Winemaking for Future Generations

In a few minutes, the life of Matteo Bruno Lunelli, 40 years old, changed. A phone call from his uncle Gino and the decision was taken: to leave a promising career at Goldman Sachs for the wine firm the Lunellis have been expanding since 1952, and take the position of President of Cantine Ferrari and CEO of the family group. This meant leaving the apartment in London and his life in the City for the family villa in the region around Trento, as well as switching from board meetings in skyscrapers to workplace negotiations with the vintner's employees.

➜ You really had no second thoughts about returning to Italy, when you received that call?

I was kind of waiting for it.. I had always stayed in touch with Gino Lunelli, my uncle and President of the Lunelli Group, and when he called me in London to ask whether I wanted to remain a manager forever or test my mettle as entrepreneur, I had no doubts and took off almost immediately for Verona, where Vinitaly, the industry's trade fair, was taking place. I hit the ground running, as they say.

➜ Yet your professional career after graduating from Bocconi had taken you away from Italy.

I worked for Goldman Sachs in New York, Zurich, London. It was a great experience which I'd do all over again. You cannot say no to a major investment bank that puts you in an international environment next to exceptional people like Mario Draghi, Claudio Costamagna, Massimo Tononi (President of Borsa Italiana). My choice was a consequence of focusing my university studies on Europe and European monetary and financial integration. The late 1990s were great times: the launch of the euro was being hatched, the Maastricht Treaty was being analyzed, various ECB models were being tested, as economists and bankers tried to understand the likely consequences of the introduction of the single currency. In one's life, you don't often get to witness and monitor the effects and consequences of such a major economic experiment.

➜ Has your enthusiasm for the monetary union somewhat abated?

I am a strong believer in Europe, for political and social reasons. And I remain persuaded that the Economic and Monetary Union is a winning strategy, certainly in the long term. Certain vulnerabilities were already evident at the euro's birth. For Italy, being part of the euro has meant low interest rates, low inflation, economic stability. However, it's clear that in the case of monetary shocks, a monetary union has its downsides, because a homogenous monetary policy is set against diverging economies. This depends from the fact that the European project is still in the making, and fiscal integration has not yet been achieved, as well as harmonization of the economic policies of individual EU countries. Turbulence has caught us midstream, but it'd be much worse if we stepped back. If we manage to cross to the other side, macroeconomic volatility and other distortions are bound to be corrected.

➜ In the new position as CEO of the Lunelli Group, what is left of your previous international experience?

Self-confidence and the ability to do things. Having worked with people from all over the world is a plus when it comes to exporting a wine around the world. Because you need a story to tell and you need to know the world, i.e. where your business interlocutor comes from.

➜ Lunelli is one of the 748,000 family firms existing in Italy today. According to the latest EY Family Business Year Book, they account for 85% of the total. Other major European economies post similar data, but Italian family companies have higher longevity on average. In your opinion, what are the advantages of a family business?

In our case, being a family business is an advantage, because the family has invested unique passion and devotion in wine-making. More generally, a family has a long-term outlook to the world, and this is fundamental in the wine industry. When you plant a new vineyard, it takes years for the red tape and to the ready the land. After grafting vines, it takes 7-8 years to reap the early fruits of excellence in wine-making. The resulting wine will have to mature further, in order to become a Gran Riserva. The whole vinification process can take up to twenty years. Only a family company can take such a multi-generational perspective. Another advantage is that in a family company, it's the family itself that expresses the quality and values behind the brand.

➜ What are the vulnerabilities instead? You took the helm of the company from your uncle, but generational transition is what usually puts a family firm in danger. How do you protect yourself from succession crises?

The rules of corporate governance must be very clear. Over the last few years there has been growing awareness concerning the issues affecting family firms, and universities have started offering courses on the management of family-owned businesses. At Bocconi, I remember a great class on corporate governance, taught by Professor Donato Masciandaro along with governance experts such as Guido Rossi and Fabrizio Barca. My graduation thesis focused on aspects of ownership and control, and that's where I started from when I had to write the governance rules of my group. Today our family pact provides for the circulation of company stakes, the entrance of external members in the company board, as well as the accession of new family members. The rules are already written for when our children and their descendants will take over.

➜ Wine dominates Italian exports and gives the made in Italy a large part of its image abroad. Is there still room for growth in the global wine industry?

Italian wine is increasingly appreciated in international markets, because it is acknowledged and loved for being the expression of a whole desirable lifestyle, starting with Italian food and cuisine. In particular, high-end sparkling wine is a growing market and its prospects look good, because it is associated with contemporary living and the many social occasions for celebration it offers in company of outgoing people and light foods.

➜ Italy is said to lack major business groups capable of defending the Made in Italy brand abroad, and compete against their European counterparts. Does this apply to the wine industry, too? You have recently acquired a 50% stake in Bisol Prosecco: is this how Lunelli is tackling the problem?

The wine market is particularly fragmented. If there's a strong brand behind the bottle, then it's not a problem because the customer recognizes you. Otherwise marketing a wine requires strong managerial capabilities that small firms often do not possess. It's a complex challenge, because you need to remain strongly tied to a locality, because a great wine is always expression of peculiar territory, but at the same time you must sell to the world, perhaps by using e-commerce and other digital solutions. For this reason, I really think that greater consolidation in the industry would be a welcome development. We are trying to do so by aggregating labels that are marks of excellence in their territories of origin, such as the Trento Spumante, the Bisol Prosecco, and the Sagrantino di Montefalco red wine etc. And if you really must drink something other than wine, we have acquired Surgiva mineral water..