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‘Hands Up Who Wants to Open a Cellar Door Just as a Pandemic is Getting Started?’

By Wednesday 11 March 2020 April 5th, 2020 No Comments

“Hands up who wants to open a cellar door just as a pandemic is getting started?”

Tom Harvey of Chalk Hill Wines asked the question when WBM approached him to comment on the impact of the coronavirus on the Australian wine industry.

He still has his sense of humour. Which is a good thing because the long-awaited opening of the Chalk Hill Collective in McLaren Vale – which includes a stylish cellar door, a gin bar and a restaurant on a hill with beautiful views of the surrounding vineyards and hills – coincided with the coronavirus outbreak.

“The Covid-19 scenario is constantly evolving for us,” Tom says.

“Initially we were guilty of taking a defensive posture as we saw the inbound planned visits being cancelled by our Chinese customers and we moved early to cancel planned visits to Chengdu and Prowein.

“The information gaps and uncertainty spooked most of us.”

The Chalk Hill Collective, which includes Never Never Distilling Co., had its launch in early February.

Tom says they have since seen orders return from both China and elsewhere in Asia.

“As well as in northern Europe,” he says.

“I am not sure that it’s the green shoots after the pandemic hype, more a situation of our customers wanting to buffer against out-of-stocks that are likely with a backlog of international freight.

“That’s not to say that we have turned our outlook from bears to bulls, but soon the market will comprehend Covid-19 will be manageable and life will return to ‘normal’ before they make another toilet paper purchase.”

Having said that, Tom says, the damage has been done and we will likely see at least two quarters of negative growth tipping us into recession territory.

“However, the outlook for the long-term remains strong; it’s the short to mid-term that looks a bit shit,” he says.

“The fundamentals for China (and elsewhere) remain positive and we will be working from that assumption as we tackle the rest of 2020.

“If you want a baseless prediction, I think there will be fewer cases of flu this year than previous years, even if the reporting (through testing) goes up.

“My hypothesis is that with increased hand hygiene and more people prepping with a flu shot and staying home when sick, we will see fewer levels of absenteeism occurring for those of us who still have a job.”

Sarah Crowe, winemaker and general manager of Yarra Yering Vineyard, says summer visitation and consumer confidence were already down due to the bushfires and global economics. Then the coronavirus hit.

“The decline in travel to Australia is meaning less cellar door visitation but also many Australians are fearful of being around strangers and seem to be staying close to home,” she says.

“We have had cellar door visitors from Wuhan who were in Australia when the coronavirus broke out and haven’t been able to return home yet.

“Asia Pacific is the majority of our export markets and Hong Kong was just starting to recover after a tough year.

“Global travel is down and impacting on airline tenders.

“As coronavirus spreads globally we don’t know what the year will bring but my instinct is telling me that sales are likely to be impacted and as a business it’s time to tighten the belt.”

Dave Milne, sales and export manager for Josef Chromy Wines says, “Shit – were do I start?”

He is currently travelling to Europe.

“The biggest export-related trade activity for us, Prowein, was postponed two weeks out, leaving us and another 80 plus Australian wineries scratching our heads as to the best way to salvage costs incurred,” Dave says.

“The question we asked ourselves, with other events, dinners and time in trade organised, was – was it going to cost us more not to go and what meaningful meetings can we arrange?

“The conclusion we came to was to proceed and I am currently en-route to Europe with a quick a stopover in Singapore where I am now.

“Must say, either everyone was stifling their coughs and clearing of throats or people are taking it seriously and not travelling if suspecting something is not right, as there was not a peep on the plane last night.

“Temperature checks at the airport, check-in at hotels, walking into office buildings and restaurants asking for your contact details just in case someone coughs up a lung near you, and taxis even requesting contact details, makes you think, are we doing enough?”

Dave says Singapore retail and F&B are severely affected.

“The timing of this just prior to Chinese New Year could not have been worse and the Singaporeans are hurting,” he says.

“Tourists have stopped coming to the island and locals not going out for fear of running into a snotty tourist.

“Redundancies and forced leave are commonplace and hotel occupancy rates that are normally 90 percent this time of year are around 20 percent for many hotels. Extrapolate this same scenario throughout other parts of Asia and now with Europe coming down with the flu, it’s sobering news.

“The optimistic side says the lipstick effect may help get us through, but undoubtedly others are more exposed and you can only speculate where this may end and what the cost will be.”

Dave says Josef Chromy Wines has seen a large downturn in Chinese visitation.

“With Chinese New Year being one of the busiest times of the year at the cellar door and restaurant and large and regular tour groups cancelling forward bookings, it hurts and it’s tangible,” he says.

“Fortunately Tasmania is seen somewhat as a safe haven, and domestic visitation remains strong.

“Sometimes it’s nice to be an island.

“Here’s hoping borders remain open and I don’t glow for the camera coming back through Singapore and make it home.”

Brian Lamb, global sales and marketing director for Paxton in McLaren Vale, says the winery was hit by the cancellation of two major European trade fairs that are “significant export channels to our business”.

“Prowein Germany is vital to not just our European, but also US and Canadian business, and it allows us to meet, review and plan the coming years’ business strategy with well over two dozen trade partners,” he says.

“Not to mention the networking and sales opportunities it affords us for signing new trade partner deals.

“And secondly, our annual Swedish Road Show hosted by our importer has been cancelled which is untimely as Sweden has quickly become one of our top export markets (being an EU certified organic producer) and with  a new Monopoly product launching in March as well.

“I’m expecting more cancellations for US scheduled events to be the next wave.”

Samantha Jreissati, managing director of Levantine Hill says, “From our perspective, we expect that the wine industry will share the economic burdens the coronavirus has on the Australian economy as a whole.

“We do not see the wine industry suffering any more or any less than the rest of the economy.”

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