UK wineries expect revenue to fall by average of 52%
A report published by the University of Edinburgh Business School has assessed the impact of Covid-19 on the UK wine industry, finding that businesses expect revenue to fall by an average of 52%.
The independent report, assessing the impact of coronavirus on English and Welsh wineries, has been published following a survey conducted by Professor Francis Greene together with Dr Alessandro Rosiello.
The pair surveyed 92 wineries during April and early May to access the impact of the pandemic, and the closures that resulted, on wineries and vineyards.
Two-thirds of those surveyed said they have experienced cashflow concerns, while half have delayed strategic investment. Half of larger vineyards are concerned about the availability of seasonal workers, which often hail from eastern Europe. This is in spite of the government’s Pick for Britain campaign.
A third of winery owners are dealing with supply chain issues, while four out of 10 have experienced higher stress levels. The latter could be in part down to the fact that 62% of those stating they had experienced cash flow issues said they used personal savings, or retained earnings, to keep their company afloat.
Only 24% believe the government’s Covid-19 support will help them through the pandemic. One quarter of those asked said they have had to reduce their overall headcount.
Three-quarters of those surveyed expect a significant fall in turnover: none expect their takings to rise. Other concerns highlighted in the report include the availability of tank and storage space and loan repayments.
Wineries have, however, taken a number of decisions to mitigate losses. 33% have sought to delay re-payments to ease cashflow pressure, while half have taken advantage of the government’s Job Retention Scheme.
Online sales have also risen during this period, with more wineries encouraged to enter into e-commerce, including Rathfinny. Two-thirds of those surveyed already had an online presence, and these wineries said that sales via this channel have risen by 25% on average.
Despite the fact that more than half of those in the report said they expected their business to shrink, Greene and Rosiello noted that producers were “upbeat” about their survival, with one-third stating their business will stay the same, while just under 10% predicting growth.
It follows a report by the drinks business in April in which wineries stressed the importance of an on- and off-trade balance.
Commenting on the report, Simon Robinson, chairman of Wines of Great Britain, said: “We welcomed the opportunity to assess how many of our members were managing during this crisis, and are very grateful to Professor Greene and Dr Rosiello for providing us with this informative report. There are many actions we can take from these pages that WineGB will develop and provide additional support for our members.
“As with many other sectors, our industry has been badly hit by the downturn in sales, particularly with hospitality in complete lockdown and our vineyards also being closed to the public. Although this crisis has had a significant impact on our fledgling industry, we nevertheless remain very optimistic about the medium- to long-term future. As a trade association we are better informed to work constructively with government at all levels to ensure that our members have access to the support they need.”
The full report can be viewed here.