China’s retail sales during this year’s traditional lunar new year will most likely face ‘cliff-like’ drop amid the deadly coronavirus outbreak, the country’s official drinks trade body has warned, as many in the wine industry move to slash sales target.
The spreading coronavirus is threatening to wreak wider havoc on China’s economic growth, as many economists fear it will possibly outweigh damages done from SARS outbreak nearly two decades ago and the US-China trade war.
Based on figures released by Ministry of Commerce, Chinese New Year in 2019 generated over RMB 1 trillion (US$144 billion) in sales. This year, with millions confined at home under quarantine from the virus outbreak epicenter in Hubei province to cities like Shanghai and Beijing, the sales during the holiday season is expected to experience a sharp plunge described as a ‘cliff-like drop’ by the China Alcoholic Drinks Association.
The direct economic damages will be mainly on restaurants, hotels, on-trade consumption, where wine sales are dependent on.
This would add to pains for wine merchants and importers who are already affected by China’s slowing economy and US-China trade war from last year when the country’s wine imports halted.
China’s biggest winery by volume Changyu Pioneers wrote on its official WeChat account today that it’s slashing sales targets for its local distributors this year amid the outbreak.
Chinese consulting firm He Jun estimated that the drinks industry will suffer 8%-15% sales decline, as merchants and distributors will face more stocks after cancellations from hotels and restaurants, according to a report on Chinese language drinks publication 酒业家.
It’s unavoidable that the novel coronavirus outbreak is also going to inflict on the country’s whole economic growth.
Officials from the Chinese Academy of Social Sciences are warning that the country’s growth in the first quarter of 2020 could drop below 6% to around 5%, which would be the slowest growth in years, as many factories and industries across the country will remain shut at least until early February to curb human mobility and contacts.
As of February 1, the novel coronavirus has infected 14,380 patients across China and killed 304. More than 2,000 patients are in serious condition and 19,544 are suspected cases, according to official data released by China’s Health Administration.