Under the umbrella organisation Alleanza Cooperative Agroalimentare, 423 cooperatives with a joint business volume of €4.9 billion are united in the wine sector. Together, they make up 58 percent of Italy's total production. Nomisma-Wine Monitor's analysis is based on data collected from wineries of various sizes, which together generate 51 percent of the cooperatives' total turnover.
The fragile increase of one percent can be attributed to the increase in sales in food retail (+6%, IRI data, 2021) and export (+3%). Sales fell for 41 percent of cooperatives, 34 percent managed to keep sales stable, and a quarter generated growth.
The overall figure, however, is mainly due to the growth of the large structures. If results are divided into two categories – businesses with a turnover above and businesses with a turnover below €25 million – it becomes clear: 47 percent of the wineries below the threshold had losses, while only 24 percent above the threshold reported losses. Of the business that experienced losses, 27 percent of the smaller ones had to cope with losses of more than 15 percent, whereas only six percent of the larger ones were affected. Growth was generated by 30 percent of the stronger structures, but also by 23 percent of those under €25 million. The two units are very close to each other in terms of growth of over 15 percent: six per cent for the wineries with the larger turnover and five percent for the others.
Horeca crashes, export above level. Regardless of size, 95 percent of the cooperative wineries have seen slumps in the on-trade and sharp declines (-44%) in wholesale and retail. The Italian market loses 13 percent in the overall picture, but the gap between businesses below and above the €25 million turnover threshold is wide.
"Above" makes 92 percent plus in food retail, grows 100 percent online, loses seven percent in direct sales and 37 percent in wholesale and retail. "Under" only manages 31 percent growth in food retailing and 65 in e-commerce, but slumps by 26 percent in direct sales and by 58 percent in wholesale and retail. The online sector accounts for just under one percent of sales overall, with the lion's share accounted for by food retailing at 59 percent.
The associations are particularly proud of the development of the export business. While Italy's total export value has dropped by 2.4 percent, the cooperatives have increased by three percent, despite the difficulties in the bulk wine trade. But this is entirely thanks to the structures with a business result of over €25 million, which were able to counter the 43 percent decline in "under" with a 25 percent increase.
Wine Monitor has analysed the shares of the various foreign markets. Sales to the main international customers – the USA, Germany and the UK – fell by 48, 55 and 29 percent respectively for the smaller cooperative wineries, while their colleagues with sales of over €25 million were able to keep their results stable in the USA and the UK and even increase them by seven percent in Germany.
*Consolidated result including the turnover of Gruppo Italiano Vini of €393.2 mill. in 2020 and €408.8 mill. in 2019, **Consolidated result consisting of the wine sector (69%) and the turnover of the circular economy, ***As of 1.1.2020 Cavit fully consolidates Casa Girelli, Cesarini Sforza Spumanti and Glv./ Source: Mediobanca report, July 2021
Investments in USA and Germany
The survey panel also commented on the most promising markets in which to invest in the future, and several markets were named. As expected, the USA came out on top with 76 percent of the votes, but Germany, often described by Wine Monitor as a declining market, managed to hold on to second place with 41 percent. This was followed by China (35%), Japan (33%), UK (30%), Russia (22%), Canada (22%), Sweden (15%), Switzerland (11%) and, surprisingly, France (7%).
For 67 percent of the respondents, the best strategy to boost foreign business is to physically meet business partners again, the classic business trip. Other responses report that 41 percent rely on e-commerce, 24 percent on social media presence, 20 percent consider online seminars suitable, 17 percent advertising (online, press, TV, radio), and nine percent rely on discounts and promotional activities.
Long-term goals
To improve competitiveness in the long term, the two groups above and below the €25 million turnover set different priorities. The expansion of distribution channels (multi-channel) achieves the greatest consensus with 56 percent, but this percentage figure comes about because 71 percent of the larger businesses favour this option.
The second most important task is to become a "sustainable company" (52 percent), a figure that is also pushed by those with the highest turnover (77 percent). The situation is similar when it comes to diversifying export markets. Seventy-one percent of the large companies are pushing for this, but the panel as a whole only comes to 52 percent.
The smaller wineries, on the other hand, raise the average on two other points. Thirty-nine percent want to push for a stronger territorial character of the wines, compared to only 34 percent on average. A better price positioning, even at the expense of volume, was the goal of 27 percent of the lower-turnover wineries; in the overall ranking, this point falls to 23 percent.
Luca Rigotti, president of the Trentino group Mezzacorona
Accelerate merger processes
"The crisis and the changes brought about by the pandemic have shown how important it is for a cooperatively organised business to have a certain critical mass. In view of the results shown, the merger process, which has been in our DNA for a long time, could be accelerated," Luca Rigotti explained during the online presentation of the study. The president of the Trentino group Mezzacorona, as coordinator of the wine sector in the Alleanza, is not only the highest-ranking wine cooperative member in Italy, but he was also appointed president of the wine working group within Copa-Cogeca in Brussels in spring 2021.
Copa-Cogeca is the union of the two major agricultural umbrella organisations of the European Union. Copa is the European farmers' association and Cogeca the EU umbrella organisation of agricultural cooperatives. The 57-year-old lawyer is the first Italian to lead the wine sector of this strong representative interest group in European agriculture.
And he is right, the merger process, which in recent years has already led to complex structures such as ViVo Cantine and Vitevis in Veneto or Emilia Wine in Emilia-Romagna, has been further accelerated in Italy.
Success over market cleansing
Cantina Valpantena in Valpolicella is the latest example. After the winery had already incorporated Cantina Colli Morenici in 2019 and also secured 25 percent shares in the historic Veronese winery Montresor in the same year, it merged with Cantina di Custoza in spring 2021.
The two cooperatives merged to form Cantine di Verona. Under the new name, they combine a turnover of €65 million and 300,000 quintals of grapes, and they can draw on assets of €30 million. Valpantena and Custoza complement each other. Valpantena produces 70 percent red wines and needs more white wine for the markets, at Custoza the situation is exactly the opposite.
That sounds like a perfect pair, but the situation is complicated. In the DOC Custoza origin, the average quality of the wines, especially the Custoza Superiore, has greatly improved, but the image is still associated with cheap entry-level qualities. The consortium does ask Custoza producers to certify only high-quality wines as DOC Custoza and to place the rest of the wines in IGTs or DOC Garda, but this process needs to be accelerated.
Luca Degani, director and oenologist of Cantina Valpantena
Valpantena Winery wants to raise the reputation of the entire DOC in order to have better chances on the markets with Custoza. "The Custoza winery is technically very well equipped, but in the vineyards the members need more support. We have additionally hired a young agronomist who guides the winegrowers to a higher quality awareness and more precision. The problem is the wines, which are also sold openly by private producers because they do not want to sell certain qualities under their brand. We have to clean up the market and buy up these wines. We will do that after the next harvest," explains Luca Degani, the director and oenologist of Cantina Valpantena.
He has already agreed on this with the second cooperative that operates on the territory of the DOC Custoza, the Cantina di Castelnuovo del Garda. It is one of the wineries that have joined forces to form the Vitevis association. Within the world of winegrowers' cooperatives, there is much more cooperation to improve quality standards than is publicly perceived.
Pioneers in the organic sector
The commitment of the cooperatives in the field of sustainable and organically certified cultivation is confirmed by an internal survey conducted by Alleanza Cooperative in June 2021. Winegrowers' cooperatives of various sizes were surveyed in different regions, which together account for more than 70 percent of the total turnover of €4.9 billion.
According to the survey, 61 percent of the cooperatives already produce organic wine. Half of the wineries produce within the framework of sustainable certification standards. They mainly apply the national SQNPI – Sistema di Qualità Nazionale Produzione Integrata of the Ministry of Agriculture – (53%), or they follow the standards of Equalitas (19%) and VIVA (15%).
Of the wineries that still produce without certification, 80 percent intend to apply the standards in the future. For 55 percent of those surveyed, the advantages of certification in the area of sustainability do not lie solely in the tendency to increase sales and value.
For them, voluntary compliance with the standards represents added value because it demonstrates not only environmental awareness but also strong cohesion among members, which is mainly appreciated by foreign buyers. However, the members' honourable endeavours could have more to do with transparency. So far, only 22 percent publish sustainability reports.
Giuseppe Bursi, president of Settesol
More organic than certified organic
The Cantine Settesoli in Sicily is embarking on an ambitious path with this harvest. For the specialised trade and gastronomy line "Mandrarossa," winegrowers were selected from the already organically certified areas who are willing to follow the "Alta Qualità Bio" project.
"We want to move ahead and raise the bar once again for organic production with stricter guidelines developed specifically for this purpose, to increase the quality of the grapes and reduce soil pollution. We carry out 30,000 inspections a year for this purpose. We have a total of 940 hectares under organic cultivation, and out of 110 winegrowers, 78 are ready to follow the new project so far," informs Giuseppe Bursi, the president of Settesoli. Perhaps the public will be convinced of the quality of the Superbio wines at Vinitaly 2022.
The Italian wine cooperatives are generally preparing for the strong international demand for organic wines, also in the bulk wine segment. Fifty-one percent of the wineries are already in the process of further increasing the organic wine share of production, and 18 percent will do so in the next two to three years. The expected competitive advantage will take effect if not only the quantity but also the quality of organic wines increases. This is certainly known not only in Sicily.
