WINE: GAS CRISIS ALSO FREEZES ITALIAN WINE, COST SURPLUS AT 1.5 BILLION EURO
UIV-VINITALY Observatory: market holds (for now), but does not compensate for cost escalation
It is a gap of almost 1.5 billion euro that caused by gas and energy on Italian wine. Even one of the healthiest Made in Italy sectors is forced to raise the alarm, and now the main fear is that the escalation in costs will be compounded by a crisis in consumption, in Italy and worldwide. According to the UIV-Vinitaly Observatory survey carried out last week on companies in Italy, the surplus of energy costs alone (+425 million euros) and, consequently, of dry raw materials (over 1 billion more for glass, paper, cardboard, caps, aluminium) are worth an 83% increase on the budgets at the beginning of 2022. In addition to these, other increasing items (bulk wine, commercial costs, workforce) lead to a 28% increase in total costs this year. The result, according to the survey of a panel representing 30% of the market, has the flavour of a mockery for the sector.
The increase in list prices estimated by the Observatory in the first nine months of this year is in fact 6.6%, a positive figure but insufficient to cover an upward variation in prices that companies have requested in the order of 11%. The equivalent gap is equal to EUR 600 million in costs not covered by revenues that Italian wine is forced to bear in order to stay on the market. The ones losing out the most are the supply chain companies, the largest cluster – but with the least bargaining power – made up mostly of small businesses that produce, vinify and bottle everything, or almost everything, in-house. But, with some exceptions, the wine industrialists and the world of cooperation are also suffering due to a dynamic that particularly penalizes the basic and popular segments of the offer, starting with medium-priced sparkling wines. The impact on the premium segment is different, not only because it is better able to absorb variations but also by virtue of a market that is more willing to accept requests for price increases.
For the president of the Italian Wine Union (UIV), Lamberto Frescobaldi: ‘The survey shows how the current crisis does not spare our sector, which is not energy-intensive but in many of its components suffers direct consequences. What we can do now is to consolidate with a supply chain pact all the dynamics that can produce a buffer effect to guarantee competitiveness and the market. Producers, industrialists, cooperatives and distributors will therefore have to absorb part of the increases so as not to dump them completely on consumers and avoid a dangerous depression of consumption’.
For the CEO of VeronaFiere, Maurizio Danese, “We consider it a duty for Vinitaly to monitor the dynamics of the sector, all the more so in a delicate moment such as this. What is happening also has a strong impact on wine, but we are aware that today’s events, like those of 2 years ago, represent exogenous and non-structuring factors affecting a sector that is in any case healthy. At the next wine2wine, scheduled for 7-8 November, we will present, together with UIV, the second part of this economic study, also with this year’s complete forecast estimates for the market, profitability, and balance sheet of the Italian wine industry”.