Sunday, October 16, 2022

Is Italy (and Italian wine) heading towards a catastrophic precipice?

Italy MMXXII ~ Quo Vadis?

Probably not the best headline for a blog in terms of SEO. Maybe better to use “Italy 2022, and her impending economic, environmental, political, agricultural and social turmoil, following on the heels of the post-pandemic (or is it?) era.”  Yes, we have much to consider, starting with the wine grape harvest.

Regardless of the quality or quantity of the harvest, which on its own is worthy of deeper consideration, but taking into account a larger vista in which wine, as an agricultural bi-product, is made with the labor of humans and the energy of technology. Say what?

Fasten your seat belts, folks.

This is complex. So, let us start in the fields. The cost of water, of energy to pump water, or to power the farm machinery, including the winemaking equipment. In other words, the energy demands that are needed to bring grapes into wine, in a bottle.

Word is that everything related to energy will see spikes in prices, thanks to Putin (and Saudi Arabia). Already, anecdotal information is coming out of Italy from folks saying the cost of energy is as much as tripling. That’s electricity to keep the winery machinery running, to keep the white (and other) wines fermenting cool, to keep the pumps pumping, the lights on, anything and everything that depends of electrical generation in order to keep things operating. That’s one aspect.

Along with that, across the supply line, the nurseries that provide the vine material, the barrel makers, the bottle makers, the label and cork makers, the box fabricators, the paper companies, the glue providers, the capsule manufacturers, all are seeing their world shrink and their expenses explode. Expect Italian wine prices, regardless of whether it is a vintage of century or not, to increase dramatically.

White, rose and sparkling wine will be the first we will notice. But those red wines that have to age for 3-4-5 or more years, what about them? Well, the price of borrowing money is going up and to hold onto Brunello or Barolo for years, in this era, will cause those wines, as, and when, they are released, to skyrocket. I’m already hearing from folks in the trade who are telling me that they are being prepared for major increases.

Along with that, stories have come across my desk relating to the price of shipping, which some sources have told me that those costs have stories as much as tripled in cost. So, if the formula (only an example) would be to add $1 per bottle for shipping, now expect $3. A $12 wine won’t become $15, because those costs are added in and then formulated to include those costs in the profit scheme. Think closer to $17-20. And that will be IF everyone in the tiers take a softer approach towards profitability and margins. Yeah, I kinda got wonky on you. Sorry.

Let’s go back to Italy.

Folks there are really worried because they have Russia breathing down their necks, the Ukrainian crisis still very much unresolved and unsettling, and the winds of war are blowing across the planet. Putin is threatening nuclear action. North Korea is popping off test rockets, Turkey is, well, Turkey, and China is also rattling sabers, especially in regards to Taiwan and “US interference” in their backyard. Israel and Iran and Syria, another powder keg. We can’t even think about Afghanistan or Africa, because the Western world thinks they are of utmost importance, as if we were not the interconnected (and interdependent) world that we have become.

Oh, and Covid is rearing its ugly head with a variant wave (BQ.1 and BQ1.1.) in Italy, France and Germany, among other places, as we head into the colder (and holiday) months.

Meanwhile China and the US are Italy’s growing wine market. Or were, prior to 2020. And while that growth is starting up, with the world economies talking recession (and in the UK, economic depression), that makes it hard for a farmer or a small vineyard/winery to plan their future. Because the future is that uncertain.

I know this all sounds so very dire. That’s because it is.

A winery is having to deal with labor costs, material increases, energy prices soaring, along with a social fabric, in Italy, that is disintegrating. Politically, there appears to be a wave of autocratic leadership that is washing over Italy, along with other European, Asian, Africa, and American countries. Wine doesn’t stand much in the way of amelioration, when there are bigger fish to fry. And the wine lover (dare we call them a wine consumer?) who has less to spend today than they did two years ago, and now it is more expensive, well, let’s just say they aren’t going to get much relief. Save for governments borrowing more money (at higher interest rates) or printing money, to spread the wealth around. And I’m not seeing very much wealth being spread around these days. You either got it or you didn’t, at this point. The bus is small and it is all full up.

So, yeah, 2022 is a great vintage. A big vintage. A wonderful vintage. A notable vintage. So what?

Or maybe the question is, “So what now?” Back to that old Quo Vadis thingie. Except instead of asking Italy, maybe we should rephrase the question to: “Earth 2022 – where in Hell are we going?”

New York, April 2020 (AP Photo/Wong Maye-E)

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