Weather and Diseases

Potential problems facing all producers of alcohol, especially wines, are weather and diseases. To illustrate just how impactful droughts, or warmer-than-normal summers can be take the price of cabernet sauvignon grapes that are grown in the Napa Valley, California, versus the same species of grapes grown in Fresno, California. Typically the grapes from the Napa Valley fetch up to 15 times more than their counterpart grapes in Fresno. The principle reason cited is the 5-degree Fahrenheit temperate difference between the two locations. Attributing this price difference around the world, any small changes in weather patterns for a season could drastically impact grape prices and resulting wine prices. The risk of disease, insects growing resistance to currently allowed pesticides, concern for bird safety (which feed on grapes) all jointly increase the risk of weather- and disease-related issues.

Business Culture in Italy

To this day, Italy is still in a recovery period from the global economic crisis of 2008–2010 and has one of the highest levels of debt of all EU members. Some experts suggest the level of debt is compounded by Italy’s complex demographics. Italians are known around the world for their close families and the importance they put on family life. Within many Italian firms, the chain of command on paper may be less impactful than personality, loyalty, and respect. Although high-ranking job titles might have formal authority, this is no assurance the position will have the practical power someone in a lower-ranking position might possess.

In addition to unclear corporate structures in Italy, many businesses still hold a high degree of nationalized industries, much more so than other EU members. Italy has one of the least mobile management populations in the world, making it difficult for outside companies to have corresponding offices and programs in different Italian cities. Nevertheless, Italy is the world’s seventh-largest economy and home to some of the most luxurious textile, automobile, and fashion companies in the world.

Punctionality in Italy is expected but exceptions are often made for personal reasons. Small meetings tend to be informal with larger meetings taking on a more formal aspect. With the informal nature, side conversations and people taking breaks to answer mobile phone calls are common in some Italian meetings. If working as a team, it is generally a good strategy to have a respected figure lead the team and assign each individual their own task. If not, individuals could possibly work on whatever they feel is best, often at the expense of the macroplan. Italians believe in talking and using the power of persuasion to prove their points. Italians tend to not like formal presentations and meetings because they are viewed as stiff and academic. This feature is in contrast to normal meeting in the USA or United Kingdom.

Although a member of the EU, women in Italy comprise a large percentage of the workforce but struggle to advance into upper-management roles. Women have made better inroads into upper management in smaller corporations. When high-ranking women from outside Italy do business with Italian firms, it is not uncommon for them to receive compliments on their style or personal appearance. Although these compliments may constitute harassment in the USA or United Kingdom, in Italy it is considered an honest compliment. With Italy known around the world for many famous fashion designers and high-end leather goods it is no surprise that dressing well for work is important. In Italy it is often said, if you want to be taken seriously, dress seriously.

Tequila

Campari owns a premium tequila brand, Cabo Wabo. Tequila is distilled from the roasted hearts, or pinas, of the spiky blue agave plant in Mexico. Tequila is gaining in popularity, especially in the USA, its biggest market. U.S. consumption rose at an average annual rate of 4.1 percent from 2006 to 2011, according to International Wine & Spirit Research (IWSR), almost double the growth of the total U.S. liquor market. Pricier, premium varieties are expanding the fastest. Tequilas that sell for more than $20 a bottle increased more than 10 percent over the last five years, IWSR reports. The majority of tequila drunk is in cocktails such as margaritas, according to Kevin Vanegas, Master of Tequila at Wirtz Beverage.

The high-end tequila market is dominated by Patron, part-owned by Bacardi Ltd. Patron sold 1.66 million cases in the USA in 2011, double that of its next competitor, Grupo Cuervo’s 1800 brand, IWSR estimates. There are more than 150 tequila distilleries in Mexico, producing more than 1,500 brands. Like Cognac, Bourbon, or single malt scotch, tequilas vary by how long they’re aged. So-called anejo varieties, sold by most brands at a premium, must spend at least a year in wooden barrels. High-end tequila should be sipped “like a fine whiskey,” not downed in shot glasses alongside a lime wedge and a lick of salt, as is often the case in U.S. bars.

Diageo in 2013 terminated its tequila distribution deal with Jose Cuervo. Cuervo is the world’s top-selling tequila, but Cuervo is not a premium brand. Diageo wants to focus on premium tequila because cheaper tequilas priced under $20, which make up more than half of the U.S. market by volume and the bulk of Cuervo’s sales, have slid 1.1 percent over the past 5 years. Cuervo’s market share in the USA has fallen to 34 percent from 45 percent over the same period, Liberum Research estimates. Some analysts believe that Diageo is planning to acquire Beam, which makes Sauza, the third-biggest tequila brand in the USA. Diageo owns half of a premium tequila called Don Julio, alongside the Beckmann family, Cuervo’s owners. The brand saw sales growth of 26 percent in 2011 versus a 5-percent decline for Jose Cuervo.