European Wine Producers Face Crisis

Although wine is undoubtedly a source of comfort for many during these days of lockdown, major European wine producing nations are facing a crisis before the 2020 harvest season even looms into view. Internet and off-licensed sales have boomed, but almost all other sales channels have closed as vineyards attempt to maintain production without access to many revenue sources

When the coronavirus pandemic hit European shores and governments instituted lockdowns, nearly all on-trade routes for wineries shut down in addition to direct sales at the vineyards themselves, which would normally be booming with tourists this time of year. This has left winegrowers with a growing stock of unsold products. Lorenzo Cesconi, vice president of the Italian Independent Winegrowers Federation, explained that sales to bars, restaurants, hotels, and cafes account for more than 50 per cent of all wine sold by Italian wine producers – a figure he says can’t be made up by retail sales alone.

“At the moment, the main issue is that the on-trade channel is basically non-existent, and so are direct sales at the winery”, says Cesconi, adding that members have to cover all the production costs associated with wine production but aren’t able to benefit from revenue streams.

Across Southern Europe, spring means buds are breaking through on the vines, along with the delicate tending to that is needed to nurture the grapes. In France, this means vine-tending in the new reality of social distancing. In Burgundy’s Gevrey Chambertin vineyard, as elsewhere throughout Europe, growers working the vineyards are having to adapt. “In the vines it is one person to a plot, or else we leave two to three metres space if we have to work in the same place. In addition to tying up and fixing trellising, we are also starting to plough. I have two tractors so each driver has their own”, explained vigneron Nicolas Rossignol.

According to Richard Siddle, editor-in-chief of trade magazine The Buyer, conditions are not likely to improve for any major wine producing nation for the foreseeable future. “As each country is going through their own Covid-19 crisis, this is likely to go on for many months, if not through at least the end of the year. Yes, grapes will be harvested, wine will be made and shipped, but the big issue is how fast will individual markets be able to sell and push the wine through their own supply networks. This will depend on how well or badly the virus is being contained in those countries”, says Siddle. “We, as a global wine industry, really are all in this together.”

Despite the difficulties currently being faced by the wine industry, some believe the pandemic is an opportunity for the sector’s revolution. “I foresee a more consumer-focused model that capitalises on the opportunities of digital technologies and which will bring a welcome future for the traditional wine industry. It has been stagnant for 100 years, trapped in the same multi-tiered distribution systems which are being exposed through the outbreak of Covid”, says Michael Baum, owner of Burgundy’s Château de Pommard. Copyright: KikoStock /

Wine in Lockdown

In Spain, second to Italy in experiencing one of the worst grips of the pandemic, production has continued but in a vastly changed environment. Miguel Torres, of Familia Torres in Catalunya, said at the end of March – before stricter lockdown conditions were enacted – that the firm was still working “but not at 100 per cent. Only the vital staff comes in. Most of the people are working from home. The bottling lines and the expedition warehouse are operative but under strict measures of security and control”.

Other major Spanish wine producers, such as Cune and La Rioja Alta, have pledged to keep their employees working and at full salary for as long as possible. The complete shutdown of the Spanish – and broader European – economy means that the forecast for salvaging anything from 2020 is very remote. “Many orders have been cancelled”, said wine producing CEO Guillermo de Aranzabal. “Domestic sales are almost non-existent. I guess sales will be reduced by more than 60 per cent.”

And yet, some with an entrepreneurial mind-set are seeing opportunity for the wine industry to revolutionise and adapt from an inflexible business model. Michael Baum, owner of Burgundy’s Château de Pommard and former tech entrepreneur, anticipates that the necessary shift for wineries to a more streamlined business-to-customer model will endure post-crisis, with user-friendly and value oriented platforms to the fore.

“I foresee a more consumer-focused model that capitalises on the opportunities of digital technologies and which will bring a welcome future for the traditional wine industry. It has been stagnant for 100 years, trapped in the same multi-tiered distribution systems which are being exposed through the outbreak of Covid-19 and frankly benefit the middlemen much more than the producer or the consumer. Covid-19 is the impetus needed to shift the wine industry into a new future where it can thrive in a world of increased volatility, demand fluctuation, climate change consciousness, and yet desire for consumers to engage in new experiences,” says Baum. With winemakers turning to bespoke apps and zoom calls to promote tastings and market and sell their product, it seems that change is occurring quickly in a relatively traditional industry.

Though the wine harvest is still some months away, European vineyards are hoping the continent will be in a far better place before September comes around. Even still, the residual economic crisis that the pandemic has sparked is sure to affect all aspects of the industry. Europe accounts for approximately 30 per cent of global wine volume, and the EU has forecast consumption this season to be 8 per cent below the five-year average.

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Ruairi Kavanagh

Ruairi is an Irish writer, editor and author with 25 years of experience across national and specialist media. He specialises in reporting on matters relating to education, development,emergency services, international affairs, defence and security with particular interest in European affairs, the Balkan region, the Middle East and Africa.

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