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The Italian Way: The future of the wine industry

Tuesday 28 Jul 2020

The fifth The Italian Way event, organised by UniCredit in collaboration with Federvini, looked at how companies in the wine industry are impacted by the crisis and can prosper and restart

The pandemic has had a strong impact on the Italian wine industry, which is estimated to lose 30-35% of its turnover in 2020. But growth is expected in 2021, supported by the stability of companies in the sector and the quality of the products. Key strategic themes for these companies include company size as a crucial factor, the risk of being bought by multinationals and digitalisation.

The fifth The Italian Way event, dedicated to the wine industry, was held on 14 July in Turin in partnership with Federvini, Italian wine federation.

Joining the discussion on how to restart the sector were Andrea Casini, Co-Ceo Commercial Banking Italy UniCredit, Sandro Boscaini, President Federvini, Fabrizio Simonini, Regional Manager Noth West UniCredit, Paolo Damilano, CEO Gruppo Damilano, Gianni Gagliardo, Poderi Gianni Gagliardo, Camilla Lunelli, Director of Communications and Foreign Affairs Cantine Ferrari, Alessio Planeta, President Planeta Vini and President Assovini Sicilia, Luigia Mirella Campagna, Industry Expert UniCredit, Marco Wallner, Corporate Commercial Synergies UniCredit.

UniCredit Sector report

1

Wine is a strong Made in Italy sector

With more than €13 billion in annual revenues, the wine industry accounts for more than 10% of Italy’s total Food & Beverage turnover. It is without a doubt a sector where Italy excels and provide the country with many record achievements. Italy is the largest wine producer in the world and the second largest-exporter by value, after France. It also has the largest number of certified wines (526 compared to 435 in France), reflecting the enormous investment in quality in Italy over many years.

2

A difficult 2020

Wine is one of the Food & Beverage sectors that is suffering the most due to the impact of the health emergency. In 2020, we expect turnover to fall by 30-35%, far greater than the average of 3-6% predicted for the F&B sector. The size of the impact will vary from company to company based on the type of wine.

3

The need for new business models

Uncertainty will continue to dominate until we go back to normality while transmission channels are being impacted by the sanitary emergency. Current wine production is made up of the domestic market (45%) and exports (55%).

4

Who has suffered the most?

The internal market is expected to shrink due to the severe difficulties faced by the hospitality sector as hotels, restaurants and cafes account for 42% of sales. Although wine tourism sector is only responsible for a small share of overall sales, it generates a high margin). A decrease in sales is also expected in foreign markets, especially for medium to high-level range wines, which are mainly sold through hospitality or export channels. Amongst businesses those that will be less exposed to risks will be those that have a wider range of products and more sale channels.

5

Strategies to restart

The sector was well placed when it entered the pandemic challenges. However, a liquidity crisis is expected, especially amongst the smaller, less structured companies. This will require new business models based on supply chains, value channels, diversification and innovation.

Speaker quotes

Andrea Casini, Co-CEO Commercial Banking Italy, UniCredit

“Wine companies have accepted changes in distribution and sale processes and embraced e-commerce. As a bank, we will continue to provide concrete support for companies’ internationalisation with initiatives like Easy Export and so that the strong tradition and commercial strength that distinguishes these companies forms a solid base from which to restart”

Gianni Gagliardo, Poderi Gianni Gagliardo

“Our main strengths are quality and the variety of territories. These features place us in a unique global position: the more wine culture grows in the world the more Italy benefits from it. We have very dynamic and professional entrepreneurs in this sector that have all the right credentials to continue successfully”

Paolo Damilano, CEO Gruppo Damilano

“We must be very united, work as a team on every single territory, help operators that are in most difficulty. Unity is very important and that is why many consortiums are working on initiatives that move in this direction”

Camilla Lunelli, Director of Communications and Foreign Affairs Cantine Ferrari

“We need strong digital competences in everything connected to online sales, in terms of marketing and communications but also in terms of customer relationship management”

Alessio Planeta, President Planeta Vini and President Assovini Sicilia

“I’m an eternal optimist. Let’s put this pandemic in our entrepreneurial curriculum and move on. I don’t think the world is ready to survive without wine”

Sandro Boscaini, Presidente Federvini

“The restart phase has begun but we in the wine world never stopped. Thanks to quality, tradition and the capacity to keep the dialogue with consumers alive, we haven’t lost the credibility and empathy that we built over time both in Italy and abroad”