Regional Manager Report, Paul Attwood-Philippe

We talk to VINEX’s Paul Attwood-Philippe, business development director for Europe, about what sort of impact he has seen from Covid-19 across the region.      

What situation are you seeing overall across Europe as a direct result of the Covid-19 outbreak and subsequent shutdowns? 

Obviously everyone is seeing a dramatic slow down in trade, and the ease of business/logistics. On-trade sales are dead, but off-trade seems to be business as usual. We  have seen a slight uptake in shipping of currently stocked wines to keep pace with demand, but in terms of future tenders we have not really seen a change in buying patterns for wines due to hit shelves in September to December 2020. Buyers are generally cautious and are not wanting to commit until they see what the fall-out (in terms of supply) is from Covid-19, but the tenders are there and the inquiries for pricing/samples are being sent.  

Any countries/ regions that have been particularly more affected than others in terms of being able to move wine within their country and then for export?

All major supply markets seem to be open for business and there are no border issues. There was a rumour Italy would close its borders to trade but that proved unfounded. The EU and Schengen areas are currently united in their ability to allow 'cross-border' trade. We have heard of more problems shipping out of Europe to US and China, but this is a logistics issue (container boats being in the wrong place) rather than political.  

We have heard isolated cases of some wineries struggling (at least initially) with confirming trucks to transport wine across Europe, but generally traffic is flowing. As some products stop being ordered due to the lack of demand or the inability to supply, so logistics is being freed up for goods that are still flowing like wine.  

What do you see as the main short term threats to the industry?

Then main threats to supply are three-fold.

1) Staffing in the wineries or vineyards - not always at 100% for a variety of reasons.

2) Storage space in wineries - as on-trade sales stop so the pallets already destined for shipment stay in wineries and take up space that could have been used to increase capacity of off-trade sales.

3) Some wineries have reported shortages of dry goods, but overall I would say this (at the moment) is a minority, and most I have spoken to remain confident that bottles etc will continue to be delivered to keep pace with demand.  

Any sign that those issues are being settled or getting easier?

As we all adjust to the new normal and as there now seems to be signs of exit dates the general feedback is that if it’s only another month supply will largely be unaffected, and able to match demand.  

What impact are we seeing overall in terms of availability and supply chain movement in Europe?  

As above, supply (for off-trade) is matching pace of demand. We saw bulk buying have a short term spike, but now the hoarders are using up existing (home) stocks), so a slight drop off in demand. Overall off-trade demand is about 20% about 2019 like-for-like.  

We have heard of big sales spikes in online and off-trade and a collapse of on-trade - what impact is that going to have on availability down the line and major retailers in key markets being able to access enough wine to restock and keep sales going?

As above, as the likely impact of Covid is now probably only another four to six buyers are reluctant to change too much. Their key strategy seems to be bringing forward/increasing the rate of existing supply, and looking to renew contracts or extend options. They are prepared to see a few spaces on the shelves for a week or two. They do not want to commit to anything 'new' outside of their pre-Covid-19 plans.  

Any particular shortages or gluts in availability?

Not heard of either, from a European perspective, seems to be a fairly balanced market, with buyers maintaining strong incumbent relationships, and not looking to step too far out of their comfort zone.   

Any thoughts in terms of how producers are going to be able to work in their vineyards in the weeks to come building up to the 2020 harvest?

There is plenty of unskilled labour available as other jobs are closed-off, so that shouldn’t be an issue. More of a concern is the immediate threat of frost and other early-season weather events. Restrictions on movement and the short-notice nature of this means existing staff having to work longer hours to get everyone out to fight frost - coastal South of France and the Var region has been unusually hit. Burgundy, Loire and Champagne seem to be coping as frost becomes more of a risk due to global warming bringing forward bud-break.  

If there have been problems for companies what have they been?

Everyone seems to be adapting, working from home for many commercial/admin staff. If anything this cautious approach has given the buyers the excuse to take more time over decisions to see which way events go, and how this affects pricing. Sampling an issue as buyers not in the office, and certainly not group tasting as many did before  

Are buyers looking to secure more long term fruit/contracts?

I don’t think so, just maybe bringing forward current end contracts, so there may actually be a flurry of activity in a few months time for more 'top-up' orders to see buyers through to the end of the year. As on-trade picks up too there could be a second spike in overall demand.