Cancelled classes. Postponed tasting and dinners. Closed bars and shops. The coronavirus crisis is hitting China's wine trade hard. Another blow came on 4 February when top wine show China Food & Drinks Fair in Chengdu, supposed to open in late March, was postponed indefinitely.
Organizers claim CFDF attracts some 3,000 exhibitors and 300,000 visitors and does RMB20 billion ($3bn) in deals each year. Almost everyone says the fair is crucial for the domestic wine trade.
Part of the appeal of Tang Jiu Hui, as it’s known in Chinese, is its links to a wide range of sub-distributors, says Koala Yao, who works in French wine sales at Castel. "You can definitely meet potential customers and, with the right follow up, get them established in two to three months," says Yao. "Now there are more new wine sub-distributors in tier-3 or tier-4 cities."
Castel and one its key importers had planned a big dinner with current and potential customers this year, says Yao. Now it will have to wait, at a time when the wine scene is already hurting from falling imports and local production.
Charles Carrard of Boisset intended to have both an on-trade and off-trade booth at CFDF. "Sub-distributors and support of existing customers are key for me," says Carrard. The booths symbolized a presence at an event 20 of his biggest clients were to attend, the kind of scenario that boosts competition in a sort of "who's going to order the most” way, says Carrard.
The postponement means delayed sales, though the coronavirus crisis already ensured that. "In the end we lose a few months of sales, but people won't have spent their money during this time anyway, so there is still hope for 2020," says Carrard.
Not all businesses can ride out big losses. Alberto Fernandez, founding partner of Torres China, says the current market may soften the impact of the fair’s postponement, as wholesalers are already loaded with stock.
"It's the lack of consumption and expenditure that will drag the industry down,” says Fernandez, and forecasts Torres China’s revenue will drop 80% in February and at least 50% in March. "Some people will be out of business for sure.”
But Tang Jiu Hui is nevertheless a barometer for China's wine trade and its delay throws a monkey wrench into its mechanics, says professor Ma Huiqin, a wine marketing expert based at China Agricultural University. She says it serves “complex functions” in the industry.
The spring edition is always held in Chengdu after Chinese New Year, a relatively slow time for the trade when it can gather to pursue new clients and catch up with old ones. But the longer the fair is delayed – and Ma points to the 2003 SARS crisis, where business in general didn’t return to normal until May – the more it encroaches on the autumn edition, which changes cities each year.
"The last two years were hard. For Chinese wine, we saw a decrease in production and total value," says Ma. She says that 2020 seems even more difficult, because the important on-trade market has been hit hard as consumers choose to stay home.
With that plus people losing the chance to boost their businesses at CFDF, Ma says the trade will likely fall back on old customers, save their cash and hope to ride this out. "The high season usually starts at the end of August, early September [before the holidays]," she says. "But it seems like we might have lost half a year by then."