20 YEARS IN ITALY

Veneto, Italy 2020 | AGRICULTURE | VIP INTERVIEW

TBY talks to Carlos Manuel Veloso dos Santos, Director General of Amorim Cork Italia, on the firm's 20th anniversary in Italy, sustainability, and Veneto's unique advantages.

Amorim Cork is the world's largest producer of cork stoppers and 2019 marks the company's 20th anniversary in Italy. Would you give us a brief overview of your operations in Italy?

The Amorim Group was established in 1870 and will be 150 years old in 2020. Amorim Cork Italia has been in Italy since 1999, when I founded the company with a local partner. Since then, we have taken a long road to become market leaders by a long margin, with our biggest competitor's revenue being around 50% of our turnover. We have sold more than 600 million corks in Italy, a market of around 2 billion corks. Amorim Cork Italia is growing every year, partly by acquiring its competitors' market share but also by absorbing part of our growth in certain segments of the Italian wine market, such as Prosecco, which represents around 550 million bottles. Amorim acts globally but operates locally. Amorim Cork Italia is a good example of this because 40% of what we are selling in the Italian market is produced in Conegliano. The rest 60% goes directly from our parent company to our customers. This mix allows us to serve both big and SME customers.

The cork stopper industry has been threatened by the arrival of alternative stoppers made of plastic and aluminum. What are the competitive advantages of corks?

Single-use plastic stoppers are no longer a threat because the market has gradually rejected it. The consumption of plastic stoppers has been decreasing over the last 11 years. At present, the market consumes around 1.8 billion plastic stoppers compared to 12 billion cork stoppers and 5 billion screw caps. Our primary competitor is the screw cap segment. Screw caps are an easy-to-use commodity, but do not give value to the wine, whereas cork gives a great deal of value. For the basic wine segment, which falls below the USD30-mark, a study published in the US found that cork stopper is the key factor in a customer deciding to buy a particular bottle. For customers with little knowledge about wines, the cork is an indicator of the quality of the product. Another factor is sustainability. A normal cork retains more than 300g of CO2 during its lifespan, so by purchasing a wine bottle with a cork means you compensate for the CO2 contamination resulting from wine production.

Could you elaborate on why cork is an example of circular economy and tell us about Amorim Cork Italia's sustainability efforts?

Cork is a good example of circular economy because it results in no waste. We use all the waste to produce products for the construction, automotive, space, and shipping industries. For example, cork is used to make pavements; even the dust we create during production is used to generate energy. In 2011, we decided to collect used corks and give them a second life. For example, we have created a new furniture collection made with used corks. This will be a kind of revolution in the concept of cork recycling because today in Italy more than 1 billion corks are thrown away annually. We can use these corks to make many things, including insulation panels. We want to prove that you can produce high-value, well-designed items with corks. We aim to commercialize these products and establish a new system of circular economy.

Amorim has offices in 22 countries. What is the particular importance of Amorim Cork Italia to the Amorim group?

We are by far the largest branch of Amorim outside of Portugal and probably the third-largest company in the global cork industry. This success is firstly because we are located in the biggest wine producing country in the world. However, Italy is not the biggest bottler; it sells around 30% of its wine in bulk. On the contrary, France sells less wine in bulk and more bottles. However, each year Italy is moving the balance in favor of bottled wine. So probably in the next few years Italy will become not only the biggest producer of wine, but also the biggest bottler of wine. Amorim Cork Italia is working together with the local wine industry to develop new services to be able to assist with this. Unfortunately, with the situations unfolding globally, such as Brexit and the US-China trade disruptions, wineries cannot make predictions about production and future trends. They need a partner who can adapt and provide service on short notice. In line with this, we are trying to become more specialized and offer just-in-place and just-in-time services to the local wine industry.

What makes the Veneto region unique as an investment destination?

The Veneto region is very rich in terms of production, but probably less so in terms of market entrance. One example is the Prosecco phenomenon. Prosecco sells in three main markets—the US, the UK, and Germany—though this is a product that is so interesting for so many other countries. Investors are now coming to buy wineries and develop businesses, but I think more investors could do this because it is a great market with a product that works very well. We are talking about a product that has the potential to reach 1 billion bottles. There are many opportunities, but mostly for people with a global view. Overall, there is still an agriculture-based approach but moving forward, the industry should adopt a more global vision and promote the product in a different way.

In July 2019, the Conegliano-Valdobbiadene Hills were added to the UNESCO World Heritage list. How will this impact the Prosecco wine sector in the region, and how is Amorim Cork Italia able to capitalize on this?

The sector needs to learn how to live with this UNESCO classification because we do not have the structures in place for tourists to visit the region's wine producers. For comparison, the Champagne region has not that attractive vines, but the wineries there steal the show. In our region, the vines are fantastic but the wineries are just warehouses with bottling plants. There needs to be a change in mentality in approaching this because the tourism potential is huge. Moreover, the region is located close to Venice, which is basically a tourist magnet. Amorim Cork Italia is ready to play its part in building the region's future. We are only using 70% of our capacity in Conegliano and are willing to invest more. We are interested in continuing to invest not only in the Veneto region but in other parts of Italy as well. We sell our products throughout the country with a distribution network of 50 agents.

What are your expectations for 2020?

We will continue to grow. Amorim Cork Italia will close 2019 with around EUR70 million turnover, and in the next five or six years we can reach an annual turnover of EUR100 million. So far in 2019 we are growing by 11%. This will continue in 2020 because we are looking at a great harvest. Italy is highly competitive in foreign markets so we will perform well. We will continue our success together with the success of the Italian wine industry. Based on all this, Amorim Cork Italia has a great future in Italy.