The Metaphor of Wine
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The Metaphor of Wine

MARCHIONNE, HEAD OF GENAGRICOLA, EXPLAINS HOW YOU MANAGE AGRICULTURAL FIRMS IN AN INNOVATIVE WAY TODAY TO COMPETE IN INTERNATIONAL MARKETS


If people were asked in a TV quiz show which agricultural firm is Italy’s largest, most would be unable to answer the question correctly. In fact, only industry insiders know that the place of honor belongs to Genagricola, a subsidiary of the Generali insurance group that operates in the agro-food sector, controlling more than 25 firms for a total of 13,000 hectares under cultivation in Italy and Romania, 800 hectares of vineyards, 7,000 heads of livestock, and even two power plants fueled by biogas. These are farm assets that have few equals in Europe. At the helm of Genacricola is Bocconian Alessandro Marchionne, a 50-year-old manager whom the Trieste-based insurance group snatched from Allianz when he was working at Agricola San Felice.

➜ This makes you, in effect, one of the most experienced managers of the relation between insurance companies and agricultural investment. When was this relationship born historically and how has it evolved in recent years?
Actually it’s a relationship that has long existed: the first agricultural investment made by Generali dates back to 1851, twenty years after the foundation of the insurance company. At the beginning, however, and for a long time, it was considered only a way of diversifying investment in land assets. Today, however, it has become clear that you need a more advanced and specialized management of agricultural production, a kind of management that is not fearful of innovation. Furthermore, today agricultural assets can be of great value for large groups in terms of public image, because they have traditionally been and still are bearers of positive ethical values and contributors to collective welfare, assets which need to be communicated in a novel way to strengthen the corporate identity.

➜ What phase is Italian agriculture going through?
A phase of polarization. On the one hand, there is growing attention to organic food and the environment, to the ecological sustainability of production, which rewards small firms, those capable of achieving precise positioning in a niche market. On the other hand, in the case of agricultural commodities like wheat or rice, no marketing strategy is possible because these are flex-price markets, dominated by buyers, where major producers have little room to maneuver. However, if you operate on a big scale, you can diversify crops, a practice that is good for the land but above all limits the risk of fluctuations in market prices.

➜ How do you reconcile the priorities of an international group controlling brands that compete in global markets, with the need to remain tied to the land, and the traditional methods and slow time frames of agriculture?
You need a lot of flexibility, a long-term vision, and a diversified set of skills. In this sense, I believe that the most emblematic agricultural product is wine, because it is born as a very local reality, linked to the land, climate, vineyards, vintners, regional traditions, but after it is bottled, it becomes a global product that can compete with rival brands from all the world. In my present role, the previous experience I had in marketing and business organization is proving very useful, because the agricultural industry really lags behind on these two fronts.

âžœ Regarding wine, you’ve been given from the beginning a very clear mandate: to improve the quality of labels and design a new brand identity for the whole wine-making division. Where is the company headed?
In the wine industry, the vast majority of firms – 80%, I would say – are family firms, so tradition has a big role in the business, for better or worse. In Genagricola, we cannot focus on family values and therefore we have immediately pursued a distinctive kind of market positioning oriented towards innovation. Next to this, we’ve followed the advice of a great enologist, Riccardo Cotarella, and converted some of our productions towards higher quality, by concentrating, for example, on the autoctonous Albarossa wine grape variety, of which we have become one of the largest producers in the world. Furthermore, in order to increase profitability, we have concentrated our efforts on the market for great red wines, and for this reason we have recently acquired the Costa Arènte estate near Verona, so that we could have a wine like Amarone that is much appreciated both in Italy and abroad.

➜ What do you mean when you talk of the Genagricola Method?
It is a set of values comprising agricultural sustainability, food and labor safety, social responsibility, which our daily work is based upon, and which we have turned into a business method, to make clear that it is not just a matter of corporate image, but the core of our approach to business. We want to be leaders on these issues and educate the whole industry about them, first of all about labor safety, because today agricultural work carries the highest occupational hazard, and many work injuries go unreported.
 
➜ Genagricola also generates electricity, operating two biogas power plants having a total installed capacity of 2 Megawatts. What are prospects of power generation have in the agricultural sector?
Excellent from the point of view of profitability, I would say. But policymakers need to have a certain foresight on this. If the production of energy from alternative sources is to be permanently encouraged, it is necessary to apply preferential pricing for electricity coming from this kind of plants, otherwise we’ll remain hostage of price shocks just like for commodities.
 

by Emanuele Elli
Translated by Alex Foti


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