Leggi in italiano

The 2022 edition of Vinitaly was all about restarting. While the desire for a return to business as usual was strong among the pavilions, one cannot ignore the tensions running deep in the sector, already weighted down by a Covid-marked 2020. 

THE CHALLENGES FACED BY WINE

Among the main challenges faced by the wine industry, some stand out:

• The energy and commodity crisis which, heightened by the war in Ukraine, is putting immense pressure on companies. CENSIS has estimated €1,1 billion in extra costs placed on the supply chain, a +35% increase compared to 2021 according to Coldiretti: +30% for bottles, +40% for caps excluding corks, +35% for labels and +45% for packaging. That all pales compared to logistics, with increases from 400 to 1000%. And not all these added costs can be compensated through the final price of wine.
• The Russian market. As revealed by Nomisma Wine Monitor, Italy was the primary supplier of wine to Russia in 2021, with an export value of €345 million, or €400 million including Ukraine. Because that accounts for about 6% of our total export, we are the most vulnerable country in Europe.
• The battles within Europe, from Nutriscore to the Cancer Plan, which place wine on the witness stand and could lead to restrictive policies.
• Climate change. Droughts and global warming could displace vineyards northwards, halting centuries-old traditions of winemaking in some countries and opening new business opportunities in others.

TOWARD A GLOBAL DISRUPTION

With these great tensions on the rise, we face the risk of a disruption that will change the face of “wine geopolitics.” The scale of the disruption will be proportionate to the continuation of the current market volatility. Rising prices will disproportionately affect medium-sized companies that cannot benefit from scale economies while having high cost structures. Competition will become more and more ruthless, producing winners and losers; geopolitical friction will lead to the implementation of barriers to free trade. The world of wine will never be the same.

WHAT CAN BE DONE: THE NEED FOR A CULTURAL SHIFT

What to do then? It is clear that in unity there is strength, and that these challenges must be faced with a united front. However, this won’t be enough without a deep cultural transformation behind it. There are three directions we need to follow.

• Social responsibility. A synthesis between the industry and the local social fabrics will be indispensable to create diffused, rather than concentrated, forces of development. In particular, schools and universities should play a bigger role in local development, facilitating knowledge and technological transfer and multidisciplinary approaches.
• From colonialism to the ecosystem. We need to put a stop to the downward price trap and to a market saturation caused by a flood of low-quality but highly marketed products. Instead, let us engage in transversal cooperation with the target markets, aiming for an understanding of the right value of a high-quality product, also through the institutions.
• Vision and planning. A medium-long term strategy is needed to anticipate commercial and price dynamics, so that we may guarantee stability and financial peace of mind to companies. Consortiums and institutions can play a key role in delineating strategic priorities and procurement policies.

These three areas represent a deep cultural change and an opening to a steady internationalization of our enterprises. They would become an integral part of an entrepreneurial system able to guarantee to the sector competition and stability – features that are largely lacking in today’s landscape. It is an enormous undertaking, in some very complex times at that, but it is a vital one. Instead of being scared, we should roll up our sleeves: the future is a construction site.