Wine in the Time of Pestilence VII – Wine Distribution

The wine industry is not, of course, alone in the havoc Covid-19 has wreaked on it.  All businesses (except maybe those producing face masks and – at least early on – toilet rolls) have suffered, and wine is low down to list of priority industries for the general health of the world.  As I’ve noted in previous posts, enterprising producers have been working to find ways to get their wines direct to consumers – but the distribution industry generally has been thrown into turmoil by the crisis.  Harpers – a UK wine trade magazine – ran an article suggesting that the wine economy would take five years to rebound from the chaos.  Yet, as I’ve said in all my posts, the disease has not created new problems for the wine distributors; rather it has just accelerated the speed of changes already taking place.  Further, these changes develop in the context of the specific cultures where wine is sold.

The hospitality sector is clearly going to contract.  In some countries bars and restaurants are reopening, but social distancing means that they can accept fewer customers so their income will decline.  In France I’ve already noticed a number of restaurants that have just failed to reopen as lockdown is ending.  One issue here is the cultural insistence that meals only happen between midday and 2 p.m. and then after 7 p.m. at night.  If they could bring themselves to accept that some people at least (if only summer tourists from other countries) would like the chance to eat a bit earlier, have a late lunch, or graze all day they might do more business.  In other countries the decline of the town centre in the face of online shopping and rents that go up in the face of that decline has already been putting many restaurants out of business.  Meanwhile, as Robert Joseph has noted, if work patterns change (at least in Western countries) so that more people work more often at home that may put further restaurants in the centre of major cities under pressure.  Additionally, as the same perceptive critic notes, if there is a decline in restaurants, where consumers get to meet new wines introduced by sommeliers, what does that mean for producers in places such as Georgia, Sicily, or Carnuntum?  The key question is – how is the on-trade for wine going to be recreated over the next decade?

Getting wine to consumers – particularly under the influence of Amazon and similar wine-focused organisations like Naked Wines – was already evolving, and this has now accelerated.  In early June Amazon announced an ‘online wine store’ in Australia; meanwhile, according to Reuters Naked Wines has just stated that their June sales saw a 67% increase on the same month in 2019.  Low overheads reduce costs (and thus the price of the wine) and rapid delivery increases consumer convenience.  They may not squeeze out all the independent retailers but they could put pressure on larger suppliers (especially those who are already going online).  Again, there are cultural issues at play.  In Australia, as in much of Western Europe, online purchasing of wine is still really in early stages; however, in China, with the rise of behemoths like Alibaba, the population has already accustomed itself to making purchases online.  Yet China itself is proving paradoxical here.  Even before the disease hit there in January imports of wine in to the country were declining in both volume and value.  According to one of my correspondents there, based on the General Administration of Customs of China the value of year on year imports of wine in to the country decreased in five of the last six months of the year.  Why is this?  No doubt the trade war with the USA has caused some price rises, and beyond that perhaps dissuading Chinese consumers from buy wines made by allies of the States.  Perhaps there is a partisan move to drinking more of its home-produced wines (which are steadily improving in quality).  However, what then followed –a year-on-year decline in import volume for the first three months of the year of 25.3% and in value of 31.1% just reinforced that.  Subsequent political events will be doing nothing to reverse that process.  Politics trumps the need for wine here.

I’ve always argued that the problem with selling wine online is that the physical interaction with the product (most obviously the taste and smell) limits how much it can be sold virtually; however, that is to ignore the fact that so many (especially younger) people now make their purchase decisions based not on taste but on recommendation by influencers and the online communities to which they belong.  Meanwhile in the US online sales of alcohol doubled in the year to May and the UK showed a 50% growth over the same period.  What is more, it seems that over the time since the crisis began consumers have been maintaining their move towards online alcohol shopping so it is probably likely to be continued when (if) the pandemic disappears.

Meanwhile, two countries present particularly interesting case studies about the effect of the crisis on wine distribution – both of them with an element of ‘prohibition’ in their cultural make up.  In the wake of the end of prohibition in the USA in 1932 strict rules were introduced to manage how alcohol got to the consumer and (in part) to make it more expensive: this is the notorious three-tier system.  In each state there must be one ‘importer’, a separate wholesaler, and a third retailer direct to the consumer.  This gives big power to the large-scale distributors (who are reluctant to see the system change as it guarantees them an income but it is not popular with wine producers, who may not be able to sell wine directly interstate, nor with consumers who see three layers of distribution each taking their own cut (and thus pushing up prices) and who are limited in their ability to buy direct from producers.  Additionally, those who seek new ways of getting wine to consumers (such as Amazon) may find the system works against them.  A debate has developed on how the world of wine may change – but the power of the anti-alcohol lobby remains substantial, and is allied in this case to alcohol distributors with a vested interest in the status quo. 

Finally, spare a thought for poor South African drinkers.  As I noted before, in the early stages of the pandemic not just sales, but even the movement of alcohol was banned (thus essentially stopping exports).  That was eased at the beginning of June – but the restrictions have just been reintroduced.  This produced a brilliantly articulate groan of agony from one of the country’s leading wine journalists, Michael Fridjhon. While he acknowledges that wine causes all kinds of problems for some segments of the local population, notably more alienated groups with less access to power or wealth, all this is doing is stymieing that part of the nation’s economic recovery based on wine exports.  Further, it is entirely undermining the attempts to rescue the hospitality sector.  Fridjhon points out that the majority of the ANC’s leadership is officially in favour of prohibition (which has, of course, never succeeded in any other country).  Additionally, I’d suggest, with wine specifically there is also the point that it was traditionally a white economic activity, and remains dominated by whites.  Beyond that, as well, it is a business that is almost entirely based in the Western Cape– the one Province in South Africa which has a non-ANC government, and which the ruling party therefore detests as it threatens its monopoly on power.  Politics beats wine again…

Wine in the Time of Pestilence IV

There has been a lot of press chatter around the idea that we are drinking more in the Covid-19 crisis.  The Sydney Morning Herald reported that online sales for one retailer had jumped by 50-75%; Nielsen tracking figures for wine sales in the USA showed dramatic rises in wine sales in the two weeks following the start of lockdown in key states, then a dramatic fall, then two more weeks of increase (though less intense).  There has been an increase of wine sales in the USA of 29.4% since the ‘start’ of Covid-19 – just behind the increase in spirits sales but well ahead of beer on 19%; this has also seen a surge in sales of cabernet sauvignon – as if consumers want to go back to what is tried and tested.  Meanwhile in the UK I’ve heard through the grapevine, that for some UK retailers March was their best month ever.  What seems to be selling is their core range – so that consumers are indeed sticking with brands they know well and feel comfortable with, with sales of these wines almost one quarter up on normal.  That could include things like Rioja, Argentine malbec and pinot grigio.  The winners, it seems, are winning even more.

So, the sales figures seem to bear this out this general idea that everyone is drinking more wine, though the detail is much more complex than that.  As I’ve noted previously, the ease of buying wine in France isn’t mirrored in South Africa, for instance.  So how is our drinking behaviour changing?  By which I don’t just mean how much we drink, but how and what we drink – and why we may be drinking more.  Looking at my own drinking I felt it was changing, and anecdotally it appeared that others were changing theirs as well.

So, it occurred to me that it would be interesting to find out how some dedicated drinkers have been changing their relationship with alcohol during the spread of the virus.  To do this I chose my own colleagues in the Institute of Masters of Wine with a short survey on how they are drinking during the time of pestilence.  We asked both numeric questions and asked them to add comments about their drinking – and this is what transpired.  As this is a blog about ‘wine and culture’ I’m going to focus on the most interesting cultural findings.

I received completed surveys from 142 Masters of Wine, which is a good response rate and the sample was broadly representative of the Institute’s gender and geographic make up (65% male and 47% based in the UK).  The ‘typical’ respondent was aged about 56 and had been in confinement for just over 18 days at the point when they responded.  They pay on average just under 18€ per bottle when they buy wine, drinking about 5-6 days per week.

Forty-two percent said that their wine consumption had increased since the onset of Covid-19, while 15% said it had decreased, and for 43% it had not altered.  However, an examination of who is drinking more or less reveals some interesting and statistically significant results.  Those who are drinking less wine are disproportionately male (85%) rather than female – but those drinking more are proportionately more likely to be female.  The following quotation illustrates this:

I think anyone home-schooling kids whilst working from home during lockdown is definitely drinking more wine.

The same trend is even more marked for buying wine: women are more likely to be buying more wine than before Covid-19 by 60% to 40% for men. 

Interestingly, when we look at the country of residence of Masters of Wine drinking more or less there was no obvious difference between the regions of the world – except that none of the Australasian Masters of Wine claim to be drinking less (statistically it should have been three)! 

Many of those drinking less listed health concerns as a major reason to cut down – though a few also qualified this by noting that they are drinking better.

I am drinking less as I want my immune system a bit stronger.  I’m drinking less per week , but definitely increased the price point (doubled).  So drinking less, but better.

A great many Masters of Wine who responded to this survey noted that they were ‘raiding their cellars’, and this is related to the quality level of wine being drunk.  Over 46% of all Masters of Wines feel that the quality of what they are drinking is better than it was before.  However, one unfortunate London-based Masters of Wine lamented that his cellar was outside the capital and he couldn’t access it during lockdown! 

So why is the drinking behaviour of Masters of Wine changing? When we look at reasons for drinking more wine, a number mention that the sense of mortality is having an impact on their decisions: 

I’m glad you asked if I’m raiding the cellar for the good stuff. I am doing that, as are many people. Why save it for the apocalypse – we are in the apocalypse.

Reward and celebration as well as the need to avoid boredom were also noted, as was the fact that the family is together.  Thus, food and wine combined were often mentioned, including jointly preparing meals and the overall pleasure of cooking – suggesting that community and family support have become more important.

I enjoy drinking wine even more now because it’s usually during mealtime with family and it helps bring us together. Since being sheltered at home, our lives have fewer outside distractions, which allows us to focus more closely on what we’re consuming

Additionally, many Masters of Wine noted the need to use wine for ritual: the marker of the end of the day at a time when lockdown has removed from us the normal routines and rituals of the working day.

It’s too easy to feel you need to mark the break in the day as you move from day to evening, work/busyness to leisure/family time with a glass of wine. Easier to justify it than normal: unprecedented times require a little reward/enjoyment on a regular basis

There was also an implication in some of the comments that in isolation wine gives a link to a previous, less threatening time, or to a wider, exciting world from which we are currently cut off – the world of wine being a notoriously convivial place!

Wine is a way to ‘travel’ with our senses, through the magical way it can express its origin, and capture the flavours and essence of wonderful places, and transport you around the world in our imagination. (For example, last night we said ‘let’s make a delicious fresh pasta and open a Chianti Classico and pretend we are on holiday in Tuscany!’)

Consequently, like the rest of the population, Masters of Wine have not been immune to the lure of virtual consumption, and online aperitifs are becoming more popular.

What are the key conclusions from this?  The first is that probably Masters of Wine resemble other wine drinkers in that few are decreasing their alcohol consumption and a number are increasing it.  It is also probable that the reasoning is generally the same for the wider population (isolation, family, boredom, apprehension, and the need for reward against health and maybe financial concerns).  They also mirror the general population in that some, at least, are having virtual aperitifs, and seeking reasons to celebrate.  The key differences are that they pay more on average for their wine.

A key marker of Masters of Wine however may be the quality of what they drink, which appears to be going up for many – and rarely going down.  This is affected by the fact that most have access to a cellar and the current crisis has acted as a catalyst to make use of that cellar and drink better wine.

Otherwise, the key conclusions seem to be the following.  It is female Masters of Wine who are driving the increase in wine consumption and the Australasian Masters of Wine have resolutely turned their face against drinking less in this time of pestilence.  Additionally, try to ensure that your wine cellar is where you live, and not away from your home.

Meanwhile, together with a work colleague I’m extending this research to the general wine-drinking population:

https://schoolwinespiritsbusiness.limequery.com/346558?lang=en

Please do complete the survey – we want as many responses as possible from all kinds of people: those who drink wine no more than a few times a year up to weekly imbibers – and please pass it on to friends as well: we need to get as many as possible completing this.

Meanwhile, public authorities have been telling us how we ought to drink. Early on in the pandemic the World Health Organisation warned that using alcohol is an ‘unhelpful coping strategy’ in lockdown. The trouble is that one person’s ‘coping strategy’ is another’s ‘reward’, or ‘ritual marker’ which becomes a pleasant, psychologically beneficial; and while WHO suggested that it is unlikely to alleviate stress it seems that many drinkers disagree with them. Meanwhile, and more usefully, organisations like Drinkwise in Australia and Drinkaware in the UK are promoting a message of moderation rather than abstinence, and reminding people of the sensible limits for consumption.

Finally, some people have been using this time to tell us how to expand our wine activities to get us through lockdown.  The trade magazine The Drinks Business have run articles explaining the best wine-related crafts to help break through the boredom (if you want to ‘repurpose’ your empty bottles or create wine-dyed cork straps this is the place for you).  If craft isn’t your thing then they’ve listed the ten greatest wine films to watch in lockdown – from Rock Hudson and Jean Simmons keeping a Californian wine company going during prohibition to a recent fictional release based on the life of Master Sommelier in training.

What to do? 

This blog theme will be continued…

Update: if you enjoyed this article, I have since published a small footnote related to it, found here.

Wine in the Time of Pestilence II

(Thanks to Cathy van Zyl MW, Neil Jing Zhang, and Paul McArdle for some leads which helped me develop this post).

Phylloxera began to spread through France in 1863 – and reached the furthest north around 1890 – so it took its time.  One of the interesting things about its spread is that while it eventually ruined vineyards in every region, before it arrived most regions had a reason why it would not affect them.  Soil, or variety or viticultural techniques: each place would be spared from what the others had endured – because they were, after all, special (thinking about it now, as an aside, I wonder if this played into the later development of notions about terroir?  Hold that idea – perhaps we’ll return to it one day).

The spread of Covid-19 in the western world had me thinking about this more.  The Chinese attempted to ignore it for a few weeks but – with the experience of SARS – when they took action it was severe and proactive.  The same in South Korea.  Yet when it arrived in Italy they took time, and ultimately only locked down a few provinces and regions (which in turn prompted an exodus of people, many crowded into trains whilst no doubt infected, to the south of the country).  Thus it spread rapidly, and with devastating effect.  Spain and France looked on but dilly-dallied.  Certainly we had the sense here that our lockdown, strict as it was, should have come a week or ten days earlier, given what was happening in Italy and Iran.  Boris Johnson should have seen this and acted sooner; and what can one say about the catastrophic shambles of federal leadership in the USA?  In each case there was a sense – even if only unconscious – that ‘we are different, it won’t be quite so bad here we are more special than those who have already suffered’.  I’m not claiming the Phylloxera was as bad as the current disease; it didn’t kill people. Yet the response was similar.  And while Phylloxera killed no one it did reshape an entire industry.  Hundreds of thousands of smallholders stopped producing wine, vast swathes of vineyard land disappeared (Champagne went from between 50,000 ha. and 80,000 ha. to the current 34,000) and what is now Algeria became for a while the main source of French wine.  The fallout from the current crisis on markets and distribution, if not production could well produce changes that are as momentous.

There is another result of Covid-19 which is having an impact on the world of wine.  The plague has shut borders.  A viral mutation has managed to achieve what neither Brexit nor Donald Trump nor even Viktor Orban had attempted in order to keep foreigners out.  ‘The foreigners are dangerous; the disease comes with them; and so, conversely, we need to focus on what our own country offers’.  What are people drinking?  Their local drink, so much safer, more hygienic that that ‘foreign muck’.  OK – I’m exaggerating rather, but it’s interesting that some producers of English wine claim to be doing very well.  Mark Harvey, of Chapel Down, says that ‘retail and online is flying’ – particularly the sparkling bacchus.  Which makes sense, because bacchus (even if created originally in Germany) is the quintessential British grape variety.  Are drinkers in times like this more likely to revert to drinking what their own country produces out of a sense of solidarity with their compatriots and a need to identify with the national fight against ‘the enemy’?

Having said that it maybe that only certain types of wine will sell, and in specific places.  Another friend who works in the UK wine industry said that their premium fizz (pinot and chardonnay) is not moving so much – because it is the drink of celebration, and this is no time to celebrate.  I always remember listening to Yves Dumont, former CEO of Champagne Laurent Perrier, when the 2008 financial crisis arrived.  When there is a recession, the Anglo-Saxons refuse champagne – it is not appropriate in a time of crisis, when belts tighten and we should not be happy.  The French, on the other hand reach for something which sparkles; it is necessary to cheer you up amid the gloom.

This pandemic and the lockdowns which have become widespread have certainly revealed different cultural attitudes to alcohol and wine.  Today (4th April) I received an email from a high-quality wine store in Dijon telling that me that next Saturday would be ‘happy Saturday’ with 20% off all wine.  They are still open, and you can go there to buy what our government terms ‘purchases of première nécessité’ – essential products, which is what wine is after all!  On the other hand, South Africa has banned all alcohol purchases during its lock down, which prompted the following observation from one commentator:

‘The South African government has effectively decided, without consultation, to wean its population off alcohol (and nicotine) cold turkey, a decision that could end up killing more people than the virus it hopes to mitigate. Unmanaged cessation of alcohol consumption can result in death, which is just one obvious shortfall. The other is that people will either end up brewing their own nuclear-powered mampoer, and/or illegal liquor sellers will take hold of the market.’ 

I’m uncertain how many will die from enforced abstinence – but as history suggests that the final prediction is inevitable.  For those with large wine cellars, of course, it will have very little impact. 

Western Australia also decided that the crisis was bad enough to introduce limits to the number of purchases people could make ‘to limit excess drinking’ – but their conclusion contrasts with the South African one. From the 25th March the maximum you can buy is three bottles of wine a day!  Hardly a restricted intake for one household – especially when you can add either a carton of beer or a litre of spirits to that.

Meanwhile, in some parts of the Southern Hemisphere it has been harvest.  According to my friend Paul McArdle in Margaret River, cabernet is coming in as I write (where the main health concern was backpackers who pick grapes during the day then ignore all social distancing rules as they party at night).  New Zealand, too, has been facing the dilemma of harvest during a state of emergency.  The wine industry, like agriculture more generally, has a dispensation allowing it to work to harvest and process grapes, with protocols in place to ensure safe working environments.  However, in Marlborough, where over three quarters of all of the country’s grapes are harvested, there has been something of a backlash. It seems that some local residents have complained that the harvest is threatening to increase disease transmission – which is a particular problem as the region has the highest proportion of over 65s in the country.  It was reported that one doctor at the local hospital used Facebook to voice concerns, claiming that wine is a ‘luxury’ and that the harvest is ‘risking lives’.

What to do?  Returning to the sparkling wine theme – I commend to you the words of a French poet-cum-diplomat in the 1930s: Gentlemen in the little moment that remains to us between the crisis and the catastrophe, we may as well drink a glass of champagne.’

This blog theme will be continued…

Social distancing in the Burgundy vineyards…