Family businesses and the world of wine: some data
- Eight out of ten businesses in Italy are family businesses. They develop the 75% of GDP, employ more than 67% of the workforce, but they have a short life, as less than one in six reaches the third generation (“The Management of the Family Business and Generational Transfer”- Il Sole 24 Ore – La Repubblica – (2016 data).
- The world of wine is characterized by the presence of companies with even more marked family composition and significantly more durable than the others
- Figures from family business appear to be consistent with the high fragmentation of the sector: more than 160,000 companies (one million labels) develop a turnover of 9 billion euros at production prices. With some sign of concentration: 99 companies, equal to 0.06% of the total, achieve 46% of the turnover of the sector.
- Therefore, the remaining 99.94% of the supply side, consisting of a myriad of small and micro enterprises, contend for just over 50% of demand (Il Sole 24 Ore – “Rapporto 24”: Industria Alimentare – (13/03/2015).
Italian wine production represents one of the most appreciated Italian excellences abroad and, not by chance, in 2010 Italy confirms its leadership in wine production on a global scale with a share of 18.1% (for a value of € 8.3 billion), about half of which is destined to go beyond national borders.
From the proprietary structures of the 174 wineries with turnover exceeding 10 million euros, 54% of companies are directly controlled by a family owner and almost all non-family (42.5%) are cooperatives or consortiums. The incidence of family businesses is in line with that of the medium and large family businesses of the AUB Observatory (57.1%), even if lower than the national average, but the distinctive data, as known, is the high presence of cooperative companies.
Family businesses … led by elderly family members…
Moving on to analyse the peculiar characteristics of the 94 family farms in the wine sector, other important differences emerge from the rest of the country. In particular:
- a high concentration of “adult” companies: over 56% are aged between 25 and 50 (16 points above the figure of the AUB Observatory), suggesting a strong link with the territory, tradition and social fabric in which companies operate.
- over half of the small companies, with a turnover of between ten and twenty-five million euros. Conversely, about 15% of companies have a turnover of over 50 million euro, highlighting a high fragmentation of the production fabric. The scenario in the Italian context is in contrast with the dynamics underway in the sector, where we observe instead a greater and growing concentration of major players at the international level.
- also the geographical distribution does not appear uniform throughout the national territory: about half of the companies are located in the north-east. In these regions there are, in fact, some of the most famous wineries in the country.
A missing generational shift
- The spread of this model may also depend on the reduced generational turnover that took place in the entire past decade. In fact, only a third of the wineries have achieved a succession at the top between 2000 and 2010 (compared to 50% of the AUB Observatory).
- As a result, more than a quarter of the family farms analysed (26.6%) are led today by a leader with more than 70 years, and this percentage is higher than that found for the entire AUB Observatory (equal to 18.6%).
- These data lead us to believe that many family businesses in the wine sector will have to face the generational shift in the coming years, requiring particular attention to be paid to the delicate transition phase to be faced
- In the long run, the highest old-age index in Europe is the counterbalance: the ratio between employees under 35 years of age and those over 65 is 8, against a value of 66 in France, 125 in Germany and 22 in the European Union (Eurostat – on “Wine Market” by Fabio Piccoli – Ed. L’Informatore Agrario – April 2010).
- An indicator of inertia or resistance to change. While these small and very small family businesses are characterised by dynamism and flexibility, their small size and individualism do not allow them to reach levels of critical mass, nor do they allow them to compete on international and sometimes even national markets.
Family management in the wine business
- The excellences and the genial innovations that distinguish a sector of great visibility and entrepreneurial calibre.
- The challenge becomes that of systematising the heritage of excellent and innovative experiences by revisiting the way of planning, managing and controlling the activities of the family business.
- The care of the generational transfer represents, especially for the wine world, an incredible opportunity to introduce new management models to ensure continuity to the family business, combining the strength of tradition with the potential of innovation.
The generational shift as a turning point in the business model
- The generational shift represents a turning point in the business model
- There are parallels between the current situation and what happened during the 70s and 80s, in which the generational turnover was one of the main factors of renewal and new development of the sector.
- In the “wine families” the family of the company is seen and felt as a community of people, the relationship between family and company are seen as a great synergy and symbiosis.
- There is also a sharing of values such as ethics and fairness. Family unity is a spontaneous process, but it must be cultivated to try to maintain cohesion over time. The family climate remains unchanged even in cases of business mergers.
Family, wine and territory: a potentially virtuous relationship
- Family management favours the winery and, in turn, the winery is good for the relationships between family owners, as in a virtuous circle.
- The social and economic context influences the sector as the family tends to remain united to ensure the maintenance of the source of income. It is very important that the company remains the property of the family, above all because of its pride and reputation.
- Wine entrepreneurs represent a healthy, hard-working, land-based entrepreneurship that loves to live on own territory and this is a virtuous example of business/territory integration