The ‘worst’ vintage of the century

There will be no cause for celebration this year and we won't be boastingwith misplaced pride. This because we are once again in second place forwine production now that the French, whom we beat last year, are back on topand the Spanish are nipping at our heels. And yet, at the same time, this isgood news.

Initial estimates from the Italian Winemakers Association predict that45 million hectolitres will be produced in 2011, but well-informed sourcessay that it will be a success if even 40 million hectolitres are produced.In other words, this year's harvest will be the smallest in living memory.And yet, at the same time, this is good news for Italian wine.

This is not because I am crazy but because we have become accustomed tojudging based on industrial and financial considerations, the logic thatmore is better. It has not always been this way in the world of winemaking.And when consumption declines, the way it has been in Italy, producing a lotmeans producing too much and this can lead to serious, negative consequencesfor the sector as well as for the consumer.

Wine consumption in Italy today is 39/40 litres per capita a year.With the population at about 60 million this means consumption is in theneighborhood of between 23 and 24 million hectolitres. Exports about toaround 20/21 million hectolitres, which makes total demand 43/45 millionhectolitres. And every litre which is not sold creates an over-supply,brings down the price of bulk wine, makes commercialization more difficultand seriously undercuts agricultural income.These factors in turn discourage the quest for quality and bring to themarket inferior wines at lower prices, which opens the way to a speculationthat lowers the quality threshold, a loss of image and the abandonment ofwinemaking in those hill areas that produce fewer but higher quality grapes.Overproduction thus creates a situation similar to the one defined byGresham's Law - that a currency with a lower intrinsic value will eventuallya currency with a higher one. In this case it would be bad, cheap winedestroying quality production.Not too long ago there were cases, especially in the south, where bulkwine was sold for less than 20 cents a litre and so even if one produced 300tonnes of grapes per hectare, far too much to be of quality, the income perhectare would be 6,000 euros. Taking into consideration the fact that one person alone cannotcultivate more than three hectares, the total would be only 18,000 euros,from which must be subtracted all the costs of maintaining the vines,producing and storing the wine. This would include the use of at least onetractor and additional labour, since one person alone cannot pick threehectares of grapes.Anyone who does this in the end earns close to nothing and sometimeseven losses money. One can operate at a loss for a couple of years, hopingthat things will get better, after which they will be forced to throw in thetowe. This is especially true in those areas where it is not possible toproduce 300 tonnes per hectare, in the hills and other high quality zones,which end up being the most penalised.

Thanks to this year's unusual weather we will not have these problems.The price of bulk wine is rising and the market is vibrant because there isa shortage of supply. Winegrowers are seeing their grapes fetching higherprices from the industrial sector and producer cooperatives are breathing asigh of relief.For the first time, at least this is the hope, there will be norequests to distil surpluses, a subsidy which in the end everyone pays for,and the whole sector will be healthier for this even if we are going througha very difficult crisis. It would be great if we could calibrate productionto coincide with effective consumption, including exports obviously, becausethis year was a blessing in disguise and it won't always be like this.