No matter what you call it, Coronavirus, COVID-19, or the pandemic, it is having an effect on everything and everyone. Although the environment has been helped in a positive fashion, and more attention is being paid to health care and other essential workers, and seniors in retirement homes, the vast majority of effects have been nasty.
With the production of this last year’s wine supply in progress, the situation heavily impacts the existing product stocks of the winemakers looking to sell the wine reserves of 2018. However, due to the recently applied measures imposed by most countries, the biggest wine producing countries – Italy, France, Spain and the US – have seen sales decline steadily.
Mid-spring to early autumn is when wineries here in Canada do most of their business. However, with wine tours, tastings and exploration being limited or completely on hold for the foreseeable future, the number of visitors to wineries will be drastically reduced along with associated wine sales. The sale of other merchandise, such as food and clothing, will also be negatively impacted.
The larger wineries that produce enough volume to distribute their products through the distribution channel for sale to consumers in wine and liquor stores will be less impacted than the smaller wineries that rely totally on customers coming through their door. To compensate for the reduced walk-in traffic, wineries are turning to online sales. Wineries that already had online purchase capability are enticing customers by offering free delivery, while wineries that did not previously have the capability are scrambling to make it available. The smaller, lesser known wineries are still at a disadvantage because if consumers are not already familiar with them and their products, they are less likely to be searching out their web site.
For consumers who do know what they want, they can have a wide selection of wines available to them without having to travel to the winery to get them. The only caveat is that the post office will currently not provide home delivery so purchasers will need to pick up their wine at their local post office.
Some of the more sophisticated winery web sites are adding virtual tours of their cellars to further entice their customers.
In Europe in particular, increases in direct sales will reduce the middleman. For example, in France the wines are first distributed through courtiers (brokers) who take a small percentage of the cost. Next the right to sell the futures is passed on to the négociants (shippers) who set a new price for the wine, referred to as the ex-négoce price. With very few exceptions, no one deals directly with Bordeaux’s châteaux; they deal with the négociants. However, if the châteaux offer their wines online direct to consumers, the traditional distribution system is circumvented, potentially providing more profit to the wineries while enabling consumers to purchase at less cost.
With the tightened measures imposed by the government banning all public and private events, including restaurants, bars, sports facilities and cultural spaces, wine sales were obviously negatively impacted. Even when these establishments begin to allow patrons once again, the reduction in the numbers permitted within an establishment at any one time will impact sales. However, if take out and home delivery options, which were introduced to help counter the negative impact of COVID-19, are allowed to continue, it will help soften the effects of the reduction in patrons.
Canadian wine competitions, both provincial and national, are postponed indefinitely. Many wineries, especially the newer or lesser known ones, rely on these competitions to better establish themselves and gain credibility. The cancellation of these competitions, even for just one year, could have a catastrophic effect on some of the smaller, lesser known wineries as there are buyers who are heavily influenced by award recognition.
In France, COVID-19 is having a devastating impact on Champagne’s economy. With weddings and other celebratory events being cancelled or postponed all around the world, there has been a massive reduction in demand for the famous bubbly.
The impact of the virus has allowed for a strong feeling of solidarity to emerge in the wine industry as it has in other areas. A number of wineries have donated part of their profits to the hospitals and other related health care providers. In Italy, Inserrata, a family-run organic farm in Tuscany, is donating all its profits generated by the sale of their Sangiovese rosato “Inebriante” to the Italian Red Cross. Instagram channel Cantina Social has started the iorestoincantina and project to put in touch wineries and customers, while donating 10% of the revenue to the winemaker’s local hospital or to Italy’s Civil Protection Department.
Due to the uncertainty in the evolution of the spread of the virus, it is yet too early to predict the future of the wine industry. However, one thing for certain is that life as we knew it won’t be returning anytime soon.