Revenues expected for 2023
In 2023 the turnover ofItalian wine industry is expected to see the first drop since 2020: the accounts will close in deficit by 2.9%, to 13.3 billion euros, of which 7.65 on the export side (-2.2%) and 5.61 on the national market side (-4%).
On the volume side, the total sold will stand at just over 41 million hectoliters (-3.1%), with a more pronounced decline on the national market (-3.7%, with erosions both on the large-scale retail trade side -3.8% and on the Horeca side -4.7%) compared to the export data, which will close at -2.4%.
On the slope export, in the face of a slight growth on the European market (+1%, which is worth just over half of Italian export sales), North America will above all be responsible for the drop in volume, which is worth 30% in value, standing at volumes down by almost 15%, attributable almost equally to both the USA and Canada. The Asian front is also declining, both Japan-South Korea (-23%), and the Far East (-20%), with China ballasting the entire area. There were also declines in Central and South America, while exports to Eastern Europe-Balkans continued to grow significantly (+20%), growth due both to the recovery of Russia and to the extraordinary performances of countries such as Poland and the Czech Republic. continental block is worth around 10% of export turnover.
Development prospects by area
It is precisely the piece of continent that it looks at East one of the areas expected to develop the most over the next few years, having among other things a penetration index that is still relatively low (40%) compared toWestern Europewhich is now approximately 80% saturated and no longer has double-digit growth rates, but rather many mature countries with prospects of degrowth in the medium term.
Penetration index at 60% for the North Americawith growth prospects in the medium term, and at 50% in Japan-South Korea, with the latter especially to be watched with interest in the medium term, in the face of a Japanese market which presents rather stable indicators.
Penetration index at 25% and 30% respectively for Far East And South Americawith the first block which – net of the unknown China – presents greater consumption growth prospects than the second, especially in light of the prolonged uncertainties on the Brazilian market.
Financial indicators: 2023 pays for the excesses of 2022
Returning to the budgets of Italian companies, the 2.9% drop in turnover comes after two years of strong growth: in 2021 the record post-Covid balance stood at +26%, followed by a +6.6% in 2022, the year in which the incidence of energy and raw materials, combined with the outbreak of inflationary dynamics, significantly eroded margins, taking away a net EBITDA point compared to 2021 (9.3%) and putting the indicator back on the level of the Covid year. EBITDA which will remain at the 2020 values also in 2023 (9.2%), a factor which has been positively impacted by the clear decrease in costs (around -3%). 2023 essentially paid for all the negativity in essence that occurred in 2022 and which at the level of mere turnover had been covered by the disproportionate rise in inflationary levels, which had artificially inflated companies’ earnings.
Stressors for the sector
Wine companies that today find themselves dealing with both economic and, above all, structural stress factors. Among the former, those which had the strongest impact in 2023 and which will partly carry over into 2024 are the destocking USA accompanied byweakening of the dollar against the euro, which had guaranteed the absorption of our inflation. Inflation (and the rising cost of money) was another factor that had a strong impact on the spending capacity of families, both in Italy and in the main European and North American markets. The last factor is the so-called “post-Covid realignment”, a package of factors which includes the cessation of state aid to support the economy, normalization of the catering and tourism sector, reduction of warehouse times and volumes for distribution.
On the structural sidethe areas of greatest concern concern climate change (not only on the vineyard front, but also in terms of impact on consumption), competition from other alcoholic and non-alcoholic beverages, the chronic difficulty faced by the sector in intercepting the changing tastes of younger generations and the anti-alcohol policies undertaken by numerous countries, which can lead to forced health-consciousness.
Focus Eastern Europe, China, United States
For Italian wine, the continental block that starts from the Baltic and descends along the Balkans is one of the most promising in terms of consumption. Today these countries (from Poland to the Czech Republic, down to Serbia, Romania and Bulgaria) are worth over 300 million euros in exports, 4% of the total, with growth rates measured in CAGR at +10%. Growth that did not stop even in the problematic 2023, with values growing by 20% in the first seven months of the year.
The types of wine most exported from our country are bubbles, understood as both sparkling and sparkling wines, with an overall share of over 55% of the value generated. Prosecco is growing very strongly (30% of the total), which has exploded in the last two years especially in Poland and the Czech Republic.
The Chinese market has entered a phase of profound involution. Even before 2020, we were witnessing a worsening of consumption indicators, a sign of the country’s entry into a regime of “unexpected” normality, which few or almost no observers had predicted. Beyond the economic situation (block on the export of Australian wines, cyclical economic slowdowns), it seems that we need to take note of a reduction in expectations, at least on the volume side (expected to be stable until 2027 at around 10 million hectolitres), while on the quality front it can be stated from the data in hand that consumption is less but significantly better. If in 2012 the vast majority of wine consumed was in the basic range (under 6 euros per bottle), today this range has almost completely disappeared, in favor of the more “premium” one, above 12 dollars, which monopolizes 2/3 of wine consumption (Euromonitor measurements, off-trade channel).
United States and Midwest
On the American market, 2023 will be remembered as a black year, worse than 2020. After the extraordinary surge in consumption – pumped up by the generous aid provided at a public level to support the economy in the post-Covid period – towards the end of 2022 and throughout 2023 the indicators surprisingly went against the trend, despite remaining at volumes always above the pre-2020 averages. This caused a short circuit in the distribution phase, with operators finding themselves having to manage (in times of rising rates) enormous volumes of stock which led to a decrease in orders for new wine from all over the world.
This situation – as can be seen from the graphs drawn up on the basis SipSourcewhich give volume reductions of 12% in the third quarter of the year, of which -9% for Italian wines – still seems far from being completely resolved and will probably have important consequences also in the first part of 2024.
However, for theItalythere is a significant gap in performance between the off-premise channel (down 5% in September) and on-premise, therefore catering and Horeca, stable compared to the same period of 2022, a sign that in any case the more qualitative productions are holding up impact of this situation.
In the American Midwestwhich for Italian wine is worth 17% of consumption, the Horeca channel is even outperforming the general figure, with volumes increasing by 4.5%, compared to declines not only for US wines, but also French, Australian and Chilean wines .
In the segment “Dining”Furthermore, it is noted that sales of premium and ultra-premium Italian red wines are currently performing best, with volumes increasing by 11% and a share of the total reaching 10%.