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SUPERYACHT #11
Winter 2007

Article selected from our quarterly magazine dedicated to the largest and most luxurious boats with information, interviews, technical articles, images and yachting news


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Fabio Petrone interviews Paolo Vitelli, president of the Azimut-Benetti Group


PLAIN SAILING FOR SUPERYACHTS

The big boat sector continues to be a reference point for the international yachting industry, but especially for the Italian world leader in the sector. We discussed this with Paolo Vitelli who is certainly the person best qualified to give a picture of the global situation.

President, let's talk first of all about this increasingly international market and try to give an overview of the superyacht segment, but obviously with an eye to what those foreign countries represent for the Azimut/Benetti Group. We'll start with Russia which, from what I saw at the Moscow International Boat Show in spring, seems to be a situation in its infancy, at least with regard to the way we understand yachting. Can you confirm this sensation?

In my view, to create a yachting culture (over and above the sport aspect) you need sea, cruises and the adventure of sailing. This is all lacking in Russia. But there's another aspect that is substantially more important: the desire to own a boat in order to demonstrate how successful you are. So a boat has a different meaning there: rather than for cruising it's like a great luxury apartment where you can invite friends and acquaintances for receptions, holidays or parties. In that country, in my opinion, the same thing goes for medium sized yachts, which are beginning to find a market. This meaning becomes even more important when they come to buy boats in the Mediterranean: in this case it carries a message of excellence, again to demonstrate your success and wealth.

Which boats do the Russians use in their own country and which in the Mediterranean?

Up to 20 metres in their home waters - lakes, rivers, canals, the Black Sea and the St Petersburg area - but also in the Mediterranean. Over 20 metres, when we're dealing with large pleasure craft, they use only here, in the Adriatic and the Mediterranean. The favourite area is of course the French Riviera with everything it offers a rich superyacht owner and his skipper, but Italy is beginning to catch up as a base.

So you feel the Russian market is positive and in development?

Our Russian dealer in Cannes had plenty of work both in receiving his faithful customers and at group level. We consider Russia one of our best markets. We're experiencing powerful growth with regard to medium sized boat exports - which to us are 60 footers - and to superyachts to be kept here. Our Moscow dealer has actually built up close contacts with his French and Italian counterparts in order to guarantee service when Russian owners decide to keep their boats here.

Let's change the subject to emerging markets such as Dubai, China or even South America...

They're already superyacht markets for the most part. For example, there are two lively markets in South America, namely Brazil and Mexico, where the situation is the opposite of what I was saying about Russia. There's a taste and love for the sea, so there's a middle-upper class that buys a boat not as a status symbol but in order to go cruising. These are markets experiencing considerable growth, mainly centred around enthusiasts interested in 20 to 30 metre vessels.

Are they more Benetti markets than Azimut?

No, both brands are doing well, because in those sizes we include both the big Azimut and the small Benetti boats. In the rest of South America the market moves in a different way, as a result of well known economic problems. Now and then Venezuela has positive bursts, but it is undergoing a crisis that is not only economic but political.

What about South East Asia?

I'd say the market is stable, indeed in stable growth. Passion for the sea isn't so widespread, maybe because of the heat and the humidity. Then there are pirates and a lack of equipped marinas. A mixture of passion for sailing and the demonstration of opulence. I'd say that in South America there's passion for the sea, in Russia it's passion for exhibition and in South East Asia we're halfway between exhibition and passion for the sea.

And the Middle East?

We're making sparks in Dubai, where entrepreneurs and local authorities have invested in a great many facilities and structures. Our target is 40 boats a year, of all sizes.

What about India?

We've yet to enter the market, but we already have plenty of contacts. India could become a bigger market than China, because the Indians have more affinities with the sea than the Chinese.

It's always a question of culture...

At present India is lagging behind, while in China there are flourishing projects for tourist ports, seaside holiday homes, clubs. But in my view India, in consideration of greater love for the sea, could quickly catch up on lost time.

To complete the foreign picture, tell us about South Africa and Australia...

The latter is a fast growing market and the Azimut-Benetti Group is present with a very able dealer. But since Australia is part of the Commonwealth, the competition from English yards is strongly felt. South Africa, on the other hand, isn't ready yet. I was there in summer and went to see two or three marinas. I noted local vessels, poorly built, and very few imported ones, maybe because the country is still undergoing the passage from apartheid to western democracy. And the process is still slow.

Lastly, the European and Italian market. It seems to me that the trend is still positive...

It's still positive and has been made so by two macro phenomena: a government and a state administration which, maybe thanks also to Nautica's excellent work and the communication that all of us at the Italian Marine Trade Association UCINA carried out, have stopped seeing boat owners as bandits to be persecuted. The sector's optimum contribution to GDP has been fully evaluated which in our specific segment, as Vice-President of the Council D'Alema acknowledged, runs on Chinese development percentages. The other macro element came from Italian leasing. The two things went well together. I believe it would be a good system to implement in other sectors of production and small-medium businesses. As an entrepreneur I believe that by lowering VAT we could eliminate under the counter deals, as happened with boats large and small which are now perfectly above board from a taxation viewpoint. Though some people have attempted terrorism against boats, it seems that the present government too has maintained the presuppositions for the yachting industry and the tourism it brings to continue contributing effectively to the national economy.

With Italian leasing, however, it has become more convenient to buy a new boat than a used one. On the one hand there's the overvalued prices of the used boat, and on the other the tax advantages of leasing. This is why the used boat market is experiencing something of a crisis. There are many almost-new boats that are hard to sell, and this creates problems in dealers' operational efficacy. Can you confirm this sensation?

There are two sides to the problem: one positive and one negative. The message that leasing sales have increased is certainly very positive because it means that our yards can work outside of economic trend conditions. The negative aspect is that a used boat is sold with difficulty or not at all: this is an indicator that market growth is slowing down. When a market is very strong, the second hand product is never a problem. But when it slows down the second hand product is the first sign that something's changing. As you pointed out, there is in effect a slowing down in Italy. But on the whole it seems to me that the figures tell us that the market is still healthy, especially for medium-large vessels - between 15-18 and over 20 metres - and above all for foreign customers. If Italians still feel content in their relations with the State then they'll go on using this leasing which has greatly facilitated them.

There are leasing companies that have started financing used vessels too. What do you think?

As is well known, I was responsible for bringing about that law, and it says nothing about a difference between new and used. Clearly the operation with the new is more economically attractive, and while a private vendor can't recover the VAT, a selling company can recover it to the extent of 6%, which is added to the tax already paid for the new boat.

Let's leave the subject of the boat market and take a look at the little 24 metre Benetti ship which will be ready...?

The Legend, which will be ready in spring.

You presented the design last year in Cannes. How was the public response?

Good, excellent, in the sense that it was very well liked, but it's for a more mature market segment, people who want to sail in all tranquillity. It's the thorniest segment - 20-30% of the current market - because it's made up of experienced owners. These vessels are for people who want to sail comfortably, in a seaworthy vessel but in silence, with style and elegance. From the interest aroused I'd say that it's a market somewhat still to be discovered, but for precisely this reason we need to supply a product that stimulates it, makes it grow. At the moment we're talking about a small fraction in comparison with the fast boat market, but with the right product it will grow...

Is it a market limited to 24 metre vessels?

I don't think so. If we look at the production ratios between displacement and planing hulls we see that in the 50 metres and upwards range a planing hull is an absolute rarity. Going down to 40 metres we find 70% displacement and 30% planing, while at 30 metres we have 70% planing and 30% displacement. In the 24-35 metre range 80% are planing and 20% displacement. But I think the displacement market will broaden, especially if a yacht becomes more an investment than a consumer product. The idea of having a well built craft, perfectly soundproofed, very comfortable and functional, with timeless classic interiors, will become an increasingly attractive one.

When you reach full production, how many of these 24 metre ships will you produce per year?

In Fano we could build up to 5-6 a year.

Other Benetti designs in composite and in metal?

We've got two very important projects under development. One is a 41 metre that should inherit the customers of the classic 35 metre, of which we built no less than 43 examples, a record I believe in the history of yachting.

A great stimulus for your competitors I imagine.

Photocopied by everybody. I think it's the most imitated and copied boat of all time, which is a great satisfaction for me and the architect Righini, inasmuch as it is a boat we conceived almost 9 years ago. We build about 6 or 7 a year, and we had to duplicate the moulds as a result of such a high demand. Now we're doing a 41 metre boat precisely for a clientele that wants to go on to a bigger vessel. And then - hear this, hear this - we're also doing a fast Benetti open. I don't know if the yard wants to announce it, so let's say it somewhat on the quiet.

Is it a fast, high performance boat?

High performance with a design very different from the others.

By Righini?

No, this time by Stefano Natucci, which is to say a joint effort by Natucci-Michael Peters. Natucci is Benetti's big boat designer and Peters is an expert in fast American boats, a man who has designed several seagoing Formula Ones. The American Buzzi let's say.

What about the new 130 metre that Fincantieri has announced for sale. Can you tell us something more?

The buyer has imposed absolute confidentiality, but I can tell you that at 133 metres it is the biggest pleasure craft around. I may add that it will be a hi-tech product with several unusual features, such as an on-board submarine for exploring the seabed, and will fully exploit Fincantieri technology and Benetti know-how.

To what extent was Benetti involved in the operation?

We contributed all our know-how regarding the market, brokers, vendors, the training of these people and access to markets. We gave Fincantieri information on the right prices and designers, the appropriate relationships to maintain with yachting clientele, which are different from the cruise ship sector. In a word, there are different rules to apply. I'd say that so far the in-tandem approach has worked well and ought to improve continually in the future, because we have projects and many negotiations under way for other boats, not to mention the idea of doing one together.

When you presented the agreement with Fincantieri in Florida, you also announced that Benetti would be getting into the military market, building vessels for that sector...

It's true, it's something Fincantieri actually stimulates us towards. For the moment we haven't begun because it isn't worthwhile entering that sector while our own is going so well. At present we wouldn't even have the resources.

Will it be a card to play when the pleasure craft market flags?

Precisely. For now we're hanging onto this agreement and the know- how which Fincantieri will give us at the opportune moment.