2020: between COVID, duties, Brexit, laws and economic crisis, is the annus horribilis of wine

For the first time since the end of 2014, the value of world wine exports shows a negative trend: as shown by the data analyzed by Oemv - Observatorio Español del Mercado del Vino, in the 12 months from March 2019 to March 2020, international wine trade lost 236 million euros (-0.7%), stopping at 31.43 billion euros, essentially due to the first quarter of 2020, when 350 million euros of exports were lost. France alone left 245 million euros on the ground, “punished” by the U.S. market after the entry into force of new duties, which saved Champagne. In overall terms, quantities grew to 10.34 billion liters (+1.4%), with an average price drop of 2.2% to 3.04 euros per liter. Well Italy, which in the 12 months shipped 2.191 billion liters of wine worldwide (+9.6%), for a turnover of 6.507 billion euros (+3.6%).
The impact of the lockdown, as we have often mentioned, will be evident from the figures for the second quarter, and will probably continue until the end of the year, with expected repercussions also for Italy, which had the wind in its sails, thanks in part to favorable international conditions: saved from US duties on the one hand, which is recovering in China and Japan, in the wake of the Free Trade Agreement (Economic Partnership Agreement) between the Rising Sun and the European Union, which came into force last year.
And this is the sore point: if the tragedy of this year 2020, health, economic and social, is the Covid-19 pandemic, for wine the uncertainty that continues, or returns in the major markets risks being an important obstacle for recovery. It will take a few more days before we know whether or not the Trump Administration will have included Italian wine and food in the blacklist of EU products affected by new US duties.
The consultation procedure of the U.S. Department of Commerce ended on July 26, and the data relating to France give the measure of how real the danger is, especially for Italy, which has in the United States the reference market.
And then, on the internal European front, there is still Brexit on the table, whose effects on the wine trade are all to understand. Everything will depend on how the trade negotiations with the EU will end at the end of the year: If an agreement will be found there won’t be big problems, but there will certainly be more competition with non-European productions, and therefore with Australia, New Zealand, South Africa. If, on the other hand, no agreement can be reached, including in terms of labeling and recognition of designations of origin, then wine companies will have to work to adapt to a new context. In China, after two years of decreasing imports, not so much from Italy as from France, the drop in consumption has hit hard: With the lockdown imposed by the Government after the first outbreaks of Covid-19, the country’s economy suffered a lot, especially that of bars and restaurants, and the cancellation of the Chinese New Year was the icing on the cake of an already difficult situation. Not too much better in Japan, where 2019 for wine exports was also the year of the relaunch: the economic crisis here will hit hard, between skyrocketing public debt and swooping consumption. And we must not forget Russia, where a new law came into force on June 26, Federal Law N 468-ФЗ “On Viticulture and Winemaking in the Russian Federation”, which regulates the market and production of wine in the country, introducing important restrictions on imports of bulk wine, a niche, perhaps not so important, but which will have to face a big problem. Ultimately, the combination of all these fragilities at an international level, besides of course to the pandemic that is still far from being defeated, risks turning for wine, Italian but not only, in an even worse year than we could have imagined a few months ago.