Going viral | Coronavirus and the China wine trade

[Updated to include my January 31 newsletter. See below.]

I got back to Beijing from a long holiday this month just in time for the virus crisis. I managed to squeeze in trips to Lafite’s Longdai operation and to DFC and Canaan in the my first week back but have more recently been bunkered down in Beijing.

I sent my latest Grape Wall newsletter 36 hours ago–posted in full below–with a focus on how the coronavirus situation is impacting the China wine trade. Much has already happened since, including further travel restrictions, event cancellations and self-quarantines. I’ll be posting updates on the main Grape Wall page as things unfold. You can also find updates, memes and personal anecdotes here on my blog Beijing Boyce.

[Below is the newsletter posted January 31, 4:30 AM, Beijing time. You can also find it here with more images / links.]

Greetings from Beijing,

I plan to stay in the city during the ongoing coronavirus situation and will soon start posting China wine-related updates on Grape Wall. I have already started updating my Beijing Boyce site here with news, memes, personal anecdotes, and more.

I also wrote this piece for Meininger’s re the impact of the coronavirus situation on China’s wine trade. That situation is in flux and I will cover some issues below based on what we now know, with updates on Grape Wall as things unfold.

As always, the Grape Wall newsletter / site require time and money. (Plus anti-virus mask expense!) If you find this info useful, support Grape Wall’s efforts. Details on that at the bottom. Okay…

My Meininger piece quoted the heads of two established importers,Alberto Fernandez of Torres China and Campbell Thompson of The Wine Republic, who stated they have canceled events like tastings and dinners, and visits by winemakers and suppliers, through February at the very least.

I’ve since talked to others who have cancelled their events and visits, with some talking about May or June being the earliest they expect the wine business in general to return to normalcy.

In some ways, these decisions will be made for the trade as airlines like United, Lufthansa and BA, among others, cancel their China routes. (As I wrote this, a friend messaged me that Air France is also canceling flights.)

This raises concerns about trade fairs, especially the huge China Food & Drinks Fair, or Tang Jiu Hui, slated for the end of March inChengdu. The fair is seen by many as a must-go but the possibility remains it could become a no-go if the vrius situation is not resolved. Several wine trade people said that clients have already canceled plans to attend and others are considering it, including Fernandez from Torres. And that’s just one of the growing number of wine trade fairs in China.

Things are up in the air at the moment. Wine Australia CEOAndreas Clark was reported as planning to send this update: “At this stage, it is too early to make a decision about Chengdu in March, Vinexpo Hong Kong in May and the China Roadshow in June, noting that the Chinese government has cancelled events in February where there would have been large gatherings of people but to date no action has been taken about events in March or later.”

(One possibility is that people who cancel plans to attend these fairs discover they are not as “must go” as they believe. Alex Chen of US importer Alexander Wine in Shanghai says that “both wine dinners and trade shows are overdone and lack any real substance in driving wine sales. Wine dinners are mainly used to support restaurants and hotels. As far as trade fairs, most of our US suppliers have already given up on China.” Ouch.)

Concern also extends to trade fairs beyond China, with the attendance of buyers and producers from this country now in doubt.VinExpo in Paris is less than two weeks away, February 10 to 12, and there is talk on WeChat about delegates who planned to attend canceling. I contacted a VinExpo rep to get more info and will update on Grape Wall if / when I get a response.

Beyond events, expect the restaurant and bar business to be hit, if Beijing is any indication. I’m in a group with 400-plus food and beverage professionals who are understandably worried what a multi-month downturn could do, especially as they have already faced skyrocketing rent, labor and other costs the past few years.

This will be bad news for wine suppliers who rely on the on trade. I have talked to veterans who recall the “scare” factor after SARS in 2003, as consumers trickled back to bars and restaurants even when things were safe. If you add on economic uncertainty, which the virus situation is likely to increase, it’s easy to see how wine sales could suffer. Even if people do go out, it makes sense for the worried to cut back on wine: the markups usually make the beverage portion of the bill far higher than the food. A scenario of fewer customers with more economic concerns is not a good one, especially given as wine imports and local production were down even before the coronavirus situation.

Not surprisingly, many are looking to online retail and delivery to help alleviate the situation. But that is also not without challenges.

Deliveries in cities like Beijing rely heavily on migrant workers. Most are far away for Chinese New Year holidays and it’s unclear how many will want to or even be able to return given current and potential safety concerns and travel restrictions. For all the talk of technology, it still takes people to get wine from warehouses, which are also often staffed by migrant workers, to consumer doors. (Or gates. I saw lots of first-person accounts that apartment complexes in Beijing not allowing door-to-door delivery but requiring tenants to meet the drivers at the entrance or the street out front.) The end result might be longer delivery times and higher fees. We just don’t know yet.

Wine companies also face many issues with the day to day running of their offices. Some won’t even be able to use their offices, such as in the case of shared space facilities that have announced extended closures after Chinese New Year holidays end. (Fernandez of Torres China says his office is locked down until February 10a week after the end of the holidays, and who knows if that date will stand.)

The Wine Australia statement noted above says that, “Following a request from the Shanghai local government, our China-based staff will not go back to the office before 9 February. Those who are able to are logging in remotely and working from home.”

Work-at-home (and school-at-home) arrangements will be short-term solutions. And this means ensuring everyone has the proper equipment and that company data is protected.

Okay, it’s after 4 AM and I need to get to get a few hours sleep but there are many more issues to cover.

Some companies face employees returning from holidays at different dates and thus have to stagger their home quarantine periods. In cases where employees run wine shops or bars that were closed during the holidays, that quarantine might mean staying closed for up to two more weeks, a heavy hit if rent and wages still have to be paid. One wine importer told me his stock is stuck in Customs, which has delayed its processing due to the coronavirus situation. There are also wine education companies like GrapeA that have suspended classes, in that case until the end of February, though with free extensions, including on exams. And the annual China Wine Summit, among other events, has been postponed. None of this touches on the impact on domestic wine producers, many of whom, including Period Ricard, have donated money or supplies to those fighting the virus in China. More to come on Grape Wall, including some non coronavirus-related news — yes, there is some!

Again, if you find this info helpful, please consider helping cover the costs of Grape Wall newsletter and website, either by WeChat (ideal) Paypal or credit / debit card. And to the dozen people who have supported Grape Wall so far, many thanks and I will do some proper recognition once we get past this virus.

Happy Year of the Rat. Here’s hoping it gets better from now on  And if you are reading this in China–remember to wash your hands!

Cheers, Jim Boyce
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