Italian high-quality wines: a value chain analysis

ITALIAN HIGH-QUALITY WINES: A VALUE CHAIN ANALYSIS Conterjnic, Sergio1; Simone, Cristina2; 1Sapienza, University of Rome, Rome, Italy 2Sapienza, University of Rome, Rome, Italy Keywords: Wine business, Italian Agrifood sector, High-Quality Wines, Value Chain, Made in Italy. Track No: 48. Wine Business. The agrifood sector is one of the most important in the Italian economy, generating 31,8 % of its GDP (Federalimentare, 2023), and providing labor to 17% of the Italian labor force (Istat, 2017). The agrifood sector is also considered one of the engines of the Italian exports, generating 8,1 % of annual Italian exports (Federalimentare, 2023). There are products that are considered examples of the agrifood "Made in Italy", such as wines, olive oil, pasta, cheeses, and ham. The agrifood sector has performed very well in the last times, representing an excellent example of Italian food culture worldwide. In this paper, the focus will be on the high-quality wines value chain, that has performed extremely well in recent decades, both in terms of profitability and success on the domestic and export markets. One of the important triggers for the recognition of the different types and quality of wines and their identity, both in the domestic and the international markets, was the introduction and adoption by the Italian government in 1963 of the controlled appellation system "Regulation to protect appellation of production origin of wine and wine grape juice" which defined: (i) approval of controlled appellations by designating the boundary of production regions, (ii) foundation of the associations of producers of grapes and wines to protect wine quality and (iii) establishment of the controlled appellations committees (Consortiums). Two categories of this classification apply to quality wines: DOC (Denominazione di Origine Controllata, in Italian, Controlled Designation of Origin) and DOCG (Denominazione di Origine Controllata e Garantita, in Italian, Controlled Designation of Origin Guaranteed), the latter introduced in 1980 for the highest quality wines (Federdoc, 2024). The support for this classification and certification is that the winemakers operating in a particular area owe their success primarily to the quality of their products and the inseparable link between these products and their terroir, i.e. the particular geographical area and environment that give their grapes and wines their distinctive features (Vaudour, 2002; Conti et al., 2024). This research analyzes each of the stakeholders in one of the most important and recognized Italian agrifood value chains (Porter, 1985, 2001; Davis & Goldberg, 1957; German et al., 2020): the DOC and DOCG wine value chain, to identify its stakeholders and roles. The grape production area in 2023 was estimated in 675,000 hectares, dropping from 792,000 hectares in the year 2000. The average area per grape grower grew from 1 to 2,8 hectare per grower, showing a low level of concentration but growing over time. It is important to remark that the average size of grape production is higher in areas with vineyards producing DOC and DOCG wines. Domestic consumption of wine was 37 liters/person per year (ISMEA, 2024). There are ca. 33,000 wineries in Italy, many of them producing a small volume of wine. This is especially the case of wineries producing high-quality wines, that normally are small or medium size, most of them family owned, often for many generations. According to data from Mediobanca Research Area, in 2022 65.8% of wineries were under family control. In the last five years the average national production of wine in Italy was 47 million hectoliters, with an export of 22 million hectoliters, placing Italy as the first producer and exporter of wine in the world. In the last five decades, there was a national and international process towards higher quality wines. An example of that is that the area dedicated to DOC and DOCG wines in Italy in the year 2000 was approximately 250,000 hectares, increasing to 400,000 hectares in the year 2021, with and impressive growth of 60% in just 20 years, demonstrating a determination towards quality. This is particularly the case of the international market, that is driven by the high-quality wines, generating for the first time a total export value of over 8 billion Euros in 2024. Exports are increasing in value regardless of the volume, that is variable. The Italian Northern regions are oriented towards high-quality wine production. Italian Northern wineries are normally privately own, family run, and with a high degree of value chain integration (grape-growing, winemaking, bottling, marketing and packaging). There is an environment of socio-economic mutual growth among the different stakeholders in the high-quality wine value chain. Figure 1 describes the value chain of the Italian high-quality wines: the paper enlightens the main phases, and the main stakeholders involved in each phase, analyzing the institutional context by focusing on the quality standards. Figure 1: Framework of the main production and market phases of wine in Italy. Source: our elaboration The key stakeholders identified in the Italian high-quality wines value chain are: (i) the consortiums of wine quality and the certification institution (Valoritalia, the Control Body authorized by the Ministry of Agriculture); (ii) wine fairs, such as Vinitaly; (iii) educational institutions for the research activities; (iv) providers of complementary products in production and marketing; and (v) the enotourism sector, providing services such as visits to the wineries, wine tasting, etc. and mainly focused on the value rings of marketing and sales activities of the value chain. These businesses networks serve as support for the relatively small companies operating in the high-quality wine sector, sustaining the whole value proposition. Implications for scholars: the paper integrates the extant literature on high-quality wines, clearly identifying the sources of advantages of Italian DOC and DOCG wines. Implications for practitioners: the paper provides a multidimensional strategic framework of analysis to support the main stakeholders within the Italian high-quality wine ecosystem in adopting sustainable and regenerative practices for a higher value co-creation. Eventually, the paper will provide suggestions for future research paths. References Area Studi MedioBanca (2022). Il settore vinicolo in Italia Conti, M. E., Rapa, M., Simone, C., Calabrese, M., Bosco, G., Canepari, S., & Astolfi, M. L. (2024). From land to glass: An integrated approach for quality and traceability assessment of top Italian wines. Food Control, 158, 110226. Davis, J. H., & Goldberg, R. A. (1957). Concept of agribusiness. Federalimentare (2023). Rapporto Federalimentare-Censis: Il valore economico e sociale dell'industria alimentare italiana. Federdoc (2024). Italian PDO wines. 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