China Wine

How will the coronavirus affect China’s wine industry?

For many wine merchants hoping for a recovery in 2020 after sales slump in 2019, the hope is completely dashed, as the whole country’s economic growth is expected to be undercut significantly by the deadly coronavirus.

For many wine merchants hoping for a recovery in 2020 after sales slump in 2019, the hope is completely dashed, as the whole country’s economic growth is expected to be undercut significantly by the deadly coronavirus.

From January on, China is gripped by the fast-spreading novel coronavirus, which has now sickened over 40,000 and killed over 900 across the country as of February 10, according to official data, surpassing 2003’s SARS, also caused by a member of the coronavirus family.

At least over 60 million people in the epicentre of Hubei province to elsewhere in China are under effective lockdown, with many under quarantine, preventing them from travelling, working and shopping.

Many cities such as Beijing and Shanghai are encouraging people to work from home and limit human contacts.

Factories and businesses across the country have postponed opening hours to limit mobility. International companies such as Apple, Ikea and Starbucks have temporarily closed their stores. The outbreak also triggered countries and global airlines to suspend direct flights to China including Hong Kong and Macau as it spreads to over 27 countries and regions.

A medical worker at Wuhan Xiehe Hospital, which is located in the epicenter of the novel coronavirus outbreak. (Photo source: Xinhua)

The impacts of the outbreak is so damaging that many economists and think tanks are downgrading growth target for China, with many expecting the country’s growth rate to slip below 6%.

Amid outbreak, hotels, shopping malls and restaurants look deserted. Hospitality and retail businesses are among the hardest hit, as nationwide people are confined and under self-quarantine, fearful of contracting the novel coronavirus from contacts.

The country’s wine sales during the outbreak which coincided with Chinese New Year, the most important holiday in China, are expected to experience “cliff-like” sales drop, the country’s official drinks body warns.

Within China’s wine industry, there’s a flurry of cancellations in February and March in mainland China and Hong Kong, including The Fine Wine Experience’s flagship wine event Burghound Symposium which was originally planned in March in Shanghai, Beijing and Hong Kong.

An infected patient in Hong Kong. The city has now reported over 36 confirmed cases of infection and one death. (Photo source: Initium)

The biggest news came when China’s most important drinks trade fair in Chengdu was postponed due to the viral outbreak. The China Food and Drinks Exhibition (Chengdu), last year drew 200,000 trade visitors for its main show in March, and over 6,000 exhibitors.

The postponing of the fair means that importers, distributors and wineries will miss out a big opportunity to move stocks for the remainder of the year. It will add on perils for wine merchants who are already loaded with stocks from previous year, and cash flow will inflict more pains on them.

Whether the postponing of the fair will have a ripple effect on this year’s Vinexpo Hong Kong in May still remains to be seen. With mainland visitors restricted in travels and flights cancelled to China and Hong Kong, wineries will have to weigh in pros and cons more diligently than ever, especially when the infected number of patients is still climbing.

Leading drinks retailer 1919.cn temporarily closed over 600 stores across China, and a Chinese research think tank estimated the novel coronavirus will cost the drinks industry 8-15% sales loss.

Bordeaux En Primeur this year which is about to kick off in April will most definitely feel the pinch from the viral outbreak.

China, which is already cutting back on En Premieur buying due to economic slowdown and US-China trade war, will likely be scaling back again if the Chinese came for En Primeur at all this year.

France at the moment has 11 confirmed novel coronavirus cases, with one Wuhan wine merchant confirmed in Bordeaux earlier in late January. Air France has initially suspended travels to and from China till February 9 and further extended it till March 15.

Wine Australia, which so far is enjoying envious success in China, has thus adjusted its sales expectation as well due to the outbreak.

At the stage, almost everyone is certain, sales in the first quarter of the year is most definitely lost, but the big question hanging over merchants’ head is if its impacts will extend throughout the whole year.

With no end in sight for the epidemic, many remain wary.

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