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At Montes Wines, a tasting typically involves sipping cabernet sauvignon in its feng shui-inspired building nestled between verdant, rolling slopes in Chile’s Colchagua Valley.
Now, with much of the world in lockdown, tasters in Brazil, Mexico and Germany are swishing and swirling in front of laptops as the winery joins the global trend of using meeting apps like Zoom to connect with clients.
"They have the same wines that I’m tasting, so we go together and we discuss the flavor and the color and the way it’s performing," said co-owner Aurelio Montes.
It’s a scene playing out around the world, from California to Cape Town. Centuries-old wineries and vineyards are reassessing their businesses at every step as the pandemic roils everything from labor and transportation to vital tourism and hospitality industries.
To be sure, at-home drinking is on the rise, boosting retail sales. But overall consumption is expected to take a hit as bars and restaurants -- which in Europe account for about 30% of volume - stay closed. The EU has forecast consumption this season to be 8% below the five-year average, with mostly sparkling and high-value wines affected.
Many in the industry have already lost their jobs and some producers may not survive the upheaval, despite the rapid push to innovate.
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“There will be a large number of small operators that don’t come out the other side of this,” said Tony Battaglene, who heads industry group Australian Grape and Wine.
In California, the spread of the virus shuttered tasting rooms and restaurants in the heart of wine country just as the spring season was to usher in a wave of tourism and festivals. While many wineries are shifting their business to focus on direct sales to consumers, it’s not enough to offset the losses.
Many wineries are building on direct-to-consumer sales through websites or membership clubs. For PlumpJack in Napa Valley, which relies on restaurants for two-thirds of its business, that means FaceTime tastings and virtual Q&A sessions.
In South Australia, home to the Barossa Valley and Adelaide Hills wine tourism areas, some wineries had already been hit with wildfires and smoke-taint this vintage, before coronavirus shut tourism and cellar doors. The government has since eased restrictions to allow wineries to sell takeaway products.
Retail, online and mail order sales are showing signs of improvement, said Brian Smedley, chief executive of the South Australian Wine Industry Association.
"We’ve had a significant increase in alcohol sales in this country," Smedley said. But it’s not going to replace the ability to have consumers coming to the cellar door, “tasting and experiencing the things that wineries have to offer.”
Italy’s Cantina Tramin sells most of its wine to restaurants and bars in its home country, all of which remain closed. The wine cooperative is active on social media and sells its flagship Gewurztraminer and other varietals online.
"That fraction is working very well and bringing great results, but it’s a fraction of the whole thing," said Wolfgang Klotz, director of marketing and sales.
Export concern
In terms of exports, the outlook remains murky as shutdowns thwart demand and disrupt logistics. The EU expects wine exports to fall 14% in 2019/2020, while in Australia, first-quarter shipments were down 7%, including a 14% drop to China, according to Wine Australia. Australian exports to the U.S. and U.K. also slumped in the first quarter, down 2% and 6% year on year, respectively.
The impact on prices is also unclear and is likely to differ from country to country, dependent on consumption patterns and the types of wines grown.
At Quinta do Vallado in Portugal’s Douro Valley, about 25% of sales are to tourists visiting the estate. That segment completely dried up as the wine shop and hotel shuttered, said CEO Joao Alvares Ribeiro. Meanwhile, exports to key markets including the U.S., U.K., Brazil and China slumped, pushing down total sales by about 60% in March.
"No one is really sending orders," he said.
There are positive signs from China, with restaurants starting to reopen and movement restrictions eased. "If the Chinese market can recover quickly, that can actually springboard our recovery," Battaglene said.
The lockdown is also presenting problems at vineyards, with grape growers facing logistical hurdles in bringing temporary workers in from other regions and countries. In California, now is the time when many seasonal workers arrive in wine country to do everything from ensure irrigation works, training the vines and setting the grape-growing strategy for the year.
"There’s just a lot of uncertainty," said Karissa Kruse, president of Sonoma County Winegrowers, noting some guest workers have faced delays getting to the U.S. due to travel restrictions within Mexico and hotel shutdowns. "That’s where we’ve seen the greatest impact."
In Australia, Argentina and Chile, the virus-related movement restrictions came in the middle of the 2020 vintage harvest, meaning a rapid response was needed to allow work to continue. All three countries deem the industry as essential, meaning harvests and wine making can proceed, albeit with challenges.
"Everything has been slower and more complex," said Patricia Freuler de Ortiz, CEO of the Fincas Patagonicas winery in Mendoza. All jobs in the industry unrelated to production are being done from home. Face masks, distancing protocols and measures to reduce worker concentrations have been introduced, she said.
On the commercial side, the industry remains optimistic that online tastings, classes and promotions will help it navigate the disruptions.
"It challenges us to sell our brands with different methods, to be more creative, to use technology," said Angelica Valenzuela, sales manager at Wines of Chile. “In the end, when things return to normal, we’ll have our regular channels and the new ones developed during the coronavirus crisis.”
-With assistance from Felix Njini and Jen Skerritt.
