There are growing concerns about the effect the deadly coronavirus will have on the Australian wine industry.
Australian wine exports to China (including Hong Kong and Macau) reached a record value of $1.25 billion in the 12 months to September last year – an increase of 18%.
Chinese New Year is normally a peak time for wine sales. It was celebrated on January 25 this year, but festivities were shut down in many parts of the country.
Wendy Liu, China strategist at UBS, said retailers were likely to suffer as people stayed at home to avoid crowds.
“Furthermore, on-premises alcohol consumption is likely to be negatively affected,” she said in a report.
Wine Australia CEO Andreas Clark gave this update: “In light of the coronavirus outbreak in China, I wanted to reach out to let you know how Wine Australia is managing our ongoing activity in the China market.
“Following a request from the Shanghai local government, our China-based staff will not go back to the office before February 9. Those who are able to are logging in remotely and working from home.
“Of course, our first concern is our colleagues’ welfare, so I am very pleased that they are safe and well.
“We also are concerned about the well-being of our exhibitors and suppliers and this concern will guide any decisions we make about proceeding with or cancelling events.
“At this stage, it is too early to make a decision about Chengdu in March, Vinexpo Hong Kong in May and the China Roadshow in June, noting that the Chinese government has cancelled events in February where there would have been large gatherings of people, but to date no action has been taken about events in March or later.
“We are monitoring the situation and liaising with the Department of Foreign Affairs and Trade and we will be guided by their advice. We will keep you informed as the situation evolves.”
Meiningers noted: “Some even wonder if the virus crisis might have a major impact on Tang Jiu Hui, the China Food & Drinks Fair that is only eight weeks away. It’s the country’s biggest fair and considered a must-go for many.”
Australian Foreign Minister Marise Payne announced today that the travel advice had been updated to “reconsider your need to travel” to China, following the virus killing more than a hundred people in China.
Thirteen Chinese cities are in lockdown as the coronavirus death toll climbs. The death toll has reached 132, with the number of confirmed cases rising by 1459 to 5974.
Taylors Wines winemaker Mitchell Taylor told Australian Financial Review. restaurants and bars suffered from a sharp decline in customers.
“We are quite concerned looking forward,” he said. “We’re watching it fairly carefully.”
Treasury Wine Estates CEO Michael Clarke said it was too early to make any predictions about the effect the coronavirus would have on wine sales.
“It’s too premature to make a call on this,” he said.
Clarke noted that predictions Hong Kong wine sales would fall because of riots had been proven wrong, with business growing.
“It’s not always correct just to join the dots,” he said.
The coronavirus is expected to have an impact on Australian wine tourism, which is already struggling because of the bushfires.
Sophie Wu, director of local travel agency CYC Travel, told the Australian Financial Review she’s had at least two significant cancellations since the outbreak of the virus.
She said the cost of the cancellations on her business is significant: “You can guess. It’s 12 days per group, and up to 100 people at $300-$400 per day.”
Economist and former Reserve Bank board member Warwick McKibbin told The Guardian: “The virus itself has a pretty small impact in itself, but the way people respond has a larger impact.
“You turn off the flow of Chinese tourists for six months and that’s a big economic shock.”