Italian wineries in the time of Coronavirus

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Col D’Orcia vineyard in the Brunello di Montalcino territory

Italy was the first European country to be gripped by coronavirus. Its lockdown, which was imposed on a national level on 10th March, led to many sectors having to adjust to the safety measures, logistics and economics of a totally new existence. Agriculture is one these sectors. Food and wine exports equate to some 50% of production and €44 bilion in export value, of which its wine business is said to be worth €6.4 billion. A quarter of Italy’s agriculture depends on migrant workers and that includes vineyards and harvesting. According to Coldiretti Associazione (farmer’s association) agriculture legally employs annually some 370,000 migrant workers.

Although ‘masked’ agricultural workers can still work in the fields and a skeleton staff operate the wineries, an approach for survival has been taken by many across Italy. This includes using 10% of key workers at wineries by rotating staff; using extended family in the vineyards to cover absent migrant workers; looking at massive green harvest in July/ August; looking at distilling overstock into pure alcohol (sanitizers); and not over-loading export pipelines while sales and marketing staff do their best with ‘smart-working’.

Concern in wineries is sweeping across all regions of Italy as sales and exports dwindle. Large and small enterprises alike are concerned with the need to manage their warehouses as lack of sales brings over-stocking and a new harvest could mean that producers will be short of space to deal with the situation.

“It’s still too early to say,” says Andrea Sartori President of Consorzio Valpolicella and CEO of his family winery, Sartori, in the Valpolicella area. “However, from the data we have, we know that there are 59 million hectoliters of wine in stock in Italy. Considering that a standard vintage produces about 44 million hectoliters, we have more than one vintage, almost a year and a half, in stock.” According to Sartori, the largest stocks are in Veneto, which has a quarter of the total, followed by Puglia and Emilia Romagna. “It is clear that table wines and generic IGT will be preferred for. distillation However I would not be surprised if Pinot Grigio or Prosecco DOC have the same problems,” Sartori says. “It is a serious matter and I honestly do not know how, from a technical point of view, Europe and the ministry will deal with the matter.”

With so many wineries in Italy offering hospitality there is a risk that, like tourism, this part of the business will slump into a recession. “Wine tourism, especially important to Tuscany is already completely blocked and what is lost, is lost forever and not recoverable in the coming months. The economic and financial consequences will bring some wineries to their knees,” says Francesco Ricasoli, CEO of prominent Chianti Classico estate, Castello di Brolio. It’s a scenario which is worrying many wineries across Italy’s 20 wine producing regions. The hills of Conegliano Valdobbiadene Prosecco Superiore DOCG, known for their breathtaking landscape and heroic viticulture, had great expectations for wine-tourism this year as a new UNESCO World Cultural Heritage destination. “All those who booked to come to our beautiful hills have had to cancel,” says Giancarlo Moretti Polegato, president of Villa Sandi’s premium Prosecco estate.

Exports of Italian wines have shown that there is a strong empathy for Italian brands and it is reassuring in these dark coronavirus times to hear someone say, “We can see the light at the end of the tunnel.” Jgor Marini, regional manager for Castello Banfi, premium Brunello estate in Montalcino, says that in the first week of lockdown the best sellers were fine, premium wines, Barolo and Brunello, but now two weeks later the decrease in premium wines is 70%, and wines from €6 to €12 are the most sold online. These show a 400-500% increase and the same is for supermarket sales. “The reason is that in the first week of lockdown things were unpredictable so people were spending, but now they are not safe about their salary and they do not know what is going to happen in the future so they save a bit more, and drink a bit more wine for less money. Everybody’s doing this in Italy.”

Shooting across to India, to one of Italy’s on-trade markets there is grave concern. “Business is zero!” says Sumit Sehgal, director, Prestige Wines & Spirits Pvt Ltd. “Presently everything is shut and I don’t see the restaurant and hotel business doing well for long period. We represent Tedeschi, Piccini and Pio Cesare and cover both on- and off-trade quite well. Retail may do better once they open. But expensive products will take a big hit.”

India’s wine consumption depends a lot on its tourism and foreign travellers, which affect the consumption of imported premium wines for sure.

“It’s too early to understand the impact of Covid19 on Italian wines, says Sandip Parsan, CEO of Ace Beveragez, importers of a fine Italian wine portfolio, featuring Col D’Orica, Michele Chiarlo, Carpineto and Folonari. “Since lockdown, which may be extended to 30th April, imported wines are lying in the port uncleared.”

2020 is going to be an extremely difficult year for everyone. Let’s hope for best.

 

 

 

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