Online wine sales are increasing due to coronavirus

With billions of people now under some form of lockdown due to the Covid-19 pandemic sweeping the world, there have been major changes in the way people are shopping.

Bars, restaurants and cafes are all shut down in the UK, in much of Europe and across some of North America among other regions. With everyone housebound, wine aficionados have had to find new ways to ensure they have enough in. And naturally this has meant a huge uptick in online wine sales.

Online wine sales are rapidly increasing

The wine industry is going through a patch of sales that is rivalling, if not beating, the Christmas rush. For example, US based wine club Winc told Forbes that it has seen an increase of 578% in new members week over week. Sales are also rising fast, with a 49.6% increase in consumer direct sales.

According to Nielsen, wine sales in the US were up by 27.6% in the week ending 14 March 2020, compared with the same week in 2019. Wine app Vivino is also showing massive increases, with its highest recorded sales date on 13 March 2020. In both the US (162%) and Italy (282%), the app has seen a huge increase of merchandise sold.

Now that the majority of people are working form home and having to enforce strict social distancing measures, home consumption of wine will continue to rise. And alongside this will be a wider take up of ecommerce for the wine sector. While wine sales online have always been relatively popular, they’ve lagged behind sales in pubs, bars and restaurants. As this is temporarily halted, we will continue to see the ecommerce sector for wine sales expand.

Some sellers are struggling to keep up with demand

Other smaller wine companies in America have also witnessed sales take off rapidly. Gold Medal is an independent wine club that curates limited production wines from California. Owner David Chesterfield explained to Forbes that the company has seen an increase in revenue of $517,800 in 28 days when compared with the previous 28 days. This is more than a 200% increase.  Some small wine shops are hastily moving online for the first time, in order to keep employees paid and businesses going.

Here in the UK, the situation is much the same. Since 21 March, when the bars, restaurants and clubs were formally closed by the government as part of the nation’s efforts to slow the spread of coronavirus, sales of wine and other alcoholic drinks continue to climb.

Some online wine sellers have had to temporarily pause orders in order to keep on top of restocking. Naked Wines told the Times that: “… we’ve made the decision to temporarily pause accepting orders while we work through existing ones.” Sales for French and Italian wines for the company jumped to 68% last week, and English wine sales are also increasing.

It remains to be seen how online retailers will cope with the surge in demand, and how much of these sales increases are down to stockpiling. Pubs are beginning to sell alcohol as takeout as part of creative ways to keep in business, and this could bring online sales down again.

However, at Ideal Wine Company, we believe this could be a turning point for wine and ecommerce. As people become used to buying wine online during the pandemic, it’s highly likely that this will continue when restaurants and pubs begin to open their doors again.

How is coronavirus affecting the global wine industry

Coronavirus continues to cause concern around the world, affecting global stocks and many business sectors. And there is also fallout within the wine industry around the world.

The virus has now reached every continent apart from Antarctica, with countries including China and Iran suffering the highest number of fatalities so far. And as consumers in China cut back on buying wine, and cases remain stranded at customs, winemakers are seeing stocks fall.

Coronavirus is affecting wine industry

China is the biggest market for luxury wine in the world. The country accounts for just under a third of LVMH (Moet Hennessy Louis Vuitton) sales, which covers Cloudy Bay, Dom Perignon and Moet & Chandon. China also accounts for 10% of all sales of Pernod Ricard, which includes Jacob’s Creek and Campo Viejo.

And as the market slows, global brands are expecting major hits to sales. Spain’s biggest wine company, Torres, expects a 50% fall in March 2020. Bordeaux wines, which are very popular in China and the wider Asian market, fell 38.3% in the second week of February. According to Liv-ex, this is a record low.

Australia is also seeing strong hits to wine sales, particularly following the massive fires of recent months. With vineyard damage affecting some sales, other grapes have been affected by smoke taint. China imports about $1.3 billion worth of wine from Australia each year, which is 20% of the national crop. According to Forbes, sales were down for Australia wine by 90% in January and February 2020.

Wine shows are being postponed

China was due to host the massive China Food & Drinks Fair in Chengdu this month, but it has had to be postponed due to the virus. This annual show attracts 300,000 buyers and 3,000 exhibitors and aims to link up global distributors and promoters.

Other shows including the China International Alcoholic Drinks Expo (CIADE), TaoWine and the TWC Chengdu Fine Wine Showcase have also been moved to later in the year.

Imports have been particularly affected by coronavirus, due to dwindling numbers of customs officials. For example, usually around 33% of all Chilean wine goes to China but since the start of the year, exports have dropped by 60%. Before the outbreak of the virus, China imported approximately 350 containers of Chilean wine every day. Right now, 50 cases are going through customs daily. The rest are stuck at the port.

Exports are rerouted to ease port congestion

To mitigate the backlogs at Chinese ports, brands are trying to reroute shipments. However, with Italy and other countries reporting more cases every day, and more than 50,000 people under quarantine, alternative routes may also be difficult to access.

In China there has also been a huge fall in operating income across food and drinks businesses. According to the China Culinary Association, operating income has dropped 100% across more than three-quarters of businesses. This means that while food and drink companies are paying wages, insurance and rent, no money is coming in.

Fewer people are going out to eat and drink, which is also impacting wine sales. And while brands are trying to increase deliveries to make up for the money they’re losing, drivers are reluctant to risk catching the virus. Despite this, alcohol delivery companies have seen a 50% growth in February in China, after a leap of 60% over the Chinese New Year.

As the virus continues to spread, it’s likely that fine wine collectors and regular consumers will notice shortages in supply.

Wines from around the world showcased at Wine Paris 2020

Wine Paris 2020 took place between 10 and 12 February 2020. It was the first dedicated wine platform in Paris and was organised in response to market demand. A forecast study by International Wine and Spirit Research (IWSR) shows that Europe will continue to be the number 1 market for wine over the next five years. And, as part of the expo, IWSR showcased some of its highest rated French wines.

The best French wines on show at Wine Paris 2020

At the IWSC stand, delegates found some of the best French wines from regions all over the country. Wines on show came from Alsace, Cotes du Rhone, Languedoc and Champagne, and were available to thousands of visitors to taste during the three day exhibition.

Each French wine on show at the expo had been given at least 90 points by IWSC’s wine experts. The showcase included the Alsace Pinot Gris Selection de Grains Nobles Clos des Anges 2015, which scooped the highest number of points from the experts last year at 96.

A gold award winner last year, the wine was praised by judges for a flavour brimming with: “intense spice, white peppercorns, clove cooked pairs, cinnamon and glace chestnuts”. A smooth palate, chalky minerality and citrus acidity cuts through the sweetness, with a smoky spicy feel to finish.

Wines from around the world at Wine Paris 2020
Other winners from the IWSC also showcased at the event included wines from New Zealand, Austria and Italy.

From New Zealand, Church Road Grand Reserve Chardonnay 2019 was praised by judges for its “intense lemony… succulent stone fruit nose, followed by a luscious full-bodied complex and layered palate”.

Italy’s Borgo Isolabella Augusta – Nizza DOCG 2015 has vanilla, clove, cherry and fresh ginger flavours, with a complex palate. The judges praised its beautiful texture and well-balanced acidity. And from Austria, the Weingut Rabl Gruner Veltliner Ried Loiserberg Alte Reben 2017 was included thanks to its complexity and intriguing flavours of tropical fruit, orange blossom and peach.

Wine Paris 2020 aims to unite global industry

Wine Paris 2020 brought together 2,200 exhibitors from every French wine region, all showcasing the highest quality French wines. More than 30,000 buyers attended, with at least a third from overseas. The event aims to link together every kind of global wine professional, including importers, restaurant owners, sommeliers, specialised distributors and sales agents to taste the latest vintage wines, discover new wines and trial the extensive range available.

During the event, Wine Paris 2020 hosted Wine Talks, which were round-table discussions among engaging and passionate personalities to share best practice and creativity. This year marked the first joint event between Wine Paris and Vinexpo Paris, and the first industry event of the calendar year.

AS well as the conferences and discussions covering industry issues including “The future of French wines in the US” and “Trends and major challenges in the global spirits market.”, there was also heavy promotion for specific industry sectors. These included organic wine and other environmentally forward-thinking choices, and the ‘Be Spirits’ area, which featured 100 brands from 14 countries.

Looking ahead to 2021

French Minister for Agriculture and Food, Didier Guillaume, opened the exhibition and welcomed the inclusivity of combining the two complementary events as a boost to the country’s international influence in the wine industry. The top three countries represented by the trade and industry members at the joint exhibition were the US, Belgium and the UK.

The joint exhibition was so successful that Wine Paris and Vinexpo Paris are already preparing for 2021’s event. The plan for next year is to establish an event with even more international scope for visitors, exhibitors, producers and buyers.

Why US wine industry is hoping tariffs on EU wine won’t go ahead

The US wine industry is currently reeling from the President’s decision to potentially  tax wine from Europe by 100%. In fact, some experts in the industry are saying that the threatened rise in import tax will have a similar impact on them as prohibition did more than 100 years ago.

Wine sellers in the US are hoping that the President will change his mind and drop the import tax raise. They say that their businesses will fail should the proposed taxes happen.

How would 100% EU tariffs affect the US wine industry?

Proposals to raise tax on EU imports is in retaliation for subsidies on American company Airbus. But the American wine industry is arguing that it shouldn’t take the hit for this trade battle. Representatives of wine merchants in the US argue that these proposed tariffs would hit the industry very hard.

Every year, the US imports wine worth £3.8 billion (approximately $5 billion) from European countries. In October 2019, the industry had to deal with a 25% tax on wines from Europe. This was imposed by the President after approval was granted from the World Trade Organisation (WTO) for the US to retaliate after subsidies imposed on Airbus.

This first round of tax increases was absorbed by wine sellers in the US. However, the suggestion that there will be another round of tax increases, this time at 100%, has shaken the industry once more.

Possible job losses and huge price rises

It is feared that the tariffs will lead to more retaliation and put potentially thousands of jobs on the brink. But what would the fallout be for the consumer? The National Association of Wine Retailers (NAWR), says that prices per bottle could more than double. Furthermore, some bottles will just be way too expensive to import.

The US Trade Representative has been open to comments, and according to the BBC, thousands of sellers have formally opposed the tariffs. Field Blend Solutions is a wine importer based in New York. A representative told the BBC that while the tariffs are supposed to cause problems for the countries of origin in Europe, “… instead, they are having a calamitous impact on American small businesses, American workers and American consumers.”

The president of the National Association of Beverage Importers (NABI) warns that the “impact on jobs” and “the impact on the US marketplace” are concerning.

Industry braces for impact of wine tariffs

This tariff was announced in December 2019 by the US Government, which says that the 100% increase is necessary. This, they say, is because of a “lack of progress” between the EU and the US in resolving the subsidy battle over Airbus.

President Trump says that Americans should drink home-grown wine instead. However, industry experts say that consumers may well turn to wines from the New World instead of the US.

Whether the 100% tariff on wine imports goes ahead remains to be seen. However, it’s likely that even if it doesn’t, some tariffs will remain for the US wine industry. It’s possible, for example, that Champagne will come under fire in a separate trade dispute over French taxes on tech companies. Whatever happens, collectors of fine wines and everyday consumers will be watching closely on both sides of the Atlantic.

What are the biggest wine trends for 2020?

 

It’s not always possible to accurately predict the future for any business sector, and the wine industry is no exception. However, as we enter 2020, there are a number of likely changes to the industry. These include changing consumer tastes and demands, as well as wider economic and political issues affecting the market.

 

Look out for these nine wine trends for 2020

 

1. Fusing rosé and Prosecco

These two hugely popular trends are looking set to come together in 2020. In Italy, wine producers have been attempting to get official approval for Prosecco rosé for a number of years. And in the Bibendum wine trends 2020 report, the UK supplier predicts that the first shipment could reach the shelves before the end of the year.

Wine producers looking to take advantage of this new trend would have to use up to 15% Pinot Noir with Glera grapes to make official Prosecco DOC rosé.

 

2. Rosé continues its ‘serious wine’ trend

Rosé has been gaining traction as a serious wine for a while, and there will be continued exposure to high end versions. This is borne out by various high-profile acquisitions, including Moet Hennessey buying the maker of Whispering Angel rose (Chateua d’Esclans).

 

3. The rise in appassimento wines will continue

Sales of appassimento wines have doubled in the UK, according to major sellers such as Majestic Wines. These Italian wines are taking market share from previously popular Malbec easy drinkers.

Appassimento is a specific wine making technique used mostly in traditional Italian regions. The grapes are dried before fermentation takes place, leading to wines with concentrated, rich flavours.

 

4. Austrian wines are becoming more popular

Bibendum’s report also highlights indigenous Austrian grapes becoming more popular. These include Saint Laurent, Zweigelt and Blaufrankisch.

 

5. Vegan wines continue to grow as a new sector

Many wine sellers are increasing the number of vegan products, due to growing consumer demand. Expect to see more wines labelled vegan during 2020, following the growth of the market in 2019.

 

6. Natural wines will go mainstream

While it’s not easy to get official figures on natural wines, as there is no one definition, there is a definite shift to sulphite-free wines. This part of the wine industry continues to divide wine lovers and wine makers and remains a small sector. However, it’s likely to continue to gain exposure and consumers can expect to see more ‘natural’ labelling used by wine retailers and in restaurants during 2020.

 

7. Changes in the fine wine market

Fine wine continues to be a fascinating part of the industry, for consumers and collectors alike. During the 2010s there was a distinct shift in the market as wine collectors began reaching out to a wider range of regions. This led to an increase in specialist fine wine retailers, including Ideal Wine. And while some analysts suggest that the fine wine market could slide slightly, collectors should be on the lookout for a resurgence for Bordeaux 2010.

 

8. Economic and political changes

These factors affect the fine wine market as tariffs and trade wars are ongoing. However, it also affects the accessibility of wine to consumers in general terms. For example, following the UK’s exit from the EU on 31 January 2020, trade negotiations will begin. This could lead to changes in the value of the pound versus the Euro, and if the UK and EU cannot agree new trade agreements, then a ‘no deal’ Brexit is back on the table.

Over in the US, the president is entering the election year. Recent US tariffs on wine still stand, and it’s unclear as to whether these will be rescinded or increased. US officials plan to agree on raising tariffs by the end of January across a number of wines from the EU, including Barolo and Champagne.

 

9. The biggest threat of all – climate change

In 2019, Spanish wine producer Miguel Torres urged the world’s wine industry to work faster to combat climate change. Having set up a thinktank in 2011, Torres told Decanter that just 20 wine producers in Spain had joined. There have been a number of reports during 2019 showing the likely effects of the continuing threat of climate change on wine producing regions.

This is, of course, a long-term issue, but we can expect to see more conversation, more research and more changes within the global wine industry to respond to climate change in 2020.