Since We Don't Talk About It Enough... Coronavirus!

It seems like today you can jump into any conversation at the GSB and know exactly what's being discussed: Coronavirus.  It's the one thing that's on our mind as we contemplate questions like will be attending school next quarter?  Will we be able to travel and see loved ones?  And most importantly, will BPL still be happening in the spring?

In the midst of all the news coverage about the demise of airlines and the meteoric rise of Zoom, there is one thing that has been forgotten.  What will be the future of wine?  Although I find it impossible to speculate on the ultimate effects that COVID-19 will have on anything, it's always fun to try and predict.

One of the regions that is expected to be hit the hardest from COVID-19 is Italy.  As an Italian, this seems like a good place for me to focus.

First, on the domestic front.  Italy has the 2nd oldest population in the world by one commonly used measure, which causes COVID-19 to be especially dangerous.  As a result, the country is essentially on lock down mode.  People are staying home from work and not going out with friends.

The first effect that this has is that some wineries don't have the necessary labor during this essential pruning season to prepare the vines.  There's also a risk that many of Italy's top wine makers are particularly prone to COVID-19 due to their age, and one has to hope that these wineries have adequate succession plans in place!  Certain wineries in quarantined regions have halted new production altogether, meaning that there will come a time when they have no wine to sell.

Another effect of the quarantine is that there is less tourism to Italy and Italian consumers are not out as much as before.  This equates to less people visiting restaurants and bars, and thus spending less on wine.  Similarly, people are not visiting wineries as much, especially those in or near quarantined zones.  Although March tends to be a low season for travel to Italy, if the coronavirus scare continues through the summer, this could prove disastrous for wineries.

Additionally, major wine events are being canceled or postponed due to coronavirus, many of which are often massive sales and marketing opportunities for these wineries.

Finally, as uncertainty looms in global trade, one of the biggest challenges has to deal with Italy exporting wine.  In 2017, Italy exported $161 MM of wine to China.   Sandro Boscaini, chairman of Masi, which produces a variety of wines in Tuscany, describes the Far East as "Completely frozen.  Nothing is getting shipped there and our agents there are all blocked. Meetings, tastings and presentations, which are key for getting people in Asia acquainted with Italian wine, have all been canceled."  Masi exports roughly three-fourths of what it produces, so as more countries start to place restrictions around trade, this could spell catastrophe for Masi and other similar Italian wine producers.

So the next time you head out to buy wine for your own quarantine party, consider helping the Italians out and purchasing an Italian wine!