The wine market should not be feared
The pandemic has clearly had a significant impact on the wine industry, particularly the Horeca channel; but recent signs of recovery show that there is still plenty of room for the wine market to grow.
The italian “Corriere Vinicolo” provides very important updates on the status of the wine market through its Wine Observatory. At this point, it is clear that close attention is being paid to the impact that Covid 19 has had, and continues to have, on our wine supply chain.
On this front, the "Vinicolo" (which highlighted how the pandemic actually overturned the values of the wine market) reported that if on- and off-trade sales were almost equivalent before the Coronavirus (197 and 178 billion dollars, respectively), the modern channel took over in 2020 with sales of 208 billion dollars, a share of 65 percent in value and 80 percent in volume (it had never exceeded 70 percent before).
According to the Wine Observatory, in 2021 we will witness the dominance of large-scale distribution, which, despite the growth in horeca (+ 16%), is expected to grow by 5%, reaching 218 billion dollars.
In conclusion, if the epidemic has winners, they are unquestionably the large-scale retail sector and all those who have been able to work with it throughout this tough period.
It's reasonable to assume that the on-trade will take some time to recover to pre-pandemic levels, but this assumption might be inaccurate, as the transformations occurring in the horeca world could surprise us.
In recent weeks, there has been a significant comeback in the restaurant industry, which has been certainly influenced by the desire of consumers to return to a regular life. Many realities have reformed themselves to the best of their abilities, which must be seen with great optimism.
However, the current rebound prompts us to emphasize once again that there is still a lot of room for wine growth on global markets. We don't want to come out as shallow, but we have a hunch that the market isn't our manufacturing companies’ biggest challenge.
So, what are the most pressing concerns for us?
First and foremost, there is the age-old problem of creating a system in Italian wine on all fronts. Starting with the wine policy, which appears to be controlled by a small number of people with little knowledge in the sector. And this can't help but concern, especially in this period. The data on agricultural support measures show that our sector will receive around 6.8 billion euros (via the Pnrr), which rise to 8 billion if we consider the so-called horizontal measures pertaining to other Ministries (Ecological transition, Tourism, Culture, etc.).
It is unclear what funding will be available to our wine industry. Solid ideas must be put forth quickly in order to support the wine industry and set the groundwork for a more competitive future for Italian wine.
To be honest, we get the impression that the dynamics of political struggle are always the same, and that we end up with the same old answers from above.
We would like to finally have a clear, transparent direction on the promotion of Italian wine around the world, rather than just the task of the usual institution on duty, which will have to manage (without input from real operators, let alone control) a sea of millions of euros on the major international wine markets.
In addition to that, we shouldn’t ignore a crucial topic: the expansion and aggregation procedures of wine firms. We realize how the vast fragmentation of Italian wine, while representing a crucial aspect of our wine offer, still remains a substantial barrier to its development. Important dynamics and mergers are underway in recent weeks as well, thanks also to the increasing interest on the part of some investment funds.
Let's face it: this sort of operation that results in the formation of larger Italian wine firms can only be viewed with delight. It means that national firms can compete effectively with global giants while also inhabiting new market areas.
Italian wine, probably more than any other foreign rival, is capable of competing at the highest level in the numerous global wine championships; but it is also true that, given the present severe obstacles, enterprises of a larger scale are required.
If we have to express a concern on this front, it is certainly about the expectations of some of these investment funds, which may be too optimistic about the recovery timelines of their assets. We are certain that they will learn quickly and gain a better understanding of the wine industry's dynamics as time goes on.
Last but not least, there is a scarcity of qualified human resources in our wine industry. It's an issue that emerged at the OperaWine and Vinitaly Preview, when several of the companies complained about the difficulties in finding skillful resources.
We've been working on this for a while, but we believe the time has come for a more collective contemplation on the wine system in order to come to more tangible answers sooner rather than later. Among these, institutional involvement will definitely be critical, and it would not be a terrible idea if a portion of the money allotted to the wine sector were set aside for training activities as well as to support the wine industry.