Friday, June 14, 2013

A tough business in a beautiful place: The World of Sicilian Wine

This piece initially ran on the website of The Deal,, and reappears here with the permission of its editors.  

Making wine in Sicily may sound idyllic, but it’s a challenging business. Grapevines have been cultivated on the island since the 8th century B.C., resulting in a wide range of native varieties and wine styles, but fragmented production, a lack of commercial sophistication and the European economic crisis have made it hard for many Sicilian producers to prosper.
Frances Di Savino is well suited to understand both the history and the contemporary realities of the Sicilian wine industry. A venture capital lawyer in the Boston area and a longtime aficionado of Italian culture, Di Savino and her husband, Bill Nesto, one of 300 or so people in the world who hold the Master of Wine title, recently published “The World of Sicilian Wine” (University of California Press, $34.95). The book tells the story of Sicilian viniculture and describes the important producers currently at work there. The couple combined on the first part of the book, while Nesto wrote the second based largely on research that he and Di Savino did on 10 trips to Sicily between 2008 and 2012.
“No one else has done the analysis that was done in this book,” said Antonio Rallo, co-owner of the producer Donnafugata Srl and head of Assovini Sicilia, an association of the island’s premium winemakers. “This is the first book that is so complete in speaking about the Sicilian producers and in going back to the roots of Sicilian wine.”
Di Savino was born and grew up near Boston but took a roundabout path to practicing law there. She studied classical Greek and Latin in high school and picked up Italian at Wellesley College, from which she graduated in 1981 with a degree in both medieval and renaissance studies and Italian culture. Di Savino spent a year studying in Florence after college and a summer working at the Milan law firm Pavia e Ansaldo while she was a student at Columbia Law School. She considered a career in international business, but instead became a corporate associate at Simpson Thacher & Bartlett LLP in New York after graduating from Columbia in 1985. 
She moved to Mabon Securities Corp. in 1992, the year after Italy’s IMI Group bought the brokerage, and became general counsel two years later. She moved to San Francisco in 1996 to take a position as associate general counsel at technology investment banking boutique Montgomery Securities, an experience she calls her “professional year abroad.” NationsBank Corp. bought Montgomery the next year, and Di Savino consulted for rival Hambrecht & Quist before moving back to Boston and opening the boutique law firm InCounsel with her brother, Sam, in 1999.
In 2000, the Di Savino siblings helped structure a Cambridge, Mass.-based venture fund with close ties to the Massachusetts Institute of Technology. They’ve worked with a number of tech companies since then, including Virtusa Corp., a Westborough, Mass.-based information technology outsourcing company that went public in 2007; Lightlab Imaging, a medical device manufacturer spun out of MIT that was sold in 2002 to Goodman Co. Ltd., which in turn sold Lightlab to St. Jude Medical Inc. in 2010 for $90 million; and I-logix Inc., which was sold to Sweden’s Telelogic AB for $80 million in 2006. IBM Corp. paid $745 million for Telelogic two years later.
Di Savino and Nesto met through a Wellesley alumnae event in 2002 and married in 2005. Nesto, a 1973 graduate of Harvard College who founded the wine studies program at Boston University and is currently a senior lecturer there, has a deep knowledge of Italian wines, and the couple first travelled together to Sicily in 2008 when he was researching an article for the online wine magazine Sante, an assignment that became the genesis of their book “The World of Sicilian Wine.” Di Savino researched and wrote the book’s opening chapter on the origins of Sicilian wine and culture, and Nesto picked up the narrative in 1770, when Englishman John Woodhouse arrived at the port of Marsala in western Sicily and saw the possibility of imitating the success of his countrymen who’d developed the Madeira wine trade. He seized the opportunity and began exporting Marsala wine to Great Britain.
Woodhouse and the Britons who followed him to Sicily brought with them “the spirit of enterprise, the understanding of commerce, the knowledge of markets and the ethos of industry and collaboration,” Nesto writes, traits that were rare in Sicily at the time and have remained so since then.
Now greatly diminished in popularity, Marsala was a very successful premium export product and thus an anomaly in Sicily, where today only 20% of the wine produced on the island is bottled there, with the rest shipped to mainland Italy to be packaged and sold as bulk wine. That’s true even though Sicily’s vineyard surface area fell by 21% from 2001 to 2011—“a trend that probably needs to continue,” Di Savino said, since Italian consumption of wine continues to fall and most of the island’s producers have found it difficult to compete with more efficient rivals in Australia and the Americas. She added that the 80 or so cooperatives that produce about 80% of Sicily’s wine will need to consolidate as well.
Sicily’s midsized and small producers also face daunting challenges. “The middle class is struggling in the EU, and a great wine industry cannot exist without a solid middle class,” Nesto said. The U.S. is an attractive export market, but a difficult one for many producers to enter because of the country’s byzantine regulation of wine.
Nesto identifies three Sicilian producers as “essential for the future because they can surmount the current economic downturn:” Donnafugata, Planeta and Tasca d’Almerita. Diego Planeta in particular is “a tremendous entrepreneur,” Nesto said. Not only did he excel at running a cooperative and launch his own highly successful winery; from 1985 to 1992 he was the president of Sicily’s Instituto Regionale della Vite e del Vino, a state-owned company formed in the early 1950s to promote improved viticulture, wine production and marketing techniques.
Planeta’s ability to strike a balance between competition and cooperation is one that most successful entrepreneurs have and that Sicilian winemakers would do well to emulate, Di Savino said. “Regardless of industry type, a company enters into a web of important contractual and business relationships with competitors, some of whom become investors, partners and customers,” she said. “History has shown that Sicilian entrepreneurs have found it difficult to collaborate. In the wine industry, there are a lot of producers and only so many foreign importers.”

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