at -6% over 2019, thanks also to an increase in average values. In Italy in 2021 the consumption of wine, bubbles, spirits and bitters / sweet liqueurs amounted to almost 1.2 billion. Wine and sparkling wines generated over 650 million drinks and were the first categories to restart after the end of the lockdown, followed by alcoholic cocktails with almost 300 million drinks, half of which concentrated in the summer quarter. Consumption of Bitter and Sweet Liqueurs was just under 200 million, largely concentrated in Southern Italy (about 60%). The category that recorded the least consumption, also disadvantaged by the closure of the discos, is that of liqueurs and spirits which recorded just 61 million drinks. An overall picture still not at pre-pandemic levels, but nevertheless comforting, distorted, however, by a 2022 that goes on with prospects that are anything but serene.
In fact, in the last months of 2021, as reported several times, the first signs of tension on the front of prices and raw materials arrived, up to the alarms of recent weeks. The price of cardboard has almost doubled, the cost of caps has increased by 40% and glass by a good 25%, with many suppliers texting to wineries and distilleries anticipating new increases, and even possible supply suspensions in the upcoming weeks. Road transport has had increases of over 25%, while the record has been marked for sea freight: + 400% on 2020. “2022 was thought of as the year of the definitive post-pandemic restart, but the enthusiasm was soon dampened by new uncertainties that do not help the development of the sector and make management very difficult - explains Beniamino Garofalo, at Santa Margherita Gruppo Vinicolo - now we are faced with unexpected critical issues in the supply chain: strong increases in value and poor availability affect the key components for the marketing of wines - from paper to packaging, from glass to transport - significantly affecting production planning on the one hand and on the bill consistent on the other. However, the concerns are not only recorded upstream. Negative signs also arrive on the consumption side: the gradual climate of confidence regained in recent months has already given way to a contraction in purchases. The scenario, therefore, remains uncertain, we find it hard to make forecasts for 2022. However, we must try to be optimistic: we have overcome the challenge of recent years, we will find a solution even in the current situation”.
“The world of Prosecco is in turbulence - adds Giancarlo Moretti Polegato, president of Villa Sandi - unfortunately the pressure coming from suppliers will soon begin to be discharged on final consumers. From April there will be a further increase in the cost of glass, after the price increase in the past months. At this point, we will have to inform our customers that the price lists, like those of all the others, will have to be retouched upwards. Unfortunately, the situation is worsening day by day and we are unable to absorb all the increases in raw materials, energy costs and transport that are reaching a point of no return. And that’s not all, because the problem will not only be the increase in glass but if we have bottles available for the next few months at all”.
And the concerns of the world of wine are the same as those of the world of spirits. “If they had asked me for a comment for 2022 at the beginning of January, I would have been happy to confirm the optimism of 2021 - explains Leonardo Vena, a member of the family that owns Lucano 1894 - today, however, my forecasts are rather gloomy. We are in a moment of very strong geopolitical tensions with heavy consequences for our sector. For us the issue of transport is crucial and for months the situation has only worsened: pallets are lacking, freight costs are stratospheric while containers cannot be found. The war then aggravated the issue of raw materials: for our sector, the prices of sugar, ethyl alcohol and glass in many cases exceeded the prices of 2021 by 25%, 30%. Not to mention that inflation is around the corner and a possible increase in bank interest rates does not make us any more assured”.
“We all hope that the tragedy in Ukraine will soon end - concludes President Federvini, Micaela Pallini - first of all, to alleviate the unspeakable suffering that people are unjustly suffering. Parallel to the diplomatic efforts, the European Union and our country must find ways to manage the impact that the geopolitical framework is having on workers, consumers and businesses. Forms of compensation and promotion aid are needed, market measures that make it possible to overcome the difficult moment and lay the foundations for future recovery. In the meantime, I hope that the recent government interventions on expensive energy can convince suppliers to meet our companies, suspending the increases already planned for April. I also appeal to all components of our extended supply chain, including packaging suppliers, transporters, distributors, restaurateurs. If everyone goes on alone, with indiscriminate increases, we don't get out of it. We find solutions that allow for sustainable growth over time. For our businesses and for all consumers ".
“We all hope that the tragedy in Ukraine will end soon - concludes President Federvini, Micaela Pallini - first of all to diminish the unspeakable and unjust suffering of people. Parallel to the diplomatic efforts, the European Union and our country must find ways to manage the impact that the geopolitical framework is having on workers, consumers and businesses. Forms of compensation and promotion aid are needed, market measures that make it possible to overcome the difficult moment and lay the foundations for future recovery. In the meantime, I hope that the recent government interventions on expensive energy can convince suppliers to meet our companies, suspending the increases already planned for April. I also appeal to all components of our extended supply chain, including packaging suppliers, transporters, distributors, restaurateurs. If everyone goes on alone, with indiscriminate increases, we don’t get out of it. We find solutions that will allow sustainable growth over time. For our businesses and for all consumers”.