Bars and restaurants are just starting to open up across Europe after the COVID-19 lockdown but what has happened to the millions of bottles of wine that would have been enjoyed by customers during the time the lockdown has been in place and what will that mean for the 2020 vintage?
The global wine market is dominated by the big exporting wine economies, Italy, Spain, and France that together produce more than half the world’s wine. These countries are major consumers of their own wine where over half of their domestic wine purchases occur in restaurants and bars (the “on-trade”). With COVID-19 lockdowns closing all restaurants and bars, that leaves an awful lot of undrunk bottles sitting on restaurant wine racks and huge volumes laying in producers’ cellars. According to the International Organisation of Vine and Wine (OIV), wine producer revenues in Europe could be cut in half due to the closure of bars and restaurants and if predictions are true that a COVID-19 vaccine won’t be ready for another 12 to 18 months, European on-trade sales are unlikely to flourish again any time soon.
The 2020 wine grape harvest will start in August/September for many wine producers, but with their cellars full of unsold stock, what will they do? Lorenzo Cesconi, vice-president of the Italian Independent Winegrowers Federation (FIVI) says wineries must avoid ‘at all costs’ being left with surplus wine when the new vintage arrives in the cellar. Why? A large surplus would pull prices down, eventually devaluing all quality wines – a potentially devastating outcome that would take the European wine industry years to recover. A number of regulatory bodies across the continent have proposed lowering minimum yields (the amount of wine that is produced per unit surface area of vineyard) below what’s currently allowed by regulations. However grapes are an agricultural product and you can only limit production a little unlike commodities such as oil. Even with production control measures, a surplus of a billion litres of European wine could be produced in France, Spain, Italy, Austria and Portugal in 2020 according to industry experts.
What will be done with this surplus? The answer is Vodka! Distilling great French and Italian wine from the 2020 vintage into clean spirit for vodka and gin might sound shocking to wine drinkers but with the uncertainties of the pandemic on top of added difficulties such as the US’ import tariffs and Brexit all looming in the background, the revenue from the distillation of surplus wine would ensure a slightly less awful 2020 for the European wine industry.
