Rollo Gabb
managing director, Journey’s End/Cape Wine Exporters, South Africa
Before the Covid-19 pandemic struck, the UK hospitality sector was a key commercial centre for our South African wines. Sadly, the on-trade across all our markets disappeared in April 2020; given the stock that many operators hold, there has been a very slow pick up since lockdown restrictions eased, as their overall sales remain low compared to 2019. Yet there is significant variation: regional and residential areas are actually doing well in terms of on-trade sales – particularly the South of England – however, city centres and most notably London remain well below normal with a huge loss of tourism and people who are now working from home. The loss of tourism and travel retail markets has hit everyone hard. Once lucrative export destinations such as the Seychelles, Maldives and Dubai are hugely depressed and whilst the situation is improving very gradually, it is a far cry from 2019 levels.
On the plus side, the UK retail market saw significant spikes in sales of lower-priced wines between April to June. This helped compensate for the complete disappearance of all travel retail and on-trade business. As elsewhere, those retailers with a decent online footprint fared particularly well, as did supermarkets who were best suited to supply household requirements during the depths of lockdown in the UK. Interestingly, we have seen increased demand in both premium and lower-priced wines. However, it is clear that larger format wines, particularly bag-in-box, there is exceptional growth, with people buying bigger formats to last them longer. Multibuy offers have also performed very well at the lower end for the same reason – people are shopping less, but buying more.
As a company, all we could do is refocus our emphasis towards online and retail as the hospitality sector became moribund. That being said, as the on-trade is starting to open up in certain markets around the world, most notably Asia, we are able to slowly rebalance and allow a broader focus on more channels.
Leo Alzinger
owner, Weingut Alzinger, Austria
The US and Belgium are important markets for Alzinger: we’ve seen clients increase the frequency of orders in the US but reduce the volume. Meanwhile, our client in Belgium simply took a year’s supply in one go, repeating the pattern of previous years. The liquor stores were allowed to remain open in America during this time, which obviously helped. Moreover, the US market is a very social media-driven market and due to our social media presence, our turnover has not changed. In Belgium, we’ve been selling higher volumes of our Grüner Veltliner Ried (vineyard) Steinertal Smaragd, according to our importer, while volumes have remained the same in the US. But overall, I don’t think Covid-19 has affected the sales mix in these particular markets. A quick response in Belgium has enabled us to cope with the decline in hospitality sales as our importer managed to target consumers through the DTC channel and then delivered the orders personally.
Sadly, our sales in the Spanish and Canadian markets have collapsed. In Spain, this is simply because their domestic industry can satisfy the current reduced demand – they have no need of imported wines. However, we feel our importer in Canada has not been proactive enough in developing the DTC sales channel. Due to our long-term relationship with our Spanish partner, we are confident that there will be an improvement as soon as the pandemic is over. It is too soon to conclude whether our sales base in Canada will recover, but perhaps it is time to find a new importer.
Giovanni Geddes da Filicaja
CEO, Ornellaia, Italy
Covid-19 has not severely affected the global market for fine wine – at least not in our experience. The demand in European markets for Ornellaia is pretty much in line with figures in 2019, while sales in Asia and Canada are currently ahead compared to last year. Yet each market reacted more or less in the same way as the pandemic progressed. There was an initial panic and a resulting slowdown, but then sales returned during the third quarter. The slowdown in spring, especially with the closure of restaurants in most markets, resulted in lost revenue. Sales picked up during the third quarter, but the final quarter will be more uncertain because of the local lockdown in most of our target markets. Our relatively positive performance (-5% overall compared to 2019) is cause for optimism.
Of course, the pandemic has brought changes to consumer behaviour and distribution channels. Sales in our export markets have recovered well after a slow spring and early summer, but by the end of the year we expect Italy and the US to show a decline in revenues compared to 2019. Any decline in sales is directly linked to the closure of restaurants in both markets. In Italy, in particular, the buoyancy of demand is very much dependent on tourism from overseas as well. According to Altagamma (Consortium of the Italian Luxury brands), 60% of luxury purchases in Italy are made by foreign visitors, especially from the US. We do not expect the situation to improve until the second half of 2021. A lot is dependent on the vaccine, of course, but also everyone’s ability or willingness to travel. Tourism to Italy from European countries might return, but I doubt we will see the return of American or Asian tourists until 2022.
In addition, sales at the higher end of our portfolio have slowed slightly, but we are progressing faster on our second and third wines. Customers recognize the pedigree of Ornellaia and this added value is transferred to the more affordable wines such as Le Serre Nuove dell’Ornellaia and Le Volte dell’Ornellaia, volumes of which are growing compared to last year. We have seen some trading down and Ornellaia has not benefitted from the boom in ecommerce given the higher average price of our wines. Nevertheless, our clients have been more active at selling direct-to-consumer. The online DTC model has grown but the selling average price has gone down.
Eduardo Stark
export director,
Montes & Kaiken Wines, Chile
The pandemic has significantly impacted the sales mix in the Asian markets. The increase of wine consumption at home seems to have driven sales of more easygoing, less expensive wines. But Japan and Korea have remained important export destinations for us; their governments reacted quickly to the pandemic. From the very beginning in March they started avoiding public gatherings and visiting restaurants. Therefore, the impact in the on-trade and banquettes could be felt at a very early stage. Naturally, on-premise wine consumption shifted to home consumption. The biggest winners were the big supermarkets and convenience stores. In Japan, online started to capitalise on this situation at a very rapid pace. Unfortunately, it’s still not allowed to sell alcohol online in South Korea*. Of course, it all depends on how strongly you are exposed to the hospitality channel. Luckily, thanks to a diversified distribution that our partners have built up for Montes and Kaiken in these markets, we have seen results above expectations under the circumstances.
However, sales have collapsed in the UAE and Brazil. The hospitality and travel sector has been hit hard in the Emirates; very quickly, sales virtually stopped, leaving a thin lifeline of retail (licensed stores) business for expats. In Brazil, we have been historically overrepresented in the on-trade, which has been a huge pride at Montes. Unfortunately, such high exposure has backfired in the pandemic. A quick reaction of our importer to chase the online sector helped to mitigate the shock, but still cannot fully compensate the loss of sales in the on-trade. The lack of travel retail has especially had a negative impact in the mix.
In contrast, Germany has been a rollercoaster. Like the rest of Northern Europe, sales were hit in the on-trade by the lockdown and online retail took its place. The most extraordinary impact could be seen over the summer period. The ‘staycation’ phenomenon made the usually rather quiet months of July and August more comparable to our pre-Christmas season in some cases. The partial opening of the on-trade, especially those outlets with open-air capacity, found themselves running a decent business again, helped by benevolent weather which extended all the way through mid-September. If Germans are confined to spending Christmas at home in 2020, without the usual trips to ski resorts and the mountains, we expect a similarly buoyant period.
Interviews by James Lawrence
* Editor: South Korea has since lifted the ban.
