The spread of the novel coronavirus has led to the “radical disappearance of the HoReCa channel” that could result in a more than 50% loss of wine sales in Europe alone, said Pau Roca, director-general of the Organisation for Vine and Wine (OIV). He made his remarks at the annual OIV press conference on Thursday.
This year, the press conference was streamed live, rather than taking place in Paris as it normally does. The event is the OIV’s ‘state of the union’ moment, where the director general gives an update on trends in world viticulture.
“I normally like to think of the data and conclusions we present as a road map on which the sector makes its journey,” said Roca. “Nevertheless, this year, and more precisely, right now, we are witnessing a change which will impact significantly the life of farms and vineyards as well as grape and wine production.”
The worst effects were likely to be felt in Mediterranean countries, he said, because their wine sectors rely so much on sales through bars, coffee bars and tourism, “which will be strongly limited,” even after the lockdowns end.
While wine sales had risen in supermarkets and grocery stores, he said, “they do not compensate for the losses of on-trade sales.” Roca said that one reason is that the off trade is characterised by a very limited wine offer.
He then went on to present the OIV’s overview of the world of wine, before later returning to the impact of the crisis.
Long-terms averages are, well, average
The total area under vines – which includes for table grapes and raisins – was 7.4m ha in 2019. “The world vineyard [area] has stabilised since 2016, mainly thanks to programs of restructuring and grubbing up of vineyards in the EU,” said the OIV report that accompanied the press briefing.
The top five countries – Spain, China, France, Italy and Turkey – now account for more than 50% of the total vineyard surface in the world.
Wine production is also relatively balanced, with a production in 2019 of 260m hl – a decrease of 34m hl on 2018, when production hit historic highs. The three top wine-producing countries – Italy, France and Spain – account for almost 50% of total world production.
Consumption looks stable, with world wine consumption hitting 244m hl in 2019, marking a mere 1% increase on 2018.
Five countries, it turns out, are doing 50% of the drinking. The USA, France, Italy, Germany and mainland China are doing the heavy lifting, while the UK drinks just 5% of the world’s output.
After a dip in 2018, world wine exports grew again, reaching a new high of €31.8 bn ($34.2bn). Bottled wine exports increased marginally (0.5% in volume and 0.7% in value); bag-in-box dropped a whopping -13.1% in volume and -1.2% in value, while bulk wine sales jumped by 4.9%, though they declined in value by -6.6%.
One interesting figure presented was the “market internationalisation index”. In 2019 it was 43%, meaning that just over four bottles in every ten came from somewhere other than the place they were being consumed.
The global sparkling wine market
The OIV’s focus this year was on the state of the sparkling market, where the news was generally good. Sparkling wine hit 7% of the global wine market in 2019, a growth of 57% since 2002. There were no surprises about who was benefiting: Italy, France, Germany, Spain and the USA, which are the major producers. Production is particularly surging inside Italy.
As for who is drinking all the fizz, the answer is that Germany, France, USA, Russia and Italy account for more than 60% of consumption.
Roca noted that Japan was a country to watch in this regard, as it is beginning to embrace sparkling wine.
Climate change bites
The OIV also presented some preliminary figures from the 2020 harvest in the Southern Hemisphere and the news wasn’t good – the grape harvest was down everywhere, except for South Africa and Uruguay.
“The decline of Argentina and Chile are probably for climate reasons,” said Roca, noting the -10.9% fall in Argentina, and the massive -12.1% drop in Chile. Australia was down -3.9%, which Roca said was probably due to the ongoing drought and then bush fires.
In his closing remarks, Roca said that the development of distance selling may help staunch some of the bleeding from the on-trade. Still, he did not shy away from the grave impact the novel coronavirus has had on wine, with its deadly impact on both the on-trade and wine tourism.
“At the moment, everybody agrees that the lockdown has had a destructive effect – and it’s probably irreversible,” without dramatic government action, he said. “The growth reduction is comparable to that of the end of World War II. While some countries are starting to open, it does not leave much space for optimism – the largest consuming countries have been the most affected.”
Roca also asked the wine trade not to do anything to suggest that wine consumption is good for health. “Nothing in this environment of fear and grief justifies messages on health-related issues in any direction,” he said. “I must emphasise that messages of the positive effect of wine consumption are irresponsible,” and that “it is immoral to seek opportunities based on thousands of people who are suffering.”
He ended the press conference by hoping that this current crisis could lead to a better awareness of the risks of climate change. “Global risks should be addressed with global capacities and intense international cooperation, particularly between the scientific communities,” he said.