Allegrini 2018

WineNews analysis: +1.962%, record value increase of one hectare of Brunello over the last 30 years

Behind the success of the Made in Italy symbol is the creation of the first modern wine “district”, a small, Italian “economic miracle”

While Brunello was conquering the world markets, in “just” 30 years, Montalcino built one of the most important and profitable wine Italian and International wine “districts”. The increase in value of the vineyards testifies to this great success. As a matter of fact, in 1992 a hectare of vineyards and/or vineyards of Brunello di Montalcino was worth 40 million Italian lire, which would be equal to the current 36.380 euros (figure obtained calculating the ISTAT coefficient for the current value), and today it is worth 750.000 euros; that is, 20 times more, for a record +1.962% value increase. These are the results from the WineNews analysis, “Montalcino 1992-2022”, commissioned by the Brunello di Montalcino Wine Consortium for the 30th edition of “Benvenuto Brunello” 2021. The event was actually the first “Preview” of Italian wine, which started in Montalcino in 1992. In the past thirty years Montalcino has worked to build the “Brunello Economy”, by increasing the passion for its wines, understanding the evolution of consumer tastes, moving from the role of “trademarks” (a few historic companies whose names were the “guarantee”), to the importance of the “territorial brand” (wine producers in Montalcino have a dominant position on the market), and at the same time, developing the map of destinations of wine tourists, first Italian and then world-wide. It created a wine district that “feeds itself “, thanks to the related activities that potentially no longer have geographical borders, but instead attract top professionals, the best companies and important investments in vineyards and wineries, from every corner of the world. And, above all, through investing, perhaps against the tide at least in those years, but certainly pioneering, compared to the rest of Italy, in the growth of agriculture, farms and human resources from other countries as well, near and far. Therefore, one of Made in Italy’s symbolic products, firmly linked to an ideal terroir, where beauty makes wealth, generating income, employment and social integration, today represents a modern, dynamic Italy, looking towards and, at times, perceiving the future through the glass. It is not a “bubble”, but rather one of the finest and most recognizable wine territories in the world, and Montalcino is a model in doing business guided by well-defined and organic policies. The territory is very well organized, and has anticipated the times by realizing the need to establish the “Governance” of the territories more and more on public-private synergy, thanks to incentives that companies have launched and that politicians have been able to understand and put into practice. It is one of the very few territories that has maintained a high competition level, looking beyond the Pandemic to 2022, by focusing everything on quality in the bottle as well as in life, enhancing biodiversity and “attention to detail”, as well as “territorial communication”, which at the time was taking its very first steps.
These fundamental economic, as well as social, cultural and image values underline Brunello di Montalcino’s remarkable growth rate in a relatively short period of time. As a matter of fact, Montalcino went from being one of the most depressed and least populated localities in the Siena area, during the tremendous economic and social crisis at the turn of the Nineteen fifties and the seventies when the countryside was being abandoned, to obtaining the DOC in 1966 (by way of the Decree of the President of the Republic on March 28, 1966). And, it gave the impulse to companies to produce wine. It was the first DOCG in Italy, awarded in 1980 (DPR 7/1/1980, followed by the DOC for Rosso di Montalcino with DPR11/25/1983), which was the direct result of their clear choice to focus everything on quality. The Nineteen nineties were a real turning point for Brunello and its territory, thanks to its continual growth, even today. In terms of hectares of vineyards dedicated to cultivating Brunello, Montalcino has grown extensively in quite a short time. In 1967 there were 64 hectares (the year in which the Brunello di Montalcino Wine Consortium was established), which increased to 1.100 in 1992 and has gone up to the current 2.100 hectares (the quota since the beginning of Nineties, listed in the Register of Brunello Vineyards at the beginning of the millennium, which, on the heels of its success, and according to Law nr. 441 of 1998 containing the “Rules for the spreading and enhancement of youth entrepreneurship in agriculture”, led to the last increase that will stay as is, because the Register was then closed and there is now no intention of reopening it). Therefore, production as well has also gone from just over 2.000 hectoliters in the 1960s, to over 50.000 in the 1990s, up to over 80.000 in 2020 (source: Consorzio del Vino Brunello di Montalcino). More than anything else, the real market value of the Brunello vineyards, which WineNews analyzed, has increased exponentially. When land “cost nothing”, and one hectare of vineyard and/or vineyard suitable land was worth 1.8 million Italian Lire in 1966, and further, in the Nineteen eighties when it was possible to buy replanting rights from other territories, the “bare land” on which to cultivate Sangiovese grapes that would become the future Brunello, was worth 3.5 million Italian Lire per hectare, right up until the real “boom” in the early Nineteen nineties when a hectare planted with Brunello cost 30 million Italian Lire (the EEC Regulation nr. 822 of 1987, banned new plants and regulated the rights to replant, including the possibility of transferring it to other companies. However, exceptions were possible, too. For instance, in the case of Montalcino, where, contrary to what was expected, the supply prices continued to increase because demand was very high. These exceptions made it possible to get vineyards registered, as mentioned). In just a few years, instead, at the beginning of 1995, which represents the real “turning point” in the history of Montalcino. After recovering the market due to the methanol scandal, the same value, which had already doubled, went in one fell swoop from 60-80 million Italian Lire to 200-300 million Italian Lire per hectare. Then, in the 2000s, when the euro became the new currency, purchasing a hectare of Brunello vineyard cost 200.000 euros. And, this figure totally confirmed the incomparable appeal of a wine and a territory launched into the “elite” of world enology, merit its exceptional nature as well as consecrating vintages such as 1995 and 1997, thereby reaping the fruits of what was sown in the Nineties. Plus, not even the so-called “Brunello scandal” in 2008 would affect it. In fact, in the next decade, the value of hectares in Montalcino continued to increase, and after topping the threshold of 400.000 euros, which followed the exceptional 2010 vintage, they were so high that today we are talking about record sales of figures reaching 1 million euros (which, in just over half a century, is equivalent to a “monster” value increase of +4.500%). These values are the result of very high quality inside and outside the bottle, and will certainly increase even more in the future, which is what happens in all the largest wine territories in the world. It is actually a “very small circle”, in which Montalcino’s growth potential is one of the most promising since the Brunello area is one of the “youngest” to be part of it.
Montalcino represents the Italian wine territory that in the last several years has seen the apparently inexorable phenomenon of mergers & acquisitions (which WineNews is constantly monitoring, as it does as well for other Italian wine territories). In terms of sales, there have been large investments, in small as well as large wineries, many by foreign as well as Italian Groups, wine producers from other territories and entrepreneurs from other sectors, certain that they are investing in an area of ​​absolute value and beauty, which seems impervious to market crises (the first significant acquisitions of capital “from outside” date back to the Nineteen eighties and nineties, though at the time they could be counted on one hand). Being at the center of dynamic market negotiations and consequently continually attracting new investors, even though it is a “patch of land”, together with the quality and success of its wines around the world - thanks to two consecutive years on the market such as 2015 and 2016, considered “exceptional” by the topmost influential world critics, none excluded, and thanks to which 2021 was the “Year of Brunello” - make it a territory at the top of its game today, where the value of the “Brunello vineyard”, on the whole, reaches 2 billion euros (according to the 2020 estimates of the Consortium). Even the Pandemic hasn’t affected this value, plus it seems it hasn’t even affected bulk, which WineNews analyzed, starting from the real market values. A hectoliter of Brunello di Montalcino wine in 1992 was worth 250.000 Italian Lire, equal to 227 euros (figure obtained calculating the ISTAT coefficient of the current value), while today it is worth 900 euros, four times as much - + 296% value increase over 30 years - making it the highest price among the top Italian Denominations. There is also a “value” made up of 340.000 hectoliters of the last five vintages (Valoritalia, 2020 data), stored in barrels in the wine cellar vaults, which are worth 400 million euros, but which, after bottling and considering market prices, together with the finished product will increase threefold, reaching 1.2 billion euros. This quantity, unlike other denominations, does not scare the most famous DOCG in Italy, because once bottled, the market will absorb 100% of it. Even in the early Nineteen nineties, when the consumption crisis was not impacting the world wine sector, the demand was greater than the offer and the Brunello producers did not find it difficult to place their product. And, as a matter of fact, a survey the Brunello Consortium carried out on wine stocks revealed that vintages were continually depleted on the market in the fourth year of marketing. The merit goes to exports, which rose to 45% in 1993 (from 42% in the previous 1987 survey), indicating Germany and Switzerland leading the way (38%), followed by England, Austria, Holland, Belgium, Denmark and France (34%), the USA and Canada (22%), and Japan (2%), and half of the production for the Italian market, in times when there were certainly no marketing and promotion activities like there are today, so the entire merit was due to the very high quality of the product. Exports are now worth 70% and Montalcino wines are shipped to more than 90 countries around the world - the USA, Canada, Germany and the United Kingdom, in the lead.
Today, 30 years later, the numbers that make Montalcino one of the most profitable wine districts in Italy are an annual production of 14 million bottles, 9 million of which Brunello di Montalcino and 4 million Rosso di Montalcino, for a turnover estimated at 190 million euros. There are 218 companies that produce them (which represent 98.2% of production; they were 147 in 1992) on over 4.300 hectares of vineyards, primarily cultivated with Sangiovese (of which 3.150 registered DOC and DOCG, and almost 50% organic cultivation). The figures have doubled, as we mentioned, since the early Nineteen nineties when there were just over 2.000 hectares. They continued to represent only 15% of the entire territorial area totaling ​​24.000 hectares which were 50% dominated by woods, 10% olive groves and the remainder is cultivatable land, pastures and other crops. The economic reality of the area has always been based on agricultural and forestry activities - in the past it was the “natural source” of wealth, from which the population got timber, coal and many other fundamental materials for their economic activities - but also and above all, the symbol of great and extraordinary biodiversity.

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