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venerdì 14 dic 2018
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Nicoletto’s view on wine

Nicoletto’s view on wine

Italian wine? “It needs to be positioned properly to highlight its level in the world, but there is still a long way to go.” This is what Ettore Nicoletto, CEO of Santa Margherita, one of the most important wine groups in our country, has to say.

Summer of 2017 was especially fruitful for this company owned by the Marzotto family. With assistance from the Withers law firm, the company was able to carry out two acquisitions. First, it bought Cà Maiol, representing the Lugana Doc appellation with140 hectares of vineyards on Lake Garda and 1.5 million bottles sold. Then it acquired the Cantina Mesa in Sardinia with 70 hectares of vineyards in Sulcis Iglesiente and production capacity of about 750,000 bottles per year.

“These acquisitions are part of our strategy to expand the product portfolio, representing a variety of regions with our offerings,” Nicoletto tells MAG. In 2016, profits for this group based in the Veneto region leapt from 118 million to 157 million (an increase of almost 33%) with an Ebitda of 54.6 million and 70% of sales thanks to exports.

The creation of Santa Margherita USA was a true boost to these numbers. This is a company that distributes directly in the United States, confirming the group’s strong desire to continue expanding internationally.

What are the next growth objectives?
First and foremost, we are thinking about strengthening our portfolio and the sustainability of our business model. The aim is to reach 200 million in sales in the short term.

Does this include new acquisitions?
Our recent moves have shown that the Santa Margherita Gruppo Vinicolo is interested in widening its horizons. For example, we are looking at central and southern Italy as well as the Valpolicella area. We have a “white focus,” and Pinot Grigio represents about 50% of our business, but there are also many interesting reds. We are constantly looking for the white wine of the future, perfect for the consumer of the new millennium.

Are you thinking about going public?
Today, we aren’t the right size for the capital market, and Santa Margherita is self-sufficient in financial terms to support our development objectives. We don’t feel the need at the moment. But never say never.

What is the advantage of having a direct distribution company in the United States?
With Santa Margherita USA, we are stronger commercially and have greater market penetration abroad where we have full control of imports and marketing. In addition, there’s a direct relationship with distributors. The American company invoices about 100 million and has a team of about 60 people.

What other markets are you looking at?
We are certainly interested in the Asia-Pacific area, from China to Japan to Australia. But to have success there, all companies need to communicate—in China especially—and there especially needs to be a collective effort by Italy.

What do you mean?
The fact that the Italian government has not really supported the wine industry, allowing other countries like France and Spain to surpass us. We often find ourselves doing the jobs of institutions in promoting Italian wine.

Are you also talking about European CMO funds, which are still being held up in Italy due to appeals and bureaucracy?
Exactly. This would be an important boost to wineries, but, at the moment, there is still no administrative order on the matter. This is a scandalous delay because there are 100 millions of euros in resources that we can’t spend, a drastic competitive disadvantage compared to other countries.

Something that really hampers growth in the industry…
We feel like we’ve really been ignored. This lack of action by the government is something that makes no sense if we consider that it is harming an industry that is the darling of Italian agribusiness, and that saw 7.3% growth in the first semester of this year after an excellent 2016.

Furthermore, the wine world is divided. Is it time to combine Federvini and Unione Italiana Vini?
More than a division, I’d call it a “redundancy,” which instead of increasing its importance actually weakens the industry. The idea is that the world of wine needs to be careful to not drown in too much talk and too many events. Today, there is no reason for two associations to exist. We don’t seem streamlined, and it makes us less efficient in the way we are represented.

So what can be done?
We have been working for a while on how we can work together, but it’s not easy to bring together disparate companies. The compromises that need to be made limit the results that can be attained. Therefore it is fundamental to have one representative organization for quality, brand-name wine.

Who is responsible for all of this?

Unfortunately, last year, UIV prevented some of the most important companies from offering or discussing trade association alternatives in an amicable manner. The result is that when you no longer feel at home somewhere, you have to create alternatives, and that is what we are doing with a federation (Federvini) that represents us better and with a range of new services for companies.

So you will no longer run for the presidency of UIV?
I would say that the answer to that question is obvious. It missed its chance to change course, to take a decisive step forward. I took action myself.

In your opinion, what is the state of the world of Italian wine?
There is a two-fold scenario playing out. On one hand, some companies—from Poggio Antico to Biondi Santi to Vietti—have been bought by foreign groups. On the other hand, Italian groups have made some of their own acquisitions, such as Santa Margherita, Antinori, Masi and Ferrari.

How can you explain this situation?

The Italian system is very fragmented. Often family-sized companies have a hard time when different generations take over, and this makes them prey for foreign investors. And these are often foreign funds from people who have no experience in the world of Italian wine…They often invest with speculative, not very strategic intentions. The risk for the Italian wineries acquired is that they will lose their histories and their ties to the land. We are focusing on growth specifically to avoid being prey.

Looking at the bigger picture. With Donald Trump in the White House and with the Brexit, will the market change?

As for Trump and his package of reforms, so far, it has been a lot of talk over nothing. We will continue to monitor the situation in the U.S. where monumental things are happening, such as the Amazon/Whole Foods deal.

What about Brexit?
Personally, I think Brexit was a mistake, but this is the reality. It worries us because it can lead to fewer strongholds, with the effects to be seen over the long-term and disadvantages for those that export due to the weakening of the British pound along with more tax issues.

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