How the World is Coping With Coronavirus

This article is my contribution on the China section for a special commission by the Circle of Wine Writers and made accessible for all to read in full:  How the World is Coping With Coronavirus

The Circle of Wine Writers is the world’s leading international association of authors, writers, journalists, bloggers, broadcasters, photographers and lecturers, communicating about wines and spirits.



Janet Z Wang, author of The Chinese Wine Renaissance, reports on how China has been coping with the crisis. As the first country to suffer from the disease, she looks at how things have progressed since its discovery in December 2019 and what wine businesses and wineries are doing to survive the storm.

China’s wine imports dropped 30.4% by volume and 28.3% by value in January and February 2020, versus the same period last year (customs data).

Over half of China’s 1.4 billion population went into self-quarantine around the Chinese New Year (24th January 2020) due to the emergence and escalation of COVID-19. Traditionally, the week following CNY are the most active period when people visit close family and friends. As a result of the widespread lockdown, the gifting season was abruptly cut short, though sales leading up to CNY were normal, but over 50% of gifts bought were not given out. Many wine retailers estimate around 80% of stock overhang, which would take them beyond Q2 before restocking. Ironically, ample stocks mean that recent increases in international freight costs and supply disruptions from elsewhere will not adversely impact China’s import needs for at least the first half of this year.

Within the Chinese wine trade, many are speaking of the biggest ‘reshuffling of the deck’ and ‘skimming off the foam’ since 2011 (Bordeaux en-primeur crash followed by China’s anti-corruption initiatives) – euphemisms for the waves of bankruptcies expected to manifest, especially among small- and medium-sized distributors and retailers. Around 250,000 Chinese companies have already filed for bankruptcies in the past two months.

Online becomes a lifeline

Overall wine sales were down by 40% in January and February. However, behind this headline figure, there are losers but also survivors, even ‘winners’. Whilst many brick-and-mortar wine shops and restaurants lamented about sales being down by 99.9% (reads more like the amount of germs that Dettol promises to wipe off!), several established online retailers have seen over a 120% increase in sales in the same period.

In China, wine drinking is a social activity, and very few people would drink wine alone at home. That is why ‘Cloud wine tasting’ sessions, either casually among friends via WeChat video chat, or being guided by experts or influencers on live streaming platforms (usually with the aim of selling wines), have been gaining more traction, especially among urbane millennials. There is also the livestreaming of classes with wine experts and mixologists to teach people about wine and making cocktails at home. The hope is to cultivate wine consumption at home beyond the quarantine period. Isabella Gao – owner of Beijing’s The Merchants wine bar and restaurant, says she had to divert to takeaways and online sales to stay afloat. “Luckily for me, I am also an importer and agent for Zalto and Coravin and both have sold like hot cakes, and I cannot keep up with demand. This is so interesting, it means people are drinking at home, and drinking in style.”

Production not impacted

Production has not been significantly impacted. “In China, this period after the Chinese New Year is light season for both the vineyard and for sales,” says Wang Fang, owner of Ningxia’s Kanaan Winery, “plus vineyards tend to be in remote parts of China with sparse population around them, so the impact on our work is limited. The silver lining is that I have had the time to reflect, and explore livestreaming and online channels. I have personally done four livestreaming sessions on our own T-Mall flagship store during lockdown.”

Mr Tian Jiang of Martin Vineyard, in Hebei province, says, “Vineyard work is long term, the virus is here for the short term. We are doing all our work in the vineyard and winery as in normal times.  Sales certainly will be impacted. But this could be a good chance for Chinese domestic wines, as the supply outlook is more certain and prices more stable.”

Mr Zhang Yanzhi, owner of Ningxia’s Xige Estate pointed out: “the pressure is mostly on cashflow. Investment and work cannot completely stop in the vineyards and wineries, but sales may be down for a while. So careful management of cashflow is key”.

Looking beyond

1. Acceleration of existing trends

China is already the largest online wine and spirits market in the world. The post-pandemic world will amplify the significance of e-commerce and is likely to accelerate further the onset of ‘New Retail’ – a concept that morphs and integrates the offline and online business models and consumer experiences (which I have written on in more detail for Meininger’s Wine Business International).

The trend for premiumisation will also be underscored as people focus even more on health and quality. Premium-brand wine and spirits, including whisky, baijiu and health-tonics are likely to benefit.

2. Consolidation vs. fragmentation

There are two diverging predictions about China’s market outlook. In the one camp, analysts are expecting consolidation of both brands and channels. This trend would favour big players, who are well positioned to suck up the market share left behind by SMEs unable to survive this ‘black swan’ event. These larger players have been busying with PR activities during the lockdown with online streaming contents and large donations to the frontline efforts in Wuhan. The importance of trust in brands and distributors will also favour consolidation. In the other camp, some professionals believe in further fragmentation of the market as generational and technological trends – that younger consumers want to seek out characterful brands with stories, they enjoy time-limited ‘Groupon’ style deals, or demand personalised purchases and exclusive tasting experiences. The jury’s still out, but both camps will fight tooth and nail in ever competitive market conditions.

3. Old habits won’t change

Although much has been said about live-streaming and e-commerce during the lockdown period, some professionals are not convinced that they will fundamentally change people’s drinking and spending habits post crisis. Mr Zhang Yanzhi, owner of Xige Estate in Ningxia and founder of importer/distributor Easy Cellar, believes that people will quickly revert back to old habits: “we mustn’t underestimate the importance of traditional channels: shops, restaurants and personal experiences. Be under no illusion – online is no saviour for the enormous loss of physical sales in the past months”. However, he adds a positive note: “Overall this crisis doesn’t change fundamentals, it just accelerates what will happen and clears out weaker and unprofessional players sooner. Quite simply, there is only one big trend: the Chinese wine market is only going to grow.”















Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s