Masi, wine and finance
Finance and wine are two different worlds. The former is frenetic, volatile and can burn through billions in just a few seconds. The latter is slow, takes time and follows the course of nature in order to achieve the best results.
But Sandro Boscaini (pictured), the president of Masi Agricola since 1978, has been a real pioneer in bringing together these two worlds, which are seemingly so different, making the family business an example of success.
It has been a year – since June 30, 2015 – since Masi debuted on the AIM Italia stock market dedicated to small and mid-sized businesses. The company brought 20% of capital to the market (making for a market cap of about 148 million euros) at a price of 4.60 euros per stock. The institutional placement of the stocks was the largest capital-raising operation completed on Aim Italia in 2015 (not including Spac’s raising of capital).
Being listed on the stock market also allowed the company to partially reduce private equity fund Alcedo’s investment. Alcedo had entered the group ten years prior with a 28% investment. “This experience with an investment fund was fundamental for a family-run company like ours, which is now in its seventh generation,” Boscaini told MAG. “Having outside capital was rewarding and turned out to be compatible with our values and our business model, allowing us to look at the market with a different spirit.”
After a bit of a downturn, today the stock is worth 4.50 and has stood up to market volatility, in contrast to overall stock performance. “It means that we found the right investors who appreciate the chance to focus on tangible, concrete assets like ours,” says Boscaini. “It confirms that family businesses and finance can come together synergistically to take on the global market.”
The capital raised with the listing, about 30 million, came especially from foreign investors (45%) from countries like Sweden, Germany, Switzerland, United Kingdom, Spain and Denmark. The rest are all Italian investors. All investors “are very satisfied today,” explains Masi’s president. “Because they believe in the long-term nature of our product, with a range of investment that goes from three to five years.”
What this means is that “finance is able to understand the wine world, characterized by the rhythms of nature and the time necessary to mature and age the ingredients. We could say that our stock follows the same calm rhythms of wine.” In an era of globalization, adds Boscaini, the market for high-quality wines needs investment in distribution structures and in the traceability of the supply chain. “Everything that ‘relies on’ finance,” and this is Masi’s innovation as the first Italian winemaker to embark upon the adventure that is the stock market.
“We had no qualms about making the most of this opportunity,” adds CEO Federico Girotto, “Our intuition turned out to be right, and investors appreciate our company’s great transparency and profitability.” It is considered one of the most appealing of the Aim market with an EBITDA rating greater than about 30%.
Exports account for 90% of sales
The year the stock was listed on the market was very positive for Masi’s balance sheet. In 2015, the company had sales of 61 million. While the first trimester of 2016 saw overall earnings of 14.8 million euros, a 10% increase over the first trimester of the previous fiscal year. About 90% of sales come from exports (from Europe, North America and South American) while Italy accounts for the remaining 10%. More specifically, business is growing in the United States and Canada while there is a slowdown in Russia and Brazil due to geo-political and economic reasons.
However, the Chinese market is particularly difficult due to the French monopoly as well as the lack of support due to Italian policies, and these are things that Boscaini (who is the current president of Federvini) doesn’t hesitate to point out: “The Chinese market is 50% in the hands of France, which has done a better job of promoting its wine in the country. We have wasted time and we haven’t put a plan into place that is worthy of Italy’s potential. We need a boost from our institutions” in order to change direction. To this end, Boscaini says it isn’t enough to rely on things like e-commerce, which “certainly is a great opportunity, but it isn’t the solution to all problems.”
The company began producing wine abroad in the mid-1990s. Masi has a property for producing organic wine in Argentina, in the Tupungato Valley. It exports the grapes and winemaking techniques from the Veneto region.
Masi wines on the Orient Express
Masi’s business aims to offer a distinct selection of premium and top wines like the famous Amarone (in fact, Sandro Boscaini is nicknamed Mr. Amarone). In addition to these, there are other wines in the mid-to-high range that help get the Masi name out there and represent the values of the brand, such as a focus on the local area, quality and history. “We also like being organic,” says the president. “meaning, focused on sustainable viticulture and the certification of products, respecting the environment and the consumer.”
Furthermore, the brand is very strong in the duty-free area of airports and on ships.
Masi has a longstanding agreement with Belmond (the English group that works in the hospitality and luxury travel area), and its wines have been available on the legendary Venice Orient Express for years. A more recent deal was made so these wines could also be available on the Belmond British Pullman, another iconic 1920s train.
Acquisitions and new projects
Masi’s positive financial situation, which is also a result of its listing on the stock market, has allowed it to take on new challenges. Its plans also include acquiring other complementary wine brands, not just in the Valpolicella area but in the Trentino and Friuli regions as well.
“Expanding in the Triveneto [editor’s note: historic area in northeastern of Italy also known as the Tre Venezie] is an opportunity to increase the wines in our portfolio, all tied to the local area of the ‘Venezie.’”
Other new initiatives include the opening of wine bars in Italy and abroad, with the objective of making the consumer more aware of the history of the cantina, which began in 1772. “This is the Masi Wine Experience,” explains Boscaini, pointing out that the company has already opened two wine bars (one in Zurich and the other in the Tenuta Canova in Lazise on Lake Garda), and the network could be expanded in the future to Scandinavia and Canada.
“Wines from the ‘new world’ are good and competitive, but they lack that allure that European wine, especially Italian wine, has about it,” continues Boscaini,
“with the Masi Wine Experience, we want to make others aware of our wines and the values of the ‘Venezie.’”
In addition to wine bars, there is the “Masi Investors’ Club,” a program exclusively for investors, in order to be an integral part of the business and take part in the investment in a tangible way. This initiative also includes a series of events dedicated to wine. Another project is the Visitors’ Center, including a museum that will allow consumers to visit cantinas in the land of Amarone. Finally, from a financial point of view, there could be a move over to the “Mercato Telematico Azionario” (Mta – an Italian electronic stock exchange), which would allow for further growth opportunities.