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Epidemic causes big setback to imported wine business

global.chinadaily.com.cn by ZHU WENQIAN12/05/2020  

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Citizens taste the imported wine on a shopping festival in Qinhuangdao, Heibei province, on Jan 20. [Photo by Cao Jianxiong/for China Daily]


Overseas wineries' production declines while less social gatherings limit demand

Shanghai Qiuxia International Trade Co Ltd, located in the China (Shanghai) Free Trade Zone, is a wine importer that mainly purchases wine from Chile, Argentina, Europe and the United States.

The company said the fast spreading novel coronavirus pandemic has hampered the production of major overseas wineries, and the imported wine business in China has suffered a setback. International shipping and logistics companies also suffered severely. They have constantly lowered their frequencies of voyages and raised transportation costs.

"With the ongoing contagion in Europe, wine imported from Italy, Spain and France is under the most severe impact as a result of lower production and local transportation problems. Some French wine arrived at our company one month late compared with usual time," said Xia Jiajie, sales manager of Shanghai Qiuxia.

In January and February, China imported 82.6 million liters of wine, declining 30.4 percent year-on-year. The imported value reached $430 million, down 28.3 percent year-on-year, which represented the biggest drop in the past five years, according to figures from the General Administration of Customs.

Since the large-scale spread of COVID-19 in China in late January, China's purchasing volume of Chilean food dropped by 50 percent to 60 percent compared with the usual. Wine, cherry and seafood suffered the most, according to ProChile, the Export Promotion Bureau of Chile. Chilean wine industry players said they would focus more on the local market and e-commerce sales channels.

Less social gatherings and less income have limited the demand of wine for most Chinese consumers. In China, wine is mostly for large-scale social occasions, banquets and gift giving. With a sliding demand nationwide, the volume of wine that Shanghai Qiuxia has sold to domestic liquor stores and individual consumers has dropped by 50 percent since the outbreak, and it is difficult for the company to clear the stock.

"As a small company, it's hard for us to pool more human and financial resources or develop new sales channels in a short time. We have to cut costs and reduce inventory. I hope we can survive this downturn period," Xia said.

Another wine importer based in Guiyang, capital of Guizhou province in Southwest China, mainly imports wine from Italy and France. Since late January, it started to see declining sales, and the sluggish demand is expected to affect the sales in the first six months.

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Customers purchase imported wine at a shop in the Fuzhou area of China (Fujian) Free Trade Zone on April 9. [Photo/CHINA NEWS SERVICE]

"With severe epidemic ongoing in Italy, some wineries have suspended operations, and they have stopped receiving new orders. If the contagion can't get under control in June, and the production and distribution can't fully resume, we might face a situation of no supply," said Ye Juke, general manager of Guizhou Mingxianghui Wine Co Ltd.

"By then, we will have to start cooperating with other importers and domestic chateaus to get some products dispensed," he said.

He added that the company has exclusively introduced a new kind of Italian wine, but it is expected to arrive in China as late as September, only if the epidemic could get under control in Europe in summer.

Nevertheless, the Guiyang importer said the peak season of wine sales in China occurs in the second half of the year, and it is still confident to develop new sales channels and net further growth.

Meanwhile, with the contagion continuing to ferment globally, more than 10,000 wineries and 8,000 vineyards in the United States may lose as much as $5.94 billion this year due to COVID-19, and small-scale producers will be hit the hardest, according to Jon Moramarco, an alcoholic-beverage industry researcher based in Denver, Colorado.

In south Australia, total yields of wine are expected to decline 50 percent over last year, dampened by frost, intermittent extremely high temperatures, forest fire and the epidemic, according to the South Australian Wine Industry Association.

In New Zealand, chateau owners said the mandatory quarantine measures have slowed down the process of grape picking and wine making, and it has thus brought more uncertainties to the sector in the wake of the novel coronavirus crisis, according to a report from global wine information and service agency winespectator.com.