Hear from our International Market Managers

A short piece from each of our market managers summarising what they're hearing in their markets right now, and sharing some ideas of what other wine nations are doing within the current limitations.

Asia - Natalie Potts

China  
China is showing clear signs of recovery with estimates that now 90-95% of businesses are back to work, and consumers are shopping again. However, many businesses are still reeling from the shutdowns of the past few months, amid predictions that it will be at least another month before things get back to ‘normal’.  

Many restaurants and bars are re-opening and engaging in PR and promotion to reignite business. Restaurateurs are reporting a gradual return of business, with safety measures such as temperature and ID checks on entry, cutlery individually wrapped in plastic, staff wearing masks and gloves, and fewer tables to allow for spacing.  

The China Food & Drink Fair in Chengdu and associated events have been postponed a second time, after the initial rescheduling to late May. Decanter Fine Wine Encounter Shanghai, scheduled for November 2020, has been cancelled; ProWine Shanghai is still scheduled to go ahead mid-November, as is the 3rd China International Import Expo (CIIE).  

As a result of COVID-19, NZW decided to instead focus on online education, leveraging our well-established education programme, running since 2013 with a range of different education partners across China. By moving quickly, we have hosted four livestreaming education sessions since late February, reaching over 17,500 participants, as well as adding more than 800 active new followers for our Wechat official account.  

In addition, we are developing a Wechat Mini-App to help streamline information on New Zealand wine in China and support our future projects and events.  

We are also holding a webinar with China market expert Ian Ford, co-author of the NZW Guide to China Market, in mid-May. Registration information will shortly be available here.

For User-Pays activities, NZW has cancelled the May 2020 edition of our popular NZ Wine Fairs in Shanghai, Beijing and Shenzhen. Instead, we have created an online national pavilion at a newly-created online expo hosted by Lookvin, taking place mid-May, and more than 20 wine brands have signed up to participate. We expect to see more of these online expos cropping up and will be watching results closely. 

Hong Kong  
After months of intense social upheaval and political unrest, COVID-19 has put further stress on the city’s beleaguered F&B industry. The city has banned gatherings of more than four people at public venues such as restaurants, while nightclubs, bars and pubs are closed for an extended period of shutdown. 

Vinexpo HK, rescheduled to early July, is looking increasingly unlikely following the withdrawal of Wines of Chile as Country of Honour. NZW’s planned seminar on Sustainability at the expo is no longer going ahead. 

Singapore  
After initial success in controlling the virus, Singapore has seen a resurgence of COVID-19 and the government has extended the ‘circuit breaker’ Lockdown until 1 June.  

Key on-premise players were down 50-60% in March, likely to fall further in April due to the closures of bars/nightclubs/KTV bars and other entertainment venues. The entire city is now on official Lockdown, with all workers in non-essential services now working from home, and both public and private gatherings of any size banned.  

The proposed ‘Bring NZ to Singapore’ activity is on hold indefinitely. 

NZW commissioned a Guide to the Singapore Market, which is currently with our Design team and should be ready for members in the coming weeks. We are planning a webinar in late May with its writers to help pull out some of the key takeaways. Registration information will be available here.

Japan  
The Japanese government has not fixed a Lockdown, instead declaring a state of emergency that will remain in place until May 6 in Tokyo, Osaka, Kanagawa, Saitama, Chiba, Hyogo and Fukuoka. 

However, the Tokyo metropolitan government has requested restaurants and bars to stop serving alcohol after 7pm and close by 8pm. The government has allowed sales of alcohol (of existing listings or from existing suppliers) for takeout and delivery, introducing a new 6-month alcohol sales licence. It is reported that liquor stores saw increase of 10% in spending as bars closed. 

NZW has cancelled a planned seminar and New Zealand Wine Tasting, due to take place mid-June, and is instead planning a social media campaign. 

Canada - Andrea Backstrom & Melissa Stunden

Since the declaration of the Global Pandemic on March 11, Canada has undergone significant changes within the hospitality industry. According to Shanna Munro, president of Restaurants Canada, the restaurant industry has been one of the first to feel the effects of the COVID-19 crisis. To date, it has been one of the most affected industries in Canada with 80% of restaurants having to lay off staff and over 800,000 jobs lost. The closure of these restaurants has had a significant impact on the sales of wine, spirits and beer, with many restaurants looking for new ways to adjust to the current landscape. In some cases, formerly dine-in only restaurants are now offering take-out, food baskets and the option to choose items from their beverage list including wines and pre-batched cocktails. This privilege, most recently granted to all licensed bars and restaurants, provides the ability to sell alcohol with food takeout and delivery orders. This has helped some agents who sell directly to the on-premise but has certainly not replaced former business numbers. The SAQ in Quebec, released on Friday that they are now permitting the sale of mixed cases which should also help smaller agents focusing on private order with the ability to sell multiple wineries in one case direct to consumers. Overall, the entire hospitality industry is on a bit of pause.

On the flip side, Liquor, Wine and Beer retailers across the country are seeing record breaking ‘Christmas like’ sales. Some provinces recording an increase of >40%. Shoppers are also changing the way they are buying by purchasing larger formats rather than regular size bottles or individual cans and have been buying up in bulk. There has also been a demand for online purchasing in provinces where E-Commerce is available, using click and collect orders or pre-orders to adhere to social distancing regulations and avoid long line-ups.   

We continue to activate our in-store retail promotions planned for May in British Columbia, Ontario, Quebec and Nova Scotia which include multi-week features both in store and online. In-store tasting programs and any product consultant trainings have been cancelled until further notice.   

Wine events for New Zealand and other country associations have been postponed until the fall. Final decisions on whether to proceed will be made in June once we have a better understanding of the government’s restrictions moving forward. 

We have organized a series of educational and conversational webinars both in Canada and in partnership with our colleagues in the UK and US to continue to tell the New Zealand story and to keep our wines top of mind for when the world regains some normalcy. 

UK & Europe - Chris Stroud

Across the UK & Europe the COVID-19 pandemic has had a huge impact on business. In almost all countries the On-premise and hospitality industries have been forced to close.

In the UK, the split between on-premise and off-premise volume is approx 85% off-premise to 15% on-premise, although value is more like: 65% off- to 35% on-premise.

As a result, supermarkets have been very busy and the Beer, Wine & Spirts category has seen significant growth. For instance, in the week leading up to Easter, BWS was up 29% and is seen as a super category as people are bringing the entertaining out occasions, to home consumption.

In the Independent sector, many shops have adjusted their opening hours and working in line with social distancing. Delivery and online sales have had a big boost and many are trading successfully. That said, many independent businesses also rely on wholesale, events and consumption on the premises, and this is a large revenue stream that has disappeared, so they are currently trying to get by. They are looking for ways to engage with their customers and educate and are using the opportunity to trade up.

While the on-premise is closed, some restaurants are able to offer takeaway services, and this includes wine. Specialist importers have also switched their businesses to focus on online Direct to Consumer.

This is a similar story in other countries around Europe. Sweden is one country that has done things differently, with many businesses staying open – including restaurants with social distancing measures imposed.

There are many sources with great information:
The Buyer
The Wine Merchant

We will be hosting a webinar with Richard Siddle, Editor of The Buyer magazine, on Wednesday May 6th (9am NZT) to discuss the current situation and challenges in the UK market. Please register here.

USA - David Strada & Ranit Librach

As we all know, the US is a large and diverse country. The initial impact of COVID-19 was felt hardest in urban areas (Seattle, Metro New York, Detroit, New Orleans, Chicago) and is now spreading to smaller markets in Middle America. The incidence of new cases, and fatalities, has begun to slow down, yet that is not to say it has gone away. Testing is still very limited and a vaccine or effective treatment drugs are in development and a long way from release and use. Social distancing has been in effect across most of the country and it appears to be working. A number of states have shown good leadership in implementing this, the Federal government has not. Anxiety and economic concerns could lead to premature lifting of restrictions and that could very well extend the impact of the virus.

The impact of social distancing in the on-premise sector was immediate and almost total. Restaurants and bars were closed in different parts of the country at different times, but that channel has been pretty much closed off. In some instances restaurants have been allowed to sell wine along with carry out food. Some restaurants are selling prized bottles from their cellars to generate cash. Others are selling every day wines that customers are able to afford. The carry out scheme has allowed some restaurants to remain active, but in most instances it falls short from breaking even. More than 20 million Americans have filed for unemployment benefits in recent weeks. Most restaurant employees have done so. Varying estimates have been made of the number of restaurants that will not re-open after the sanctions are lifted. It is difficult to put a figure on that at this time, but it is clear that it will be large. Those that manage to re-open will focus on a business model that cuts expenses and offers dining experiences that customers see as affordable. Travel and business dining and entertaining expenses will be greatly reduced for some time and that will limit restaurant business.

Similarly, the impact on retail sales was immediate. Those outlets that could fulfill delivery and curbside pick-up orders were very busy. Initial Nielsen data, although limited, showed dramatic increases in all alcohol sales. Wine.com, which is available across most of the country and has real time data on their sales, showed sales tripling. Daily receipts were at $1 m. Historically New Zealand represented a 3% share of their business. That jumped to 5%. It is believed that some sales were to stock up to ride out the duration of Stay-at-Home directives. Sales, however, have continued to be strong.

Most of the country has been in social distancing for well over a month and it is likely that most of that will remain in effect at least for another few weeks or longer. When we return to ‘normal’ it will be gradual and it will be a new normal. What this new normal looks like is very hard to tell as there will still be restrictions in place and we will not go back to what things looked like pre COVID-19.

The US market is the world’s largest wine market, and the most competitive as well. There will be many countries and regions in addition to New Zealand looking to sell their wines in this new reality. Prior to COVID-19 there was an excess of wine in the market. With wine being agriculture, additional supply from future vintages is difficult to control. Recent retail sales have been strongest in the $15-$25 range. New Zealand is very well positioned in that category.

We will be hosting a webinar in late May continuing the discussion on the opportunities in the US market in the Digital Space/ DTC. Please keep an eye on the webinar schedule on our website for registration details.

We have organized a series of educational and conversational webinars in the US and in partnership with our colleagues in the UK and Canada, to continue to tell the New Zealand story and to keep our wines top of mind for when the world regains some normalcy.

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