How the coronavirus is affecting the English wine industry
From the obvious collapse of the on-trade and fall in tasting room traffic to the less obvious issues with mobile bottlers, we shed light on the impact of Covid-19 on the English wine industry.
With restaurants, including those within wineries, shut down, wine tourism put on hold, and travel restrictions preventing mobile bottlers and other specialists from carrying out essential winemaking processes, the coronavirus has hit the English wine industry hard.
The UK government has, however, listed food and drink manufacturers as “essential”, meaning that English wineries are allowed to continue operating so long as guidelines are observed.
As db has reported in the past week, online wine sales are also booming, providing a much needed cash injection for companies that have lost a sizeable chunk of their annual income.
However, despite strong online sales, Tamara Roberts, CEO of Ridgeview in East Sussex, estimates that the business will lose a third of its annual revenue in 2020.
In what should have been a milestone year for the winery – its 25th anniversary – Roberts has had to furlough staff, reduce hours and put celebrations on hold.
On-trade / off-trade balance
She is grateful, however, for past business decisions which has meant that the winery “doesn’t have all its eggs in one basket”. In other words it has business with both the on- and off-trade.
“It’s that mantra that has always been in my head. This is the biggest show of how much it matters,” she said.
As well as the on-trade and on-premise sales, Ridgeview also supplies Waitrose, Marks & Spencer, The Wine Society and Laithwaite’s. The winery also carries out contract winemaking and bottling for other vineyards, meaning that the production team “are kept busy”.
Like Roberts, Ruth Simpson, co-owner of Simpsons Wine in Kent, is thankful for support from off-trade partners, which including Roberson (online retail), Waitrose, Majestic, Naked Wines and local independent shops.
“It’s a lesson learned. We’d always wanted to be an on-trade brand, but if we had only focused on the on-trade all our revenue stream would have ground to a complete halt,” she said.
Others have been less fortunate. Warwick Smith of London-based urban winery Renegade said the coronavirus has “massively” impacted his business. Smith sells 85% of his wines to the on-trade. The remaining 15% are sold to the off-trade (5%) and cellar door/ taproom (10%), the latter of which has closed.
He said: “We have seen our trade sales go to zero. We have closed our cellar door/tap room and we are pivoting to sell more wine online direct to customers. We offer free nationwide delivery via DHL no contact drop service, with no minimum order.”
As well as changing tack, Smith is remaining positive and is grateful for the support given by customers. Renegade has launched a 2019 sparkling Grenache online, which customers are encouraged to riddle and disgorge at home. The winery, which is donating 10% of the sales of the red sparkler to Hospitality Action, is calling on buyers to send in videos of their do-it-at-home-disgorging.
Importance of isolation
Roberts of Ridgeview said she acted quickly after coronavirus began making headlines, closing the winery’s on site retail operation and implementing “internal social distancing”, keeping the production team away from other parts of the business.
However, she said that wineries do remain vulnerable as people still have to shop for their families.
“If we have an instance here of someone becoming unwell then obviously we have to isolate the whole production team for two weeks,” she said. “It means you can only plan so much, you almost have to work on a day-by-day basis.”
Roberts said that measures which allow the deferment of tax payments such as PAYE have helped ease the burden, but that companies must “graft a bit themselves” in order to understand what is available to them.
“It is quite a lot of work for businesses to do to get the support,” she said.
Unlike Ridgeview, which carries out bottling/tirage and other processes in-house, Simpsons and many other smaller wineries rely on assistance from overseas specialists.
Ruth Simpson told db that there was now a lot of contingency planning required which she described as “hugely frustrating and very time consuming”.
As the owner of two wine businesses, one in England and the other in France, Simpson has to be doubly organised. With visits from French specialists in the coming months now up in the air, she has had to re-arrange and find alternative solutions in the UK.
Services such as those offered by L’Institut Oenologique de Champagne can be usually be carried out in one visit. However, Simpson, while extremely grateful that she has been able to find replacement resources, said that processes may now take longer and will be carried out over several visits to the winery, making the whole process potentially more expensive.
Cash flow issues
Simpson also explained that she had to bring forward other purchases to ensure the winery keeps to its production schedule.
She said: “You had your timeline for all the dry goods that you had to buy, but instead two weeks ago we were panic buying all the glass bottles that we need for tirage 2019 because we had no idea whether the borders were going to be closed or whether they were going to shut the furnaces at the glass production facility.
“It all comes from France, there are no bottles made in England, so we had to bring forward all that purchasing at rubbish exchange rates as the pound has plummeted against the euro.
“If we don’t get those wines into bottle then we can’t go into harvest 2020 because we’ll have full tanks.”
Like Smith, however, she remains remarkably positive and praises the work of her team, stressing how important communication, as well as cash flow management, are during the health crisis.
Despite the coronavirus disruption, Simpsons is still planning to launch wines throughout the year. The winery has just launched the 2019 vintage of its still Gravel Castle Chardonnay, and is also bottling wines for Waitrose and Majestic.
Smith of Renegade, which makes wine from grapes grown in Europe as well as England, is also worried about cashflow. While he does not anticipate problems with obtaining grapes, he said the main issues for the business were staffing, cash flow and logistics.
“Given the pandemic, will we have the cash flow to buy 40,000kg of top quality grapes as we did in 2019? Will the cold chain logistics infrastructure we rely on to bring grapes back be running as usual? Will we be able to pay and look after staff so we have the top quality team in place in August this year. I bleeding hope so!” he said.
He added that the business was eligible for a government grant and that he would also be taking advantage of other support schemes.
How you can help
Ridgeview, Simpsons and Renegade are all taking part in the big English Good Friday this week.
Inspired by a tweet by the CEO of Black Chalk, Jacob Leadley, the virtual event will be held on 10 April at 7pm across social media platforms.
The aim is to encourage wine lovers to buy a bottle of English (or Welsh) wine direct from a winery or participating retailers in order to support the industry during the health crisis.
To find out more, please click here.