Australian wine exporters to China have reported dramatic drops as much as 90% in the first two months of the year, due to the fast-spreading Covid-19 (coronavirus).
Australia exported a total of AU$1.3 billion worth of wines to its most lucrative market China last year, according to the country’s official wine trade body. For the first time, it surpassed France to become China’s biggest wine supplier but its growth momentum in 2020 could be threatened by the ongoing novel coronavirus that has now killed over 2,000 and sickened more than 74,100 in China as of February 19.
Calling the outbreak “a disaster” for wine producers, a representative from one of Australia’s biggest wine producer told Australian media outlet Crikey, “Sales are off 90% for the first two months and there is no relief in sight.”
This also comes after Wine Australia’s CEO Andreas Clark warned of the impacts of the outbreak on the country’s wine sales, following a challenging 2020 vintage where many wineries are affected by damaging bushfires and ensuing smoke taint.
Pernod Ricard, the spirits giant and owner of Australia’s Jacob’s Creek, also cut its profit forecast for the coronavirus-hit China, its second biggest market after the US.
“Night clubs and night bars are all closed in China and those bars and restaurants that are not closed are empty,” Chairman and CEO Alexandre Ricard told Reuters.
The company is expecting a gradual recovery in bars and restaurants from March in China and a return to normal in June, with a recovery in March in spirits sales from stores, it says.
Treasury Wine Estates, the Australian wine giant that owns Penfolds, also adjusted its core earnings to grow about 5-10% in 2020, compared with the previous forecast of 15-20% , citing competitive US market as a main reason though it says it’s still “premature” to judge market outlook in China.
To contain the virus, many provinces and cities are under lockdown. According to an investigation by the New York Times, about 760 million people inside the country are placed under residential lockdown of various strictness.
Hotels, bars and restaurants and nightclubs look deserted across the country and some opened ones remain empty. Many companies inside China including hotels, restaurants and wine importers are asking employees to take unpaid leaves to cut costs.
A flurry of wine events in the country have been either postponed or cancelled including China’s biggest drinks fair, the China Food and Drinks Exhibition (Chengdu). Prowine Asia this year in Singapore is also postponed as Singapore confirms over 70 cases.
The virus has now spread to over 30 countries and regions.