Rome Business School research: the Italian wine sector is confirmed as the world’s largest producer
Rome Business School has published the study, “The wine business in Italy. Exports, future challenges and new professionalism.” It was edited by Valerio Mancini, director of the Rome Business School Research Center. The research analyzes the growth of the global wine market post-pandemic, the leading role Italy plays in the global wine scene and examines wine consumption at the national level.
- The positive trade balance of the Italian wine sector is growing at an average annual rate of 5.2%;
- By 2022, 91.7 percent of Italy’s top wine producers expect revenues to increase, by double digits in 23.3 percent of cases;
- Italy exceeds last year’s forecast for wine production (50.7 million hectoliters), and is ahead of France (45.6 million) and Spain (37.8 million);
- Veneto leads all Italian rankings: largest producer (23 percent of the total), exporter (35 percent), seller (20 percent), production of bubbles (56 percent), number of companies (23 percent);
- Italian wine companies employ about 210,000 people (50,000 young people), in Italy the wine world generates work for about 1.8 million people in as many as 18 different sectors;
- Stopping the race of Italian wine is the exponential growth of costs with an average of +35%, caused mainly by the war in Ukraine;
- To be more competitive, producers will have to look more and more at sustainability and new trends related to technology, artificial intelligence and online marketing techniques.
The year 2022 also presents a picture of great uncertainty for the wine sector. Although export numbers have improved compared to last year (from +4.8 percent to +5.6 percent) we are facing a complex scenario characterized by rising costs of raw materials and energy, the difficulty of supplying a great many materials due mainly to the conflict between Russia and Ukraine.
Despite the problems, wine production in Italy remains strong. In the first half of 2022 (as of May 31, 2022), according to MiPAAF data, there were 50.7 million hectoliters of wine and 5.3 million hectoliters of musts in Italian wine plants. Compared to the same period in 2021, a higher value of stocks is observed for all wines (+3.1%) and musts (+19.8%). These numbers confirm last year’s forecasts, which saw Italy exceed 50 million hectoliters, positioning itself as the only one among the three main European producers for which a positive change with respect to 2021 (+2%) was expected, ahead of France (45.6 million hectoliters) and Spain (37.8 million hectoliters).
Regional production: production numbers and trade value
Wine production in Italy involves 50.5 percent PDO wines and 28 percent PGI. Fifty-five percent of the wine is held in northern regions, to a greater extent in Veneto (Fedevini, 2022). This region alone accounts for 23 percent of national wine, mainly due to the significant contribution of stocks in the provinces of Treviso (9.1 percent) and Verona (8.6 percent), according to MiPAAF 2022 data.
Even in terms of trade value, it is still Veneto that occupies the first position in exports, exceeding 35 percent of the total amount and doubling Piedmont, which, with a share of 17.2 percent, only slightly distances Tuscany (15.9 percent of total sales across borders), ISTAT data 2021. Veneto’s supremacy in terms of volume of wine produced is also confirmed in terms of value: in both cases the incidence slightly exceeds 20 percent of the national total. It is followed by Puglia, whose volume production (equal to 18.6 percent of the total) translates into less value (12.5 percent).
Remaining in the Northeast, it is here where, according to Area Studi Mediobanca (2022), the largest companies operating in the wine sector are concentrated: 40 percent of Italy’s 251 corporations (companies have a turnover of more than 20 million euros), half of which are right in Veneto, the region with the largest number of companies (23 percent of the total). In the Center and Northwest, it is Tuscany (15 percent of total companies) and Piedmont (12 percent) that mark the highest concentration; in the South and Islands, Sicily and Puglia together cover 10 percent of the total panel. Sparkling wine producers, on the other hand, are located in 6 regions, with Veneto leading the way (56% of the total); Lombardy is the only region where sparkling wine companies prevail (54% of the total).
Made in Italy: the importance of exports and the impact of Covid-19
Like any made-in-Italy excellence, Italian wine is strongly driven by exports: about 40 percent of Italian wine production is destined for the foreign market, and the wine sector’s positive trade balance in recent years has grown at an average annual rate of 5.2 percent (Area Studi Mediobanca, 2022).
In 2022 we still see the success of bubbles: it expects to close the year with +5.7 percent in total revenues and +7.5 percent for exports compared to 2021, while, for still wines a +4.6 percent is expected (+5.3 percent exports). Proximity markets (EU countries) prevail with 41.2 percent, while the second destination area is North America (34.1 percent); however, important growth is also registered in Central and South America (+22.8 percent).
After a 2020 characterized by a major fall in wine sales, there was a clear jump for the sector in 2021: 95.8 percent of the companies surveyed again by Area Studi Mediobanca declared an increase in turnover with a change exceeding +10 percent in 56.9 percent of cases. In 2021, overall sales increased by 14.2 percent over 2020: the post-covid recovery thus affected the domestic market (+14.8 percent) and the foreign market (+13.6 percent) to a similar extent. In fact, 93.3 percent of companies increased their exports over the previous year, and in 57.6 percent of cases the increases were in double digits.
Italy has therefore held up well to the impact of the pandemic in terms of wine exports, as there has been a decline, yes, but a very small one and certainly not as dramatic as that seen in France (-2.2% vs. -11%).
Italian consumer trends and the online boom
Several phenomena have been recorded due to the Covid-19 pandemic. Among the most notable: the change in wine consumption: still wine grows as much as sparkling wines and red as much as white, favoring high quality categories (+8) over low level products (+3%). Domestic consumption is also falling, in step with the sharp increase in U.S. demand, this has caused Italy to slip to third place among consuming countries. It should be noted that although people are drinking less (-26% reduced volumes compared to 20 years ago), consumers are doing so more responsibly, with an average of 2-4 glasses per week.
The best-selling wines last year were Lugana (+49%), Brunello di Montalcino (+47%) and Piedmontese Barolo (+43%), Coldiretti data (2021). Lambrusco, Chianti and Montepulciano d’Abruzzo remain the most drunk. Sales on web portals owned by wineries and companies in the wine world also increased by 74.9%, sales on specialized online platforms by 435%, and sales in generalist marketplaces by 747%.
New job outlets and new professions
Italy occupies first place in the world ranking of producers, compared to which it holds a share of 18 percent of the overall total. Thus, despite the crisis, the wine sector continues to grow and offer job opportunities. Not only that, in our country, in recent years, we have witnessed a real “return to the vineyard” by young producers under 25, with a record increase of 38% in 2018, and it is estimated that wine producers under 25 have risen to 1,200 in just one year. Currently, there are about 100,000 companies in Italy led by young people under 35, and 25 percent of these are run by women. According to Coldiretti (2021), Italian wine companies employ internally about 210 thousand workers, among whom 50 thousand are young people. In Italy today, the world of wine generates work for about 1.8 million people with professional opportunities distributed in as many as 18 sectors.
A look into the future: sustainability, technology and marketing
Pandemic and new consumer trends are forcing the industry to make necessary changes. More and more, in fact, the wine sector will have to look at sustainability, so reducing, for example, the weight of glass in bottling; relying on technology, through digitization, automation and artificial intelligence; and being able to respond to the demands of more supply chain-conscious customers, who will look more for regional wines and lesser-known wineries, and organic wines.
A further increase in overall sales is expected in the final months of 2022: 91.7 percent of major wine producers expect revenues to rise, by double digits in 23.3 percent of cases; the share drops to 87 percent when looking at exports, according to Area Studi Mediobanca. However, holding back the Italian wine race is and will be mainly cost growth: an average of +35%, due to tensions on energy and raw materials generated by the war in Ukraine with unilateral increases by packaging suppliers. In fact, there are price increases in vineyards ranging from +170% for fertilizer to +129% for diesel fuel. A glass bottle costs up to 50% more than last year, while the price of corks has exceeded 20% for those made of cork and even 40% for those made of other materials.
A situation of fragility, this one, that “puts at risk a system that starting with the grape harvest activates a business that offers employment opportunities to 1.3 million people directly engaged in vineyards, wineries and commercial and service distribution. It is necessary, therefore, for the future of the sector, to focus on investing in environmentally sustainable resources in order to protect the unique heritage of biodiversity of Italian wine production,” says Valerio Mancini.