Saturday, May 18, 2024
 
 

The global energy crisis is negatively impacting Italy’s wine industry

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Rising costs of almost €1.5 billion are facing the Italian wine industry as a result of the ongoing gas and energy crisis and now the main fear is that the escalation in costs will be compounded by a crisis in consumption, both in Italy and worldwide.

According to Italy’s Vinitaly Observatory survey carried out on companies throughout the country, the surplus of energy costs has now reached €425 million. Consequently, for dry raw materials, the excess amount has now totalled over €1 billion more for glass, paper, cardboard, caps and aluminium – an 83% increase from the beginning of 2022.

Other items that experienced a sharp increase in price included bulk wine, commercial costs and payouts to the wine industry’s labor force, all of which have led to a 28% increase in total costs over the course of the year. 

The increase in list prices for Italian wine in the first nine months of this year reached 6.6%, but was insufficient to cover the 11% increase in operational costs that most vineyards experienced since early in the year. 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.

Within the wine industry, companies that are part of the supply chain have been hit the hardest, while small vineyards that produce, vinify and bottle their vintages in-house have been particularly ravaged by the steep climb of energy costs. With a few exceptions, industrial wine producers have also taken a significant hit, particularly those that produce medium-priced sparkling wines.

What hasn’t been a surprise, based on the data collected, has been the reaction of the high-end, premium wine segment; which is better equipped to absorb price hikes due to the fact its customers and distributors are more willing to accept steep increases in operating costs and retail prices.

“The survey shows how the current crisis is not sparing our sector, which is not energy-intensive, but many of its components suffer direct consequences,” said the president of the Italian Wine Union, Lamberto Frescobaldi. “What we can do now is to consolidate a supply chain pact that has all of the dynamics that can produce a buffer to guarantee competitiveness and the market. SMEs, industrial producers, 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.”

Maurizio Danese, the CEO of VeronaFiere, a platform for the international promotion and marketing of goods and services, added ”We consider it Vinitaly’s duty to monitor the dynamics of the sector. All the more so because we’re at a very delicate time. What is happening also has a strong impact on wine, but we are aware that today’s global events are factors that greatly impact the wine industry. 

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Former EU officer specializing in communications and journalism. He currently serves as editor of brusselsdiplomatic.com and vinoestile.com.

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