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Challenges for winemakers as Italy exits lockdown

Published:  03 June, 2020

The biggest challenge for the Italian wine trade is recovery in the on-trade, according to Pierpaolo Penco, Italy country manager at Wine Intelligence, speaking ahead of publication of the Italy Wine Landscapes 2020 report, due out this week.

Italy took its first steps out of lockdown at the beginning of May following two months of strict lockdown, and it has been predicted that some 30% of the country's on-trade will ultimately be forced to close as a reult of the crisis.

Around 80% of Italy’s restaurants have re-opened, albeit often only for takeaway and home delivery, and travel between regions is still not allowed. Less than 20% of its fine-dining restaurants are currently said to be trading.

The situation presents both short- and long-term problems for winemakers.

“It’s not only a matter of future sales, but also cash flow problems that will make it difficult for many to recover,” Penco said.

“Many in the industry will cut the production of the incoming vintage by between 10% and 20% – some denominations of origin will lower the yields – and will be allowed to distil around 1 or 2 million hectolitres of table wine.”

As Harpers reported in April, some are predicting that European wine revenues could fall by as much as 50%.

Whatever the outcome, producers will have to rethink their strategies as result.

“I expect we’ll see some wineries reducing new product development, instead focusing on core brand and products,” Penco said.

Wine tourism, a source of growth in recent years, will drop back sharply.

“Some will downsize, or not open their B&Bs or restaurants while foreign tourism remains slow or non-existent,” Penco said.

While the lockdown led to more informal drinking occasions at home, as well as online social events involving drinks, these are likely to diminish signficantly as the on-trade re-opens.

“Now that the new lighter lockdown has been granted and bars can open for takeaway or an aperitif at socially distanced tables, I expect a decline in online parties, especially from the younger generations as people returned back to more classic social occasions,” Penco said.

“This quick return has led to concern about a second wave of infections and several mayors have threatened slightly more restrictive measures again, so we will have to see what comes next.”

The lockdown has also led consumers - particularly younger demographics - to be more exploratory, with an emphasis on drinking choices that speak to concerns about health, the research suggests.

“Italian regular wine drinkers, especially the younger generation, are now more open to trying new styles of wine, particularly organic or sustainable – both of which are seen as healthier options,” Penco said.

While the domestic market in Italy has switched to retail and online sales, both of which have thrived, producers report that export markets held steady through the lockdown, with little or no loss of sales, despite the challenges of maintaining contact with importers and distributors, among others.

The Italy Wine Landscapes report, the first Wine Intelligence has produced, covers key behaviours and attitudes of Italian regular wine drinkers together with key trends in the sector. There is an additional section on the impact of Covid-19. It is available for purchase later this week.