Israeli wine tourism expert Guy Haran gives an online presentation about the Israeli wine industry using Zoom to dozens of British wine writers on behalf of the Israeli Tourist office of London on April 22 2020, near Tel Aviv, Israel, during the Covid-19 lockdown. Picture: GETTY IMAGES/DAVID SILVERMAN
Israeli wine tourism expert Guy Haran gives an online presentation about the Israeli wine industry using Zoom to dozens of British wine writers on behalf of the Israeli Tourist office of London on April 22 2020, near Tel Aviv, Israel, during the Covid-19 lockdown. Picture: GETTY IMAGES/DAVID SILVERMAN

Sydney/London/Winnipeg — 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 turning to meeting apps such as Zoom to connect with clients.

“They have the same wines that I’m tasting, so we go together and we discuss the flavour and the colour 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 re-assessing their businesses at every step as the coronavirus pandemic roils everything from labour 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. “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 Covid-19 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 the 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, CEO 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 having 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 co-operative is active on social media and sells its flagship gewürztraminer 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 US and UK also slumped in the first quarter, down 2% and 6% year on year, respectively.

The effect on prices is also unclear and is likely to differ from country to country, depending 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 João Álvares Ribeiro. Meanwhile, exports to key markets, including the US, UK, 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 open 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 ensuring 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 US due to travel restrictions within Mexico and hotel shutdowns. “That’s where we’ve seen the greatest effect.”

In Australia, Argentina and Chile, the virus-related movement restrictions came in the middle of the 2020 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 Patagónicas 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.

Despite the challenges, Cantina Tramin’s Klotz remains optimistic. “We’re in a lucky situation in that we don’t have something that goes bad,” he said. “We don’t have vegetables that go bad after a week, or something like milk. We make wine that can be sold now and can be sold in a year.”

Bloomberg