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Coronavirus: The Impact of Covid-19 on the World’s Wine Trade

Coronavirus has had a devastating impact on humanity and business across the globe, and the wine trade is one of many sectors profoundly affected. Here, wine writer Wayne de Nicolo offers his insights into the effect of Covid-19 on the world’s wine trade…

Lead image: Ridgeview (photo: Carol Sachs)

Wine. It’s what many of us have been reaching for to get us through lockdown. But could coronavirus mean our favourite tipple might start to run dry?

Fortunately, the wine trade has had one advantage over many other industries in that, generally, the governments of wine producing nations have decreed that wine production should be protected as an essential industry.

This means that it may continue operating during the periods of lockdown and other restrictions. But that has still left producers with a myriad of other problems to deal with.

Despite us swigging more of it at home, there has been a considerable downturn in revenues, and business generally, which is inevitably going to have longer term consequences for producers and all other parts of the industry.

Huge wine fairs like Prowein in Germany and Vinitaly in Verona were cancelled and the London Wine Fair in May was postponed.

All the other trade tastings that usually take place during through the year, which are the biggest showcases for many producers and an indispensable part of the job of wine writers, are now on hold or cancelled – social distancing aside, jettisoning mouths full of wine into spittoons is somewhat frowned upon right now.

Italy, the first European country to be hit by the virus and to go into lockdown, is the biggest exporter of wine by volume in the world and second after France by value. In 2018 it produced 7.56 billion bottles of wine of which 37% was exported, but now, shipments to countries abroad are encountering problems, as is transportation by road with long queues at borders.

Inevitably, the closure of restaurants and bars in a country where they are part of the social fabric has led to a large drop in revenues, which is only partly offset by the related increase in supermarket sales, as is the case in the UK.

Similarly, wine tourism – tours around vineyards, dining in the winery and cellar door sales, which are big earners in Italy and other countries – is out of action.

‘Despite us swigging more of it at home, there has been a considerable downturn in revenues’

The volume of wines held in storage pending bottling has risen to 150% of annual production and threatens to present space problems for wineries when it comes to the 2020 harvest this autumn. A significant part of this stock is likely to be distilled, which is good news at least for lovers of grappa.

In France, one of the most noteworthy effects of the pandemic is delay of the Bordeaux en primeur season; the period when the latest vintage of the wines of most top estates, and of their prices, are released. This will have a knock-on effect in the UK on the importers of those wines, and those who trade in them, as the UK claret market is huge.

As for viticulture, there have been reports from some estates of only one worker being allowed per row of vines, sometimes two rows, inevitably increasing the duration of weeding, tying up canes, trimming and other such early summer work.

Many Australian wine producers were hit hard by the bush fires of recent months. When it came to harvest some had to leave grapes on the vines due to smoke taint (renowned wineries Tyrrell’s and Clonakilla (both NSW) lost respectively 80% and 100% of their 2020 production).

Then, just as the wine industry was recovering from the bush fires, it received a second massive hit from the coronavirus pandemic. The effects have been similar to those in Italy and France.

Trade body Wine Australia has cancelled all promotional events internationally until September. And sales to one of Australia’s major markets, China, have been hit hard due in part to the ditching of corporate events.

The New Zealand government has imposed strict protocols on winegrowers, including the recording of living arrangements and contacts of all workers in wineries. Some have been moved to isolated accommodation including caravans on site.

Work breaks are staggered to reduce the size of gatherings. Registration is required with the relevant ministry which has been carrying out verification on site of safe practice. All this has come at a big financial cost, which producers will seek to offset by increasing future exports.

Here in England, the impact has been every bit as bad as elsewhere. The experience of Ridgeview Wine Estate in Sussex, which should have been celebrating its 25th anniversary with the opening of a new winery this year, is typical of many producers.

While they have been able to continue with restricted work in the vineyards (including putting out frost candles on cool evenings to protect young buds), Ridgeview lost a significant amount of revenue overnight with the closure of restaurants, hotels, vineyard tours and their cellar door, and may lose a third of predicted income for 2020. Fortunately off-trade sales are unaffected and online sales have improved.

With cashflow always a challenge in the wine trade (wines are often not ready for sale for three or more years), they have needed to obtain inventory finance to enable them to bottle the 2019 vintage and avoid business interruption in future.

I have just tasted the Ridgeview Bloomsbury NV, which has the hallmarks of accomplished winemaking, and that augurs well for a return to good times when the pandemic is over.

One positive thing apparent from various reports I have read on the effect of coronavirus on the wine industry, is the good humour and stoicism of those who produce wine. They are, in fact, necessary characteristics in those who produce wine.

There is an edifying demonstration of that in Vintage, a feature-length documentary about the incredible highs and heart-breaking lows of making world-class wine on New Zealand’s Villa Maria estate in Marlborough. Watch it here.



 

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