A 'think tank' capable of monitoring the evolution of the wine and spirits sector, with particular attention to the structure of companies in an increasingly complex market, without forgetting the evolution of the consumer. These are the goals of theWine & Spirits Observatory launched by Federvini on the occasion of the Annual Meeting and created in partnership with Nomisma and Mediobanca.
THE VALUE OF THE SUPPLY CHAINS
Both wine and spirits are characterized by very intense international trade: in 2018 global wine trade flows exceeded 32 billion euros with an average annual growth rate of +4,2% on a ten-year basis, while those of spirits almost reached 29 billion euro with a growth of +6,0%.
In international wine trade, Italy plays a leading role and represents the second world exporter after France thanks to 6,2 billion euros of exports in 2018 and a global weight of 20%, among other things in increase compared to 2008.
Italian exports are driven by the category of sparkling wines by virtue of the enormous success of Prosecco on some key markets (primarily the USA and the UK): in the space of 10 years, exports of sparkling wines have more than tripled, exceeding 1,5, 78 billion euros, accounting for a quarter of total Italian wine exports. On the other hand, the role of bottled wines is reduced (from 69% to 47% of total exports) which record decidedly less sustained but still positive growth rates (+4,2% in the last decade): despite this, they remain the main item of sector exports with a value of XNUMX billion euros. By virtue of these trends, Italian wine, especially sparkling wine, has conquered market space in most of the world's markets.
The first months of 2019 are also positive for the creation of value on the domestic market, which grew by 4% in the first 5,5 months of the year compared to the same period of 2018.
Moving on to spirits, Italy is positioned in 8th position with an export value of 970 million euros in 2018 and a worldwide market share of just 4%, but growing on a ten-year basis in international trade, dominate are the UK (6,7 billion euros of exports, mainly scotch) and France (4,5 billion euros, with a predominant weight of cognac).
Liqueurs are the main item of Italian exports of spirits: 405 million euros in 2018 and a weight on the total exports of the sector of 42%. Thanks to these values, Italy is in second place just a short distance from Germany in the ranking of the main world exporters of this type.
Thanks to the strong growth in exports over the last decade (+4,5%), Made in Italy liqueurs have managed to conquer market shares in numerous international markets, first of all the USA, UK and France.
Shifting the analysis from international trade to national consumption, the spirits market in Italy has been in constant decline for years: -1,5% from 2013 to 18 for 1,2 million hectoliters consumed in 2018. However, the value is increasing above all in large-scale distribution channel: in the first 4 months of 2019 there was an increase of 10% with remarkable performances for sparkling wines, gin and rum.
As for wine, on the other hand, 22,9 million hectoliters were consumed in Italy in the same year: after the decline in recent decades, consumption showed a slight recovery in 2016-17 and then decreased again.
THE STRUCTURE OF THE COMPANIES OF THE SECTORS
The Observatory also analyzed the economic/financial structure of Italian spirits producers: a fairly concentrated market is emerging, devoted to exports and with a good financial balance.
The concentration is primarily geographical: Lombardy, Piedmont, Emilia-Romagna and Veneto are the main producers, with a high sector concentration index for spirits (1.998) and liqueurs (2.749). The companies in the sector also stand out for their constant growth: the average change in turnover between 2013 and 2017 stood at +2,1% for spirits and +2,6% for liqueurs.
These are companies suited to export with an average of 57% for spirits and even 62,4% for liqueurs. Governance appears more collegial with record quotas rose in the spirits sector: 36% against 23,1% for wine and 21,9% for liqueurs. Margins too – the ratio between EBIT and turnover – are very interesting, even higher than for wine: 15,4 for spirits and 17,1 for liqueurs against 9,3 for wines.
The return on capital is profitable, especially if we compare it to the European average of the sector (6,5%): 11,8 liqueurs and 12,4 spirits. We are therefore double that of companies in other EU countries.
As proof of financial solidity, it is worth mentioning the credit scoring: 87,2 for spirits, 83,3 for liqueurs and over 90% for distillates. However, the knot of investments remains to be resolved, still low: 3,6% liqueurs and 3,9% distillates.
ITALIANS AND SPIRITS CONSUMPTION HABITS
Finally, the purpose of the Observatory is to investigate the consumption habits that have undergone a significant change over the last decade.
On the one hand, there is a generalized drop in consumption which has become a trend: 23% of consumers said they have reduced the consumption of bitters/sweet liqueurs away from home in the last 2-3 years (in restaurants, wine bars, other venues) , against 17% of those who saw an increase and 60% of those who did not notice any changes. The balance is also negative in the context of consumption within the home: 20% of consumers stated that they have decreased their consumption while the share of those who declare that they have increased the quantities drunk is 14%.
Furthermore, consumption is increasingly linked to food and conviviality: 82% of consumers drink bitters/sweet liqueurs mainly after meals (89% only among the Baby Boomers), while only a 10% share (which rises to 14% among Millennials) consumes them above all as an aperitif. The weekend, indicated by 67% of consumers (78% among Millennials) is the preferred time of consumption.
With regard to purchase reasons, bitters/sweet liqueurs to be consumed at home are chosen above all on the basis of the brand (28% of consumers indicate it as the first criterion of choice), while low price, origin and presence of specific ingredients are the first choice drivers only for a minor share of Italians (10%). Concerning the methods of consumption, it is preferable to take it pure, unmixed, without ice (48%), at room temperature (31%), cold with ice (21%).
As for the main consumption channels, there are no differences between domestic and away-from-home consumption: 51% of Italian consumers drank bitters/sweet liqueurs above all at home while the remaining 49% away from home (32% at restaurants/ pizzeria and 17% in wine bars). The latter spend an average of 4,5 euros for a glass of amaro/sweet liqueur ordered away from home.
THE MAIN DOSSIERS
The issues that concern the Association most concern, on the one hand, the international scenario and the strong upheavals that could be generated in particular with respect to the duties that the United States and the European Union would like to apply in reciprocal trade, touching with wines and spirits also important Italian interests; on the other hand, the economic forecasts at national level linked above all to the uncertainties on the contents of the next budget manoeuvre.
It is also necessary to remember the importance of completing the full operation of the Consolidated Text on Vine and Wine, given that two years after its entry into force, some implementing provisions are still missing; and to monitor the future, in particular the new European structures that will be defined in the new Common Agricultural Policy: Italy must be able to express a strong and unique voice, bearing witness to the leadership conquered by the wine sector.
Promotion remains a fundamental lever to support the natural international vocation of our sectors and the continuity of actions must be an essential constant. Finally, the protection of intellectual property is a matter of constant concern because our denominations and geographical indications and our brands depend on it: their defense and safeguarding remain crucial to preserve the value of our excellence.
