Wine world after COVID-19

2019 has been a positive year for the wine industry, a year in which consumption and production were balanced, and a new record in commerced volumes, with Italy as the world leader, was established. The deep fall of Ho.Re.Ca. and enotourism of this year, though, will radically and permanently change the world of wine: consumption, prices, profits are expected to lower, especially in Europe, between 35% and 50%.

The World Wine Association is analyzing the first months of 2020 to estimate the real effects of COVID-19 and economic crisis on the wine industry. As we discussed in this article about the first effects of the virus on the international market and this second article about the small Italian winemakers’ situation, the natural first-seen effects of the pandemic are deep fall in export and consumption of wine but also in its production.

The great 2019 perspective

Last year the international exchanges have been raising to 105,8 hectoliters for a total value of 31,8 billion euros, the total wine consumption was around 244 hectoliters, especially high in Italy and France where production stabilized after two difficult years (for opposite reasons) as 2017 and 2018. Unfortunately, the events of 2020 will have devastating effects.

Change in the distribution channels

The lockdown meant (and in some places currently means) no income for families, which translates into a drop of the purchasing power, of the average prices, of the value of the transactions, and consequentially of the margin for wine handlers and wine producers. A new need for optimizing costs and margins will affect and almost surely change the distribution channels as we know them. Will e-commerce be the path to walk? This is still unsure.

Harvesting in the south Emisphere

COVID-19 has hit the southern part of the world right in the grape harvesting season. The safety measures that governments had to take to prevent the spreading of the virus didn’t spare the fruit producers, who had to stop their harvesting or, the “lucky ones", renounce to the help of their workers. Statistics say that Argentina and Chile will lose 11% and 12% of the production respectively, while Australia (also hit by the great fires of the last months of 2019) the 4% and New Zealand the 2%.

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