The Effects Of Coronavirus On The Wine Business Keep Coming At Us

Each day, each moment, the coronavirus and its effect on the wine and food industries keep coming. Drizly has been updating me on its business performance over the past week. The latest from Liz Paquette, Drizly’s Head of Consumer Insights: “Drizly sales are continuing to accelerate as our customers rely more and more on home delivery. The latest trends for the past week showed that Drizly sales are growing 4 [times] the growth rate from earlier in the year. The latest 3 days [March 14-17] show Drizly is growing 6.5 [times] the growth rate from earlier in the year.”

On Monday, March 16, Gross Merchandise Volume was up 500% over last year. Paquette says, “…consumers are placing larger orders, now spending on average 50% more than normal on Drizly, which indicates a “stock up” mentality.”

Drizly expects the buying mania to continue, but with businesses shutting down or curtailing and people losing their jobs, if lockdown and social distancing lasts beyond a few weeks, the party will have to end, even if we all receive $1000 drawn from somewhere in government deficit coffers. With tasting rooms, restaurants and bars closed, many parties have been put to an end already, including what appear to be large parties but really are large business learning and networking events: conferences.

In response to the many wine conference cancellations and postponements, renowned British wine writer Robert Joseph and wine marketing leader Polly Hammond created the ‘Real Business of Wine’ webinar series.  I attended the first on March 16, and intend to be there for succeeding meetings. 

Surely, wine tastings are a feature at conferences, and many conferences operate special days for consumers to take part. But the aim of the conference is to educate through seminars and informational activities, as well as to do business—a great deal of wine buying and relationship building (or relationship continuation) take place at wine conferences. That facet of the wine conference was the overarching concern of the panelists in the first ‘Real Business of Wine Series’ meeting.

Ian Ford, General Manager and Co-Founder of Summergate Fine Wines, spends a great deal of time in the Chinese market. He was there in 2003 during the Sars virus crisis. He said that between April and September in 2003, the Chinese wine business was on life support, but it didn’t take long for the business to get back on track. This time, the coronavirus crisis comes after a year-long decline in wine sales in China. Ford said the impact from this crisis was quick, calling it “…a virtual collapse in the beverage market in China…from 0 to 60 quickly.” His information indicated that 60% to 70% in the Chinese wine market have seen a 90% decline in their business.

Stevie Kim, Managing Director of VinItaly, one of the most successful and dynamic wine conferences, recounts the somber mood in Italy, where the virus had arrived in speedy force. Referring to trade barrier problems, Kim said the Italian wine business dealt first with “…Trump disease [trade] but now it’s coronavirus/Trump disease.” She’s trying to get producers to think and plan in advance for the end of the crisis, but wonders: “What happens to mitigate lost costs?”

A conference illustrates how much wine is a people to people business, but Kim said a place for digital conferencing needs to be found. That sentiment was echoed by Portuguese food and wine consultant Andre Ribeirinho. As soon he learned ProWein  was canceled, Ribeirinho created a digital conference that attracted 80 Portuguese wine producers immediately, some small and not so digitally savvy. He told the rest of us that while we were at this webinar, “…about 20 digital meetings took place today…” 

Ribeirinho sees the present crisis as a potential catalyst not for ending the on-site wine conference, but to introduce to a rather recalcitrant wine producing industry the wonders of digital marketing. He claims to be building a bridge between offline and online, “…by extending what happens at trade fairs using digital technology.”

Isabelle Legeron, who organizes wine fairs for the natural wine movement, pointed out that while most organic/natural wine producers are small, they rely more on exports than on local markets. The fair or conference is their best shot at meeting buyers throughout the wine buying channels, and at many fairs, they also meet directly with consumers. She says, “By shutting them down [the fairs], how they get business done is up for grabs.”

Decanter Magazine’s Bordeaux correspondent, Jane Anson talked about the shutdown of the annual Bordeaux en primeur fair, but she also expressed concern for vineyards. She raised the serious question: how will vineyards fare during the crisis, “…as people can’t get to work, or for those who do work, how do they practice social distance during a work day?”

When the subject turned toward the future, Felicity Carter, editor at Meininger Wine Business International, was pithy: “…Coronavirus comes during fundamental weakness in the wine market. This crisis should create more defensive strategies…When this is over, flights will be cheaper and wine tourism will become larger.” She also said, “Money is cheap now. It’s a good time to buy assets…wine industry consolidation will heat up.”