International Trends - Europe
A SEISMIC SHIFT For the European Drinks Industry
EVEN WHEN THE NEWS BEGAN SHOWING THE CHAOTIC SCENES FROM ITALIAN HOSPITALS, MOST EUROPEANS THOUGHT OF THE CORONAVIRUS AS SOMETHING HAPPENING ELSEWHERE. AND THEN, ONE BY ONE, THE BORDERS CLOSED AND THE LOCKDOWNS BEGAN. Words Felicity Carter`
The impact on the wine trade was immediate. Online sales, already running at double digit growth a year, exploded– one Italian company, Winelivery, saw sales rise to 240% or more. In the UK, some wine sites were so overwhelmed they temporarily suspended sales. In the German speaking countries, it was business as usual for a while, and then online sales ticked up. Food retailers also saw wine practically walk itself out the door. For everyone else, the pandemic was a catastrophe. Importers were left with stocks but nowhere to place them, wineries were left with wines destined for export markets that nobody came to pick up, and the on trade, of course, was shuttered. Across Europe, wine sales plunged by 50%. In Champagne, sales cratered by as much as 70%.
18 drinks trade
The financial impact wasn’t as dire as it might have been, thanks to the economic shock absorbers that swing into action when times are tough. In Germany, for example, companies could apply for Kurzarbeit, meaning “short work”, where the government picks up a significant portion of the payroll so that workers can keep their jobs. In France, the government allowed small and medium sized wineries to defer tax and social security obligations, while also allocating €140 million for crisis distillation. Vineyard and winery workers were theoretically allowed to keep working – if there were workers, that is. In Austria, workers from neighbouring countries who lived 30km from the border could come to work every day, as long as they returned home at night. But workers from further away were automatically subject to a 14-day quarantine period – which meant the supply of workers dried up. The Austrian government built a jobs portal to try
and match the many unemployed Austrians with rural jobs, as did other governments, only to discover that the locals struggled with the work. Charter flights were scrambled to bring Eastern workers back to fields and vineyards in the UK and Western Europe. As of June, the continent is opening, with cafes, restaurants and bars able to trade again, subject to social distancing. By the end of the month, cross-border travel will be possible. But, as elsewhere, consumers are going out less, and trading down when they do. The real test for the wine sector will come this summer. Many small wineries rely on the sales generated by the wine and other festivals, all of which have been cancelled. And nobody knows when wine tourism, which had been the fastest growing segment of the wine industry, will rebound. These are problems that wineries everywhere face, of course. The biggest difference is that the Europeans have generally
