Crisis in the Piedmont wine sector? Blame the cooperative cellars!

Crisis in the Piedmont wine sector?

Blame the cooperative wineries. Matteo Ascheri lashes out at the cooperative system

The former president of the Barolo consortium points the finger at those who pay suppliers less and less. His prescription? "Uprooting, quotaization of vineyards and reduction of yields. Emergency measures are not enough."

Crisis in the Piedmont wine sector? The responsibility lies with the cooperative wineries that always do the same thing. And also with those who should be making decisions but pretend nothing is going on. That is what Matteo Ascheri, owner and winemaker of Cantine Ascheri in Bra, in the province of Cuneo, is convinced of. He knows wine policy, having served two consecutive terms as president of the Consorzio Barolo Barbaresco Alba Langhe Dogliani from 2018. In 2024, he resigned his post and left the consortium, disappointed with the direction the new board had taken.

Until last summer, Paolo Bongioanni, the Piedmont region's alderman for agriculture, said that there was no crisis in Piedmont's wine sector and that only the appellations calling for distillation were suffering. Today's facts tell a different story....

Politicians use the "made in Italy" label to gain visibility and raise their profile. Woe to those who speak ill of "made in Italy. But it is precisely because of this epic narrative that the problems are never addressed. Producers should also behave more intelligently.

The latest hearing of the viticultural associations and consortia in the Economy and Agriculture Committee of the Piedmont Regional Council confirmed a phase of deep structural and market crisis.

Asti, Barbera d'Asti and Brachetto actually represent 70% of production in Piedmont, but slightly less in terms of value. These producers waited until they were buried under the mud and are only now taking action, now that they are in an emergency situation. Now they are turning to politics to ask for money. In France and Spain they are radically tackling the crisis, but we are almost laughing at them. That means we hide the problems and are content to manage the immediate situation.

The consortia report an "alarming scenario": a drop in grape prices between 15% and 30%. Barbera d'Asti -30%, Barbaresco -27%, Nebbiolo d'Alba and Langhe Nebbiolo between -22% and 28%: what is going on?

The problem also concerns Barolo, where the price of grapes falls from 4.50 euros to 2.50 euros: almost half the value has been lost. There is a crisis related to volumes, but above all to value. But the price of grapes is very relative. The problem mainly concerns the suppliers of cooperative wineries.

How does the mechanism work?

In the system of cooperative wineries, the supplier is limited to supplying. The cooperative winery collects the grapes, processes them and then sells the wine. It then distributes the proceeds to the producers based on the profits made. But because the cooperative wineries adopt a "menga" trading policy, the profits get lower and lower. Redistribution at a value of 2.50 is a very big problem. Instead of increasing the price and added value, the wine cooperatives prefer to keep lowering the market price. In this system, the first effect is that the wine cooperatives adjust their balance sheets at the expense of the suppliers. Lowering the price helps the wine cooperatives who behave as simple suppliers: the buyers are the bottlers who need to produce mass to market hard discount wines.

So what should they do?

They should increase added value. Piedmontese wine should be placed at a higher level, even if it produces less. Let's face it: we cannot influence the customs policy, nor can we hope for promotional activities alone.

So?

We don't have the power to influence demand, but we do have the means to control supply. If you produce less, you have less impact on biodiversity in the first place and you can manage labor better. Here we have chosen to do the opposite: we have a lot of wine to sell, too much, and we end up distilling it or giving it to the makers of Vermouth di Torino or selling it at a low price.

How do we get out of this?

Cooperative wineries should also invest in quality, as Produttori di Barbaresco is already doing: proof that things can also be done well in cooperative wineries.

Why do some wineries succeed in delivering quality and others do not?

Just look at other cases, even outside Piedmont in other regions: I'm thinking of Moncaro in the Marche or Terre d'Oltrepò in Lombardy (both filed for bankruptcy last year; ed.). How many years did these cooperative wineries have the same management? But if there is never a changing of the guard, things are always done the same way: lower market prices for suppliers and a development model that is at odds with what should be happening. And when there are problems, they complain to the institutions.

Barolo stocks are growing 15%, from 65 to nearly 75 million bottles. Stored volumes of Barbaresco are up from 19 to 21.8 million bottles: +14 percentage points.

Fortunately, Barolo is a wine that can age for a long time: it will hit the market in 2029. For other products, this problem has an immediate impact on the market. It should also be noted that Barbaresco represents a third of Barolo and is one year less in stock. As they say in these cases, the numbers must be interpreted. The important thing remains value. I am not so concerned about the loss of volume or the amount of stock. More important is the loss of value that ultimately leads to selling the wine in bulk at a low price: that's how you play into the hands of the cooperative wineries and bottlers.

How does the bottler behave?

The bottler creates his own value, buying at the lowest possible price and then selling where he can secure the most advantageous contracts. He doesn't care about brand valuation, but winemakers cannot leave brand valuation to the bottlers. We need to be smarter: the system needs to be managed differently.

Why?

Grape prices are determined by two factors: the cost of production and the relationship between supply and demand. A lot of promotion is good, but not enough. I repeat again: we cannot influence demand, the only lever is supply.

To reduce oversupply and relieve the market, some in Piedmont have asked for emergency distillation....

It's the usual story. If you're at the end of your rope, you can't ask for structural measures, but emergency measures like distillation and green harvesting, which don't solve the problem. But then you are in the same situation again the following year

Francesco Monchiero, president of Piedmont Land of Wine, suggests territorial promotional activities to support demand, diversifying commercial channels for the wines that are selling the hardest, such as Barbera, Dolcetto, Cortese and Moscato.

It made sense for Piedmont Land to go to the region's meeting, but instead the three consortia went into crisis. That's a catch-up that I don't think Monchiero was happy about. But again, the promotion part, with the search for new markets, relates to demand. These actions are useful, but always relative, because if you don't have a billion-dollar budget to invest, you will never be able to influence demand. Ferrero bombards you with advertising for Nutella, but we can't. Nor can we imagine we can influence geopolitics, the weak dollar or customs policies. Besides, wine is not an essential product: you can do without it.

So what is the right recipe?

We need to influence supply by preventing more wine from being produced. To do that, you have to grub up vineyards, reduce yields and quota vineyards. With the current licensing system, you can plant new vineyards every year, but that way you run the risk of an additional 480 hectares every year, all concentrated where land values are highest. That is, in the Langhe.And what happens when production increases? Then you're left with full cellars. You are then forced to sell out: you give the wine as bulk wine to the bottlers, who take advantage of this and set their own prices and sell the wine through whatever channels they find.

In short, we are back to square one....

The cooperative wineries are the linchpin of this system in crisis that affects all of Italy. Even if there are qualitative exceptions like the Produttori di Barbaresco winery. There remain structural problems that have not been addressed. It is up to the producers to address them.

But the producers are represented by the consortia....

Indeed. The consortia behave like politicians who use the productive world to profile themselves. They have no long-term vision. But when vision and the will to improve are lacking, only the here and now is managed. It is no coincidence that, precisely with the goal of starting a debate, creating a vision and addressing these challenges, when I was president of the consortium, I organized conferences called "Changes." Changes require attention and action, they are the opposite of a fixed income. You can't pretend that nothing is going on, that they don't exist. Instead, people prefer to count on a fixed income without making strategic decisions. But if the changes are obvious, something must be done.

With the sales crisis and the immobility of policy makers, is there a risk that even Barolo and Barbaresco will suffer severely?

Barolo and Barbaresco are in much better shape than other products. They are also feeling the crisis, of course, but not like Barbera, Asti and Brachetto. The situation is not yet dramatic: they are strong brands and their market value is higher than that of other appellations. Moreover, they are wines that can age, so you can sell them even the following year. But the problem exists and we still deny it. First we have to acknowledge it, talk about it, and then the discussion of solutions can begin. But strategic choices must be made; we can no longer pretend nothing is wrong.