PROWEIN BUSINESS REPORT 2020

On behalf of ProWein, the Geisenheim University surveyed experts from 49 countries at the end of 2020, thereby covering the entire value chain of the wine industry. This year's survey focused on the effects of Covid-19 on the global wine industry.

According to Prof. Simone Loose, Director of the Institute for Wine and Beverage Research at the University of Geisenheim, the ProWein Business Report is the first report worldwide to quantify the global impact of Covid-19 on the different areas of the wine sector and to measure the expectations for the necessary future direction of the wine industry.

The effects of the Covid-19 crisis and the expected negative impact on the global economic situation are by far the most important challenges facing the wine industry this year. Compared to last year, the threat of climate change and health policy have receded somewhat into the background due to the acute threat of the pandemic, but are still considered important.

As a result of global restrictions, the Covid-19 crisis has led to an abrupt change in the purchasing behaviour of consumers. In many countries there have been extensive closures and restrictions in the restaurant and hotel industry. International tourism, which is of immense importance for sales in countries such as Spain, France and Italy also came to a virtual standstill. In return, consumers were more dependent than before on buying their wine at food retailers or online.

The restrictions imposed by Covid-19 mainly affected restaurants and hotels, 77% of which, according to the results of the survey, had to close down at least temporarily. The hygiene measures imposed led to higher operating costs, restrictions in the services offered, lower occupancy rates and declining turnover for more than 60% of the restaurants and hotels. The whole sector suffered and still suffers from the almost complete cancellation of private and public events and festivities. Compared to restaurants and hotels, the wine trade was much less affected, with only 25% of businesses having to close and/or suffering a loss of turnover. On the other side, 38% of wine retailers reported increased sales since March 2020.

Hotels and restaurants have been hit hardest economically by the closures, hygiene measures and the collapse of tourism. For about 80% of the businesses, the economic situation has deteriorated due to Covid-19, 30% of which deteriorated very strongly. Starting from a positive level in 2019, the economic situation of hotels and restaurants has thus fallen drastically to the most negative value of all examined sectors of the wine industry. In contrast, the current economic situation of the specialist wine trade is the most positive of all sectors, even if it is declining compared to the previous year. Wholesalers and importers lie between the two extremes with a significant decline but largely satisfactory economic situation.

Sales to direct customers could be increased for 44% of wine producers – specifically through special offers with discounts (46%) and increased customer activation via newsletters (40%). Every fourth wine producer tried to profit from the sales increases in the food trade and online trade by negotiating new listings there.

The expected negative economic effects of the Covid-19 crisis will also weigh on consumers' disposable income in the future. The wine trade therefore expects wine buyers to be more price-sensitive in the future, but at the same time hopes for an increase in demand for regional and sustainably produced wines. Experts unanimously expect a slow recovery for the restaurant and hotel industry. The majority expect further restraint and caution on the part of tourists even after the crisis, and only one in three hopes for a rapid and strong increase. Therefore, hotels, restaurants and their wine suppliers still require a great deal of persistence to bridge this phase and survive economically. Every third expert is optimistic and expects a complete recovery of wine sales in the gastronomy sector after Covid-19, which also offers opportunities for new innovative business concepts.