The the mineral water sector is in full transformation. It is an increasingly competitive market, squeezed between the environmentalist push that requires a review of plastic consumption and ruthless competition on prices. In this panorama, it is the more structured companies that resist, which are able to guarantee strong investments that pay off well with high volumes. Everything changes, but in many respects, especially linked to the regional management of concessions, the sector remains anchored to the past and to the permits granted for decades with few adjustments of the fees over time. Driving it is the large consumption of bottled water: with 200 liters per capita against the 118 of the EU average, Italy is the first European country (photograph by The European House Ambrosetti), the third in the world after Mexico and Thailand.
Piedmont is the Italian region that has the largest number of active concessions for the bottling of mineral waters, according to the latest available data from the Minister of Economy and Finance. Among the Italian regions, Piedmont, Lazio and Lombardy are positioned at the top of the ranking by area granted: together they represent 41 percent of the national area granted in concession for the exploitation of mineral waters and Piedmont alone is worth 17%. In total, there are 114 sources of Piedmontese mineral waters, spread over 87 extraction sites.
Land concessions, however, are 46, but those actually used are just 26 of which four are exploited by Fonti di Vinadio, as many by San Bernardo and six by Pontevecchio. More or less the same situation in Liguria: 22 sources surveyed, but only 8 active concessions and 2 companies that have resisted the transformations of the last decade, even if ready to reopen their factories, there are two other brands that will however look to the market of Emirates and the Middle East.
The Piedmontese sources
The the reason that prevents new companies from entering the market is not the cost of concessions, which is still low. Rather, it is about market valuations. The concession fee for mineral waters intended for exploitation provides for a fixed component in relation to the extension of the surface of the area subject to the concession, collected by the province or metropolitan city competent for the territory. And then a variable component related to the quantities of bottled mineral water, collected by the Piedmont Region, which also manages the renewal of concessions. The amounts paid in 2021 refer to the activity of 2020 (this is a deferred rent) and are structured as follows: the fixed component is worth 37.23 euros per hectare with a minimum of 3,190.76 euros and the variable one, for every thousand liters of bottled water, goes from 1.06 euros for the first 60 million liters and 1.28 euros if the 150 million liters bottled are exceeded. Figures introduced in 2014 and since then only adjusted on the basis of the planned inflation rate. The result is that the Piedmont Region, for all 26 concessions actually used, collected a fee of approximately 1.4 million on the bottled product. The fixed fee, on the other hand, goes to local authorities and is also paid by those who hold the concession without using it. To give an example, Fonti di Vinadio which owns the Sant’Anna brand, leader in Italy with a turnover that has more than tripled in the last 10 years – in 2019 the turnover reached 320 million euros – the same year paid the Region a fee of 875,234 euros in two installments.
«We distribute our water throughout Italy and we are first in almost all regions – says Alberto Bertone, President and CEO of Acqua Sant’Anna -. Market competition is still very much about price rather than product recyclability. The problem is that the consumer prefers to save when he has to spend a few cents more. Investments are essential to survive in a highly competitive market, where margins are tight. Our annual investments range from 10 to 40 million and are essential to adapt the machinery ». Competitiveness (the top five companies in Italy cover 80% of the market) and production costs discourage companies from entering this business.
Another important company in the area is Pontevecchio, which bottles brands such as Valmora and Sparea, led by the Damilano family whose CEO was Paolo Damilano, candidate for mayor of Turin in the next administrative lists with the “Torino Bellissima” civic list.
Much more marginal, in this sector, is the Valle D’Aosta which has a total of seven sources of which three are active for bottling, one is under concession but not used and another three are unexploited concessions. Two of those actually operational, “Fonte Rey” and “Youla” in the municipality of Courmayeur, are entrusted until April 2023 to the Società Sorgenti Monte Bianco S. p. A head of the French group Sources Alma. In this case, the concession fee is in line with the Piedmontese one.
Small is not always beautiful
SOn the geographical map of Liguria, the sources of water are 22 dots located between the Rocche dei Valletti in the province of La Spezia and Fontana Fredda in the province of Imperia. The gold of the future at hand, but complex to exploit. So much so that in the last 10 years the companies of 9 have remained 2. The others have been canceled by the competition and by the operating costs of the factories. In the words of Angelo Nan, CEO of Calizzano, 57 million liters treated in the Alta Val Bormida plant in 2019 “water is a very strange thing: it costs almost nothing, but you spend more to bottle it than to bottle barolo ».
There is also a before and after pandemic for water. In 2019 the two Ligurian companies still on the market, the Savona-based Calizzano and the Imperian-based Santa Vittoria, had different expansion projects and the only headaches came from a ruling by the Court of Auditors which, with the parification of the previous year, had forced the Region Liguria to increase state rents (from 30 to 45 euros per hectare) and collection rights, from 1 euro per cubic meter of bottled mineral water (and its derivatives) to 1.5. Today everything has changed. In one year the prospects have been turned upside down. They no longer pay the collection rights, suspended due to Covid, but as for many other companies it is a daily struggle for survival. La Calizzano, which with its glass bottles had catering as a reference point (which absorbed 65% of the product), had a collapse: the plant runs at 50%, the 35 employees are on redundancy fund at 80% . In the last “normal” year, turnover was around 6 million euros, down by 24% in 2020; and closed the first quarter of this year there is already talk of a decrease of 52% and 20 million liters less treated.
There is no funding in sight from the Liguria Region. “We cannot replace the market – observes the commissioner for production activities Andrea Benveduti -, but if there is the will to strengthen the sector, there can be space in the next programming of ESF funds”.
Water in the desert
In Koran reads: “And in the water that God makes come down from heaven (…) there are Signs for people endowed with intellect”. Thus it provokes more than one suggestion that, in March 2020, the Vallechiara di Altare (Lipiani and Fonte del Lupo) was purchased by a company headed by Sheikh Al Quasimi of the United Arab Emirates. Five million investment between the purchase and renovation of the plant and a business plan that foresees that 50% of the production ends up in the hotels of the Sheikh, in the Emirates. Vallechiara went bankrupt in 2017. Beta Consulting Srl arrived in 2020 and a new chapter is opening for the Altare plant: «Covid has caused delays on the schedule, but we are now ready. We will soon begin to install the new Pet line for bottling 15,000 liters per hour. Then the glass and tetrapak lines will come into operation, as requested by the Emirates airline ”, explains Tarek Khamis, CEO of Beta Consulting.
There is another source that could return to produce in a short time: it is the Argentiera in Alta Val d’Orba, between Urbe and Sassello. Operation conducted by the Monegasque entrepreneur Claudio Melotto, native of Aosta and owner of Comenii Aquae Srl. And as for the Altare water, also that of Faiallo, accompanied by chemical and organoleptic analyzes that place it at the top of the mineral water rankings European markets, it could end up on the Middle Eastern market.