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Masi Agricola plans next moves with restaurants as Italy enters ‘Phase Two’

Ahead of posting the Italian wine company’s first quarter results for 2020, Federico Girotto, the chief executive of Masi Agricola, told the drinks business all companies will need to learn how to react to global crises long after the coronavirus lockdowns end.

With Italy’s bars and restaurants unable to trade at all since the start of March, it’s safe to say there will be some turbulence in Masi’s first quarter earnings this week. The wines are sold in 140 countries around the world, through four channels (on-trade, retail, travel retail and online), and their order of priority changes depending on the country you are in.

“In Italy for instance our distribution rested mostly on restaurants, hotels and bars, now we’re still under lockdown until 1 June – we don’t have any client to ship to except to the shops.”

In other markets, especially the monopolistic ones such as Canada and Scandinavia, the share of wine that is sold in restaurants is “rather low, so they’re working normally.” Travel retail, as you can imagine, has ground to a halt.

Girotto tells db having a broad and complex distribution network has helped the business during the crisis, but added that businesses that have adapted quickly to the changes in sales opportunities, whether that means opening online shops or converting over to retail, will thrive.

“It is important not only for Masi but all wine businesses to be much more reactive than they were in the past – much more integrated with their vItarious channels, and behave much more like a company more than just a wine company.”

Masi is one of few public wineries in Italy. In 2015, it became the first “premium” Italian wine producer to be listed on the Italian AIM market, a section of the Bourse dedicated to small and medium sized businesses. Girotto, was appointed a member of the Technical Committee of AssoAIM, a trade body that looks after the interests of AIM listed companies.

“We must understand the needs of the market every day – I’m sure that in the on-trade the average amount of an order will be less in the past because restaurants will want to be prudent – they will have a lower level of traffic so will want to be much less stocked than before, and our company must understand this character.”

 

Re-starting on-trade

Italy finds itself divided at the beginning of the so-called “Phase Two” of its lockdown. From Monday (4 May), people can visit family members – provided they live in the same region. Before, citizens across the country were forbidden to leave their homes expect to shop for essentials.

Phase Two also means face masks are mandatory in indoor places open to the public, while  many – but not all – businesses can start up again. Shops selling products other than food or necessity goods are still unable to open. Bars and restaurants could open on 18 May.

What does the immediate future look like for Italy? “Restaurants will reopen partially – some of them will never open again because they couldn’t survive – others will reopen, but with a lower level of traffic. Some of them will reopen only with takeaway and delivery service otherwise they have no structure – but probably the restaurants will be the first channel that will come back to us.”

Girotto says Masi “built its brand” in the on-trade, and so it’s important to be “present with our customers and hopefully have a profitable situation in the end.”

The CEO said support will be “the crucial ingredient” to help restaurants get back on their feet and continue to work with wineries.

“They will ask for support from their suppliers in terms of financial conditions, like reducing minimum order amount…or reducing the time in delivering.” Girotto said Masi is currently using this lockdown phase to “work on strategic projects” to approach the so called ‘Phase Two’”.

 

A new way of working

Asked about the practical issues wineries will face once lockdown measures are eased for good, Girotto said: “The issue will be travel in my opinion, and we must understand how to manage those financial perspectives of companies.”

Although winery staff have been put on a shift rotation to accommodate Italy’s social distancing rules, the vast majority of Masi’s workforce, including the c-suite, have been working from home. Girotto said it has taken some adjusting to his new routine.

“Wine is a business in which you must be in person on your activities,” he said. The previous routine was “very hectic,”. He would drive 7000km per year, and then also travel by aircraft or by train to meet with importers and clients across hundreds of international markets, “So to stay in the same place, even if it is my home,” he says, is a challenge.

On the one hand, days are “much more compressed because we have the opportunity to plan and to schedule a single hour, but of course the level of work we can complete is also related to interaction,” during this interview, family members can be heard in the background. “Consider how much better this interaction would be if we were in Valpolicella – so I’m hoping to come back earlier.”

 

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