News 1 April 2020

“A new future”: winemakers consider how coronavirus will change the industry

The virus is a wake-up call to a “stagnant” industry, says one Burgundy producer, while others wonder if the status quo will return

Words by Adam Lechmere

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The trauma of the COVID-19 crisis should never be downplayed, but an increasing number of commentators are looking at the possibility that it will bring permanent change for the better.

Change might mean people realising that fresh food is preferable to packaged, and an evening walk is a pleasure – or that your business can thrive online.

(Main pic: Château Malartic-Lagravière)

For the wine industry, the crisis is a wake-up call to modernise, says Silicon Valley entrepreneur-turned-Burgundy owner Michael Baum.

“The wine industry has been stagnant for 100 years, trapped in the same multi-tiered distribution systems which are being exposed through the outbreak of COVID-19, and frankly benefit the middlemen much more than the producer or the consumer,” the owner of Chateau de Pommard says. This is an opportunity for producers to use technology to talk directly to their consumers.

“This is the impetus needed to shift the wine industry into a new future.” It’s a world of “increased volatility [and] demand fluctuation” but consumers still want to engage in new experiences, says Baum.

Michael Baum at Chateau de Pommard
Michael Baum at Chateau de Pommard

Like any entrepreneur worth the name, Baum – who made his millions on a series of start-ups, most notably the big data-analysis system Splunk – sees the virus not as a threat but an opportunity, in particular, to conduct more business remotely.

Because of climate change, the need to change our travel habits is paramount. “We have been preparing for nearly two years to embrace a new, more direct to consumer model, driven by advances in internet speeds access to collaboration tools, and the need for people to travel without creating a carbon footprint,” he says.

“With the restrictions on travel now and long into a post-COVID-19 future, the advancements we are embracing will be even more critical to us and the wine industry as a whole.”

Baum is not alone. Many other producers are enjoying sharp upward curves in online sales. Jgor Marini, European manager for Tuscany’s Banfi said they saw a ten percent rise in supermarket sales last week, and a 25 per cent rise overall.

It’s a reason to be cheerful, he told Club Oenologique. “We’ve actually seen some of our best off-trade sales ever. It’s a very good way to get cashflow and to keep ourselves afloat for when we have to revitalize the whole business.”

Castello Banfi il Borgo
Castello Banfi il Borgo

Montalcino’s Castello Banfi is part of New York-based distributor Banfi Vintners, which also owns Banfi Piemonte, and wine properties in the Pacific Northwest of the United States. The conversation it is having now, says Marini, is which of these changes will become permanent? “It’s a good question. We’re already discussing how we will develop online – there’s been such an increase in activity we are thinking about bringing our online sales in-house. There’s lots of opportunity to develop new ideas.”

The trend towards sourcing as locally as possible will also accelerate. Food companies across Europe are focussing more on local suppliers as long-haul supply chains are compromised.  “We are already seeing changes in business models in some industries,” Forbes commentator Rob Day said recently. “Buyers are clamoring for local food, food with short supply chains, and proven and traceable provenance.” For the wine industry, whose USP is an unbreakable connection to the earth, this is a boon.

“We’re all tired of buying products which have travelled around the world before reaching us,” says Severine Schlumberger of Domaines Schlumberger in Alsace. The reward “after all this,” she says, is that people will seek a stronger connection between nature and the products they are eating and drinking.

“For companies like [ours] this is probably good news. We are 100% estate, family-owned, sustainable farming and have tons of stories to tell.”

Malartic Lagraviere
Famille Bonnie
The Bonnie family of Château Malartic-Lagravière, with Severine Bonnie second right, next to her husband Jean-Jacques

Another major producer, Severine Bonnie of Graves Grand Cru Classé Château Malartic-Lagravière (main pic), made another point. Wine is indeed rooted in place, but “buying fine Bordeaux is not like buying a salad – our customers in Hong Kong, and the US, and the UK, buy our wine because they want to experience our very particular terroir.

“So we have now to find that balance, between the need to think and buy local, and the need to fulfil the wishes of our global audience.”

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