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There's no crisis for Italian wine. Sales up 25% over five years

by Giuseppe Oddo

Italy holds the second place in the world championship of wine. This year, due to adverse climate conditions, expected production is stuck at 44,4 million hectoliters, a provisional figure that whether confirmed will place Italy a bit behind France (46,2 million hectoliters), but largely ahead Spain (37 milioni). In 2013, with an annual extraordinary output of 52,4 million hectoliters, Italy was the first worldwide producer, Spain was second and France third with a gap of ten million hectoliters from the top.
According to a report by Italian merchant bank Mediobanca's research center, the sector has seen almost uninterrupted growth since 2004. Aside from a reduction in 2009 coinciding with the start of the worldwide economic crisis, the sector continued to expand, increasing revenue and exports.
Between 2008 and 2013, while sales in Italy's manufacturing sector fell 6%, revenue from wine rose 25% and exports surged by 41.5% - versus a modest 3% for manufacturing. The top 111 Italian wineries had combined sales of 5.7 billion euros, of which 52% were exports, gross operating margin of more than 500 million euros, and more than 11,000 employees. Some 40% of revenue, however, is from cooperatives, which enjoy considerable tax breaks compared with other types of private companies.

Market share
Italy is the biggest single outside supplier of wine to a number of big national markets: in 2013, it accounted for 31% of U.S. wine imports and 36% of German imports. It held 10% of the total U.S. market and 26% of the German market. France, however, rules in China, with 45% of Chinese imports and an 8% market share. Italy has only 1.1% of that market: so for every ten bottles of wine uncorked in China, only one comes from Italy.
An Italian liquor company Illva, owned by the Reina family, which makes the famous Amaretto di Saronno brand, has acquired 33% of giant Chinese wine maker Yantai Changyu, which has 650 million euro in sales and more than 5,000 employees. Yantai Changyu is the sixth biggest company in the sector (according to 2012 data). It's followed by two Italian cooperatives: in seventh place we find the Cantine Riunite-Giv, based in Emilia-Romagna, and in tenth place Caviro. In sixteenth place there is the wine division of Campari, and between nineteenth and twenty-second place we find Mezzacorona, Martini, Antinori and another cooperative, Cavit.

Advantages and disadvantages of small size

Most Italian companies are small to mid-sized. The 25 biggest Italian wine producers posted combined revenue of 3.4 billion euros (2013 data), but only 14 of them exceed 100 million. Another 11, including major brands like Frescobaldi, Ruffino and Gancia, fall in the 50-100 million euro range. Many family run companies have historic roots. The Barone Ricasoli company of Florence, with 20 million in revenue, of which 85% are exports, that produces the renowned Chianti Classico, was founded in 1141 and is in a heat for most ancient vineyard in the world with France's Chateaux de Gaulene in the Loire Valley. Another Florentine group, the Marchese Antinori, goes back to 1385. With 166 million in revenue in 2013, of which 67% from exports, and 22.7 million bottles produced, Antinori is Italy's largest family-owned company. In the hills of Valpolicella, in the province of Verona, one of the loveliest cities in Veneto, the Masi Agricola of the Boscaini family has been active since the early seventeenth century and holds the lead in Amarone, one of the highest quality wines, using a process that dates back to the era of ancient Rome.
Italy's prestigious brands also include more recently created companies like Casa Vinicola Botter, founded in 1928 and based in Motta in Livenza (Treviso), and Fratelli Martini, founded in 1947 in the Langhe in Piedmont, which exports red wine and spumante around the world. The Chianti region - around Florence, Siena and Arezzo - attracts the most foreign investment. According to consulting firm Knight Frank, some 40% of investment in vineyards and real estate there comes from abroad. More than 80% of Italian companies ranked by Mediobanca work with a foreign intermediary - with the result that the end relationship with clients isn't always ideal. Industrial margins of Italian companies, however impressive, are still only about half those of big international companies.

Italian Top wineries in 2013

€ mln and difference 2012/2013 (%)