How Does the Wine Sector Perform and Communicate Sustainability? The Italian Case

Abstract

The wine sector represents the world-class excellence of Italian agriculture in terms of both quality and quantity and makes an important contribution to the national economy. A number of studies deal with the sustainability of the Italian wine value chain under many specific aspects; however, a general review of the sector’s sustainability performance is not available. Therefore, this study aims to offer an overall evaluation of how the Italian wine industry performs in terms of sustainability and its relevant communication to stakeholders and to identify the most and least frequently recurring sustainability practices. The analysis indicates that the Italian wine sector shows variability in both the approaches to sustainability and the sensitivity of stakeholders to this topic, resulting in the analysed companies’ sustainability performance being dispersed across a broad evaluation range and not depending on the size of the wine producer. Furthermore, materiality analysis, a key methodology in sustainability planning, is adopted by few wine producers, and the sector does not seem to effectively communicate its sustainability efforts (only 43% of the analysed companies have comprehensive communication) to promote consumers’ drinking awareness and to provide information on economic sustainability. On the positive side, 84% of companies have adopted certifications, in particular those relevant to quality and food safety, energy, and water management.

1. Introduction and Objectives of the Study

The wine sector represents the world-class excellence of Italian agriculture in terms of both quality and quantity: famous wines are produced in several regions and exported to markets worldwide (i.e., Amarone della Valpollicella, Barbaresco, Barolo, Brunello di Montalcino, Chianti Classico, Franciacorta, Prosecco, and Sassiccaia, just to name a few). In 2021, Italy was the biggest wine producer worldwide with ca. 51 million hectolitres [1] of wine, representing ca. 20% of total world production, and the second-largest exporter with 22 million hectolitres [2] after Spain; with 671,000 ha of vines in 2020, Italy ranked fourth in terms of acreage after Spain, France, and China [3].

In the general context of corporate social responsibility (CSR) (a comprehensive review of the evolution of CSR is available in [4,5]), whereby companies must not only generate profit but also “decide voluntarily to contribute to a better society and a cleaner environment” (EU Green Paper published in 2001 [6]), all sectors of the economy are called to meet the requirements of sustainable development. The United Nations have provided a clear framework for pursuing sustainable development, first with its definition (development “meeting the needs of the present without compromising the ability of future generations to meet their own needs”, UN Brundtland Commission, 1987 [7]) and more recently with the Sustainable Development Goals (SDGs) defined by the 2030 Agenda for Sustainable Development adopted by all of the Member States in 2015. Agriculture, which produces ca. 9 billion tonnes of carbon dioxide equivalents (CO_2eq) per year and globally represents ca. 18% of the global emissions of greenhouse gases (GHG [8]), is no exception to this call. Within the agriculture sector, on the basis of inventories of direct and indirect emissions calculated for certain Italian wine producers in accordance with the VIVA [9] protocols, the authors roughly estimate that worldwide, the wine industry’s contribution to GHG emissions is in the range of 52 million tonnes of CO_2eq per year, i.e., ca. 0.6% of the agriculture sector’s emissions. Despite this minor contribution to GHG emissions, the wine industry also has other significant environmental impacts, such as the conversion of land to vineyards, the water footprint, and the production and disposal of waste; therefore, the whole wine sector must deal with the sustainability challenge of the wine value chain in terms of impact on the environment and communities and economic performance.

Once the requirement of a commitment to sustainability is recognised, it becomes of interest to evaluate the relevant performance of a company and the whole sector. The stage of integrating sustainability into the organisation of a company can be evaluated by applying Prof. Mario Molteni’s model [10], which conceives of five different stages starting from the “informal” stage, where sustainability is integrated in an unaware and sporadic way, and ending with the “dominant” stage where companies base their activity on CSR. This model was used in research conducted by the Alta Scuola di Impresa e Società (ALTIS) of the Università Cattolica del Sacro Cuore on the Italian olive oil sector [11] with the objective of understanding how the producers integrate economic, social, and environmental aspects in their sustainable activities and strategies.

With regard to the Italian wine industry, a number of studies deal with sustainability under many different aspects, such as a review of background research and academic contributions [12], a comparison between different sustainability programs used in the Italian wine sector [13], the proposal of technologies and practices (for instance, the use of sustainable machinery in the vineyard to reduce soil compaction and therefore enhance root growth or water management and water footprint assessment [14]), analysis of social accountability such as working conditions [15], wine tourism coupled with the sustainable use of rural resources as in the Prosecco case study where tourism is not considered to be an antagonist of the environment but an agonist [16], or creating agro-energy districts using the biomass obtained from the wine industry following the reconversion of abandoned rural land to viticulture [17].

Certain sectorial analyses are also available, although limited to certain geographical areas, such as an analysis of how Conegliano Valdobbiadene Prosecco firms incorporate environmentally sustainable practices and social actions to strengthen their competitiveness and deliver shared value for the community [18], or a study of the awareness of CSR among wineries located in the Italian regions of Veneto and Friuli Venezia Giulia, describing the obstacles to and market drivers of its implementation, the adopted practices and communication tools, and the implications that this management approach can have for company performance [19].

Overall reviews of the Italian wine sector are also available reporting financial, commercial, and market information; analyses of Italian wine consumers, including their interest in the environment and sustainability [20]; the role of social media technology in environmental involvement and in encouraging sustainable behaviours in the wine industry [21]; and, in one instance, high-level statistics on the availability of sustainability reports or sustainability sections on websites for a sample of 39 wine producers [22].

However, a general view of how the sector performs in terms of sustainability and the relevant communication to stakeholders is not readily available. Therefore, this study aims to offer a picture of the sustainability of the Italian wine sector by understanding:

• How the Italian wine sector communicates what it does in terms of sustainability;
• The overall sustainability performance of the sector on the basis of the communication by wine producers;
• The most recurring sustainability themes and practices in wine producers’ external communication;
• The strengths and weaknesses of the Italian wine sector with regard to sustainability.

Apparently, no similar investigation has been conducted yet, and in this sense, the study offers an innovative view and an opportunity for further consideration.

2. Materials and Methods

2.1. The Panel

The study was conducted on a panel of 70 Italian companies by using an evaluation model developed specifically for this study. The panel was defined by identifying the top 20 Italian wineries in terms of revenues, cultivated land, and number of bottles produced, then by adding the wineries holding a sustainability certification from either VIVA or EQUALITAS [23], which are the two major Italian programs specifically developed by the Italian government, academic institutions, and private organisations for the sustainability of the wine sector. These criteria led to a list of 120 companies; therefore, an EUR 10 million revenue cut-off was applied, thus obtaining a panel of 70 companies. The panel does not include all the wineries with revenues >EUR 10 million, since there might be wineries (in particular in the EUR 10–70 million range) that do not fall within any of the search criteria above; nevertheless, with total revenues of EUR 5.8 billion, the panel represents approximately half of the total revenues of the Italian wine sector in 2020 (ca. EUR 10.8 billion).

The companies of the panel were then classified into three main typologies, as these wine producers are likely to approach and communicate sustainability in different ways: cooperatives (about 25% of the panel), private producers with vineyards (about half of the panel), and wineries using grapes from third parties (about 25% of the panel) (Figure 1). The higher range of revenues (≥EUR 100 million) showed a slight prevalence of cooperatives vs. the other two types of companies. The lower range of revenues (<EUR 50 million) mainly included private producers with vineyards, with a smaller presence of the other two main typologies.

2.2. The Indicators and Sustainability Practices

After the establishment of the panel, all of the websites and, if present, the sustainability reports (18) of each of the 70 wineries were analysed from a sustainability viewpoint. All the sustainability information and data available on the web and/or in the sustainability reports were organised and clustered into 10 sections (performance indicators) in analogy with the research conducted by ALTIS on olive oil. The 10 indicators are the following:

• Presence of a sustainability section on the website;
• Presence of an annual sustainability report;
• Use of Global Reporting Initiative (GRI [24]) standards in the sustainability report;
• References to UN SDGs;
• Presence of strategic planning of sustainability (objectives and strategies to achieve);
• Presence of a materiality analysis;
• Best practices and performance;
• Presence of policies and management systems;
• Presence of a code of ethics;
• Certifications.

In this study, Indicators 7, 8, 9, and 10 were further broken down into 25 practices, resulting in a total of 31 evaluation items (Figure 2) covering the areas of communication, reporting, the approach to sustainability and strategic planning, policies, best practices (environment, HR and consultants, the supply chain, products and consumers, community, and governance), and certifications.

2.3. The Scoring Model

Each evaluation item was assigned a score from 0 to 5 and a weight on the basis of a scoring model. Generally, scores of 0–1 are considered an insufficient evaluation, while scores from 2 to 5 fall within the sufficiency range and scores of 4–5 represent the top scores. There are many criteria which could be used to assign a weight to each evaluation item. In this research, the evaluation items were grouped into two macro-areas—“approach” and “do”—and the weights were defined in such a way that the two macro-areas have an equal weight (i.e., the maximum achievable score per macro-area is 40), as shown in Figure 3.

Therefore, based on the model, the maximum score obtainable by a wine producer is 80. The resulting scores were statistically evaluated in terms of overall performance, communication, most and least frequently occurring sustainability practices, strengths, and weaknesses, as well as with reference to the three different typologies of wine producers.

It is noteworthy that this study comprises external research aimed at the sector rather than at individual companies; all information was collected from the websites of the concerned companies and from their annual sustainability reports when available, and no contact was made with such companies to discuss the results.

3. Results

3.1. The Overall Performance of the Panel

The results are represented as a percentage of the maximum obtainable score (Figure 4). The overall evaluation of the companies is distributed mainly in the lower part of the range: the median of the evaluation is 23%, and ca. 45% of the companies achieved an overall evaluation less than or equal to 20%, a result that would be obtained with a score of 1 (on a scale of 0–5) on all 31 evaluation items. Only 9% of the companies (6) reached a score higher than 70% of the maximum.

The overall evaluation sorted by revenues (Figure 5) indicates that there is no correlation between sustainability performance and firms’ dimensions; thus, the sustainability performance does not seem to depend on the size of the company, as further confirmed by no correlation in a linear interpolation. The authors argue that the factors driving sustainability performance seem to be the sensitivity of shareholders and management (eventually influenced by stakeholders), and thus the resources that they are willing to allocate to sustainability, rather than the size of the company. It is important to note that this study comprises external research, i.e., it is exclusively based on information available in the public domain (website, sustainability reports), and therefore the results depend on how efficiently wine producers communicate what they do in terms of sustainability. In other words, it may be the case that a wine producer scoring low in this research has, nonetheless, good sustainability practices in place which have not been communicated.

3.2. Performance by Typology of Wine Producers

The performance by typology of wine producers was evaluated in order to see if there was any difference in the level of application of the sustainability practices. The average evaluations for each typology (calculated as a percentage of the maximum obtainable score) are as follows (Figure 5):

• Cooperatives: 41.0%;
• Private producers with vineyards: 27.3%;
• Wineries/bottlers (using grapes from third parties): 17.3%.

At first glance, the difference between these evaluations is significant, and therefore it does not seem related to a possible inhomogeneous application of the scoring matrix; rather, it seems to indicate an actual difference in the development of sustainability amongst the three typologies of companies. Cooperatives are the best performing typology, as also shown by the fact that four out of six firms that achieved an evaluation >70% are cooperatives. The average performance of each category of winemakers was then analysed in order to understand in which field each typology performed well in and if any particular observation could be made. To further understand the basis of this difference and to validate the above-stated hypothesis, the average evaluation of each typology was split into three components, where the previously defined “do” macro-area has been further divided into practices and certifications:

• “approach” (including Indicators 1–6, 8 and 9);
• “practices” (Indicator 7);
• “certifications” (Indicator 10).

We aim to examine to what extent these three areas contribute to the final evaluation.

The contribution of each component to the performance of the typology of wine producers is shown in Figure 6.

The main difference (8.6%) between cooperatives and private producers with vineyards lies in the “approach”, in particular in the Governance Indicators 9 “code of ethics” and 8 “policies and management”, with another substantial difference in relative terms being relevant to the certifications. This might be justified by the fact that cooperatives must run themselves in a transparent and structured way and are requested to demonstrate (also with a review by a third party) their efficiency and reliability as an assurance to their shareholders. Private producers with vineyards are active along the whole value chain, which could facilitate the adoption of sustainability practices and control measures; on the other hand, the majority of such companies are family owned and so potentially less prone to adopt governance systems, whereas cooperatives need governance.

The main difference (6.3%) between private producers and wineries falls within the “practices” area, which includes Practices 1–19. The difference is mainly due to different approaches in the environmental pillar of sustainability. As wineries are not active along the whole value chain (they procure the necessary grapes), they may have more difficulties (perhaps also less sensitivity) in the adoption and control of sustainability practices, especially for activities by third parties (typically the vineyard activities).

3.3. Level of Application of the Sustainability Practices in the Panel: Strengths and Weaknesses

The level of application of each sustainability practice, as represented by the average score of that specific practice, was used in order to understand the panel’s weaknesses and strengths.

Overall, the most commonly recurring best practice was “certification quality and food safety”, i.e., ISO 9001 [25], ISO 22001 [26], BRC, IFS, SQNPI, followed by “energy management” and “water management”, as many companies acted in terms of saving energy and water (e.g., solar panels, decreased bottle weight, high-efficiency lighting, more efficient and lower emission mobility through car sharing and electric company cars, depuration plants, measurement of the soil’s hydric stress, use of rainwater, or even soil moisture deficit). The least commonly recurring practices were those regarding “drinking awareness”.

The most commonly recurring practices differed between the typologies of wine producers: “certification quality and food safety” was the most commonly recurring practice for cooperatives and wineries, and “hospitality (restaurants, guided tours, lodging)” for private producers. Hospitality was widely offered by private producers with vineyards who, by owning land, could organize leisure activities more easily compared to the other typologies and exploit their land to build resorts or restaurants. The second most commonly recurring best practices for all typologies fell within the macro-area “environment”, in particular “energy management” and “water management”, as stated above.

Certifications were widely adopted: 83% of the companies in the panel had obtained at least one certification. In detail, the certifications reported by the companies in the panel were grouped into four areas:

• Quality and food safety certifications (e.g., ISO 9001, ISO 22001, BRC, IFS, SQNPI);
• Environmental certifications (e.g., ISO 14001 [27], ISO 50001 [28], BIO);
• Health and safety certifications (e.g., ISO 45001 [29]. OHSAS 18001 [30]), CSR (e.g., SA 8000 [31], BSCI);
• Sustainability certification (e.g., EQUALITAS, VIVA).

The most widely adopted type of certification was for quality and food safety, especially for cooperatives and wineries, while it is an improvement area for private producers with vineyards. Sustainability certification was the second most widely adopted type of certification, particularly relevant for private producers, thus confirming the environmental focus of this typology of wine producers; however, it is worth noting that this result is biased by the methodology used to identify the panel companies. Environmental certifications were widely adopted by cooperatives, while health and safety certification and CSR were the least adopted category of certification; in particular, this represents a weakness for private producers with vineyards, possibly indicating, for this typology with a smaller average size, a less structured approach to health and safety in the workplace and less integration of the human capital element into the company’s sustainability strategies and practices.

The least commonly recurring practices were used to identify the weaknesses of the panel, which are summarized in

Table 1. Weaknesses and improvement areas of the panel.

	Cooperatives	Private Producers	Wineries
Weaknesses	Materiality analysis, references to UN SDGs and use of GRI standards	Materiality analysis, references to UN SDGs and use of GRI standards	Materiality analysis, references to UN SDGs and use of GRI standards
		Health and safety certification	Research and development
		Drinking awareness	Economic sustainability (risk analysis, publication of economic/financial data)
		Economic sustainability (risk analysis, publication of economic/financial data)	Themes relevant to the communities (e.g., charity, territory promotion)
		Promotion of sustainability practices among suppliers	Biodiversity
			Promotion of sustainability practices among suppliers
			Human resources
			Circular economy
Improvement areas	Biodiversity	Policies	Annual sustainability report
	Drinking awareness	Quality and food safety and respective certifications

.

In particular, materiality analysis, which through internal and external engagement is key to identifying the material sustainability themes on which management should focus and invest resources, was a significant weakness for all typologies of wine producers (although much more frequently used by cooperatives).

3.4. The Level of Communication

Non-financial ESG communication to external stakeholders is becoming more and more important for investors, financial institutions, and customers and may also play a role in the education of consumers. The level of communication was evaluated, taking into account the scores obtained for Indicator 1 “presence of sustainability section on the website” and Indicator 2 “presence of annual sustainability report”. According to the results, 26 companies (37% of the panel) (Figure 7) did not have a sustainability section on their website or, if present, no meaningful information was provided.

Furthermore, 14 companies (20% of the panel) had published a sustainability section on their website, but with limited information, therefore bringing the number of companies with insufficient information on sustainability to 40 (57% of the panel). Among the 30 companies that received a score of 4–5 on Indicator 1 and had a good level of communication (43% of the panel), 18 companies had also published an annual sustainability report, most of which were cooperatives (39% of this typology) and private producers (26%), followed by a smaller representation within wineries (only 6%); however, the quality of the sustainability reports was quite variable, as proven by the fact that only eight companies had carried out a materiality analysis and only seven had used GRI standards for reporting.

Overall, the evaluation of the communication on sustainability resulting from this study is comparable to that of the Italian olive oil sector obtained by ALTIS, which concluded that only 37% of the companies considered in the research had communication which was adequate and provided the necessary information.

4. Conclusions

A number of studies deal with the sustainability of the Italian wine value chain under many specific aspects; however, a general review of the sector’s sustainability performance is not available yet. In this context, this article aims to provide a general overview on the Italian wine sector’s sustainability using an innovative methodology purposely developed for data collection and evaluation. The conclusions can be used by winemakers to appraise their sustainability performance and to identify and plan future objectives.

The main conclusions of the study can be summarized as follows:

• The overall evaluation of the companies is distributed mainly in the lower part of the model, suggesting that the sector has to improve its sustainability performance. However, it must be noted that this result depends on the adopted scoring model and on how the sector communicates its sustainability efforts (see below). The overall evaluation indicates that the sustainability performance does not depend on the size of the company; moreover, cooperatives are the best performing typology.
• The strengths, i.e., the most commonly recurring practices, are the certification of quality and food safety (e.g., ISO 9001, ISO 22001, BRC, IFS, SQNPI), as well as energy and water management. Certifications are widely used: In fact, 84% of the panel has at least one certification. Meanwhile, the weaknesses, i.e., the least commonly recurring practices, are the promotion of drinking awareness and information on economic sustainability (e.g., financial statements and risk analysis). Also, materiality analysis, which is the key to sustainability planning, is a significant weakness for all typologies of wine producers.
• The wine sector shows variability in both the approaches towards sustainability and the sensitivity of stakeholders towards this topic. Additionally, it is characterized by the absence of a unique certification for sustainability.
• The Italian wine sector does not communicate effectively about its sustainability efforts: only 43% of the panel has comprehensive communication.

The main conclusions of this study were presented and discussed in a webinar organized by ALTIS held on 27 June 2022 (Sostenibilità certificata ma poco comunicata: la virata necessaria per i brand del vitivinicolo), which was attended by representatives of certain Italian wineries and certification bodies.

The planning and adoption of sustainability practices and relevant reporting may be perceived by certain producers as a cost and as an increased price for consumers rather than an added value. Therefore, further research on this subject may focus on understanding consumer perceptions and attitudes towards sustainability and under which conditions the implementation of sustainable practices represents a benefit for producers rather than a cost.