Wineries Battle to Come to Terms With Coronavirus’ Economic Effect
Photo by boyoz/Shutterstock.com
The impact of the COVID-19 pandemic on the wine industry is deep and far reaching right across the winemaking world, with many Hungarian wineries significantly affected and facing export uncertainty as well as a halt on sales to local restaurants.
Traditional wine cellars in Hercegkut, Tokaj region. Photo by boyoz/Shutterstock.com
Nevertheless, online and supermarket sales are booming. Some wine shops and delicatessens selling wine remain open, albeit with limited access and social distancing measures in place.
Online sales are taking over as people, for the most part, keep off the streets, other than trips to buy groceries, often to supermarkets where the shelves are stocked with wine (usually the less premium stuff). Meanwhile, restaurants have either closed or switched to carry out and home delivery, killing the so-called on-trade wine business almost overnight.
“It’s tragic, there’s no doubt about it,” says Rob Gilvesy, the Canadian-Hungarian owner of Gilvesy Pincészet, an organic winery on Szent-György Hill in the volcanic region of Badacsony, on the northern side of Lake Balaton.
“Some 50% of our wines are sold to the on-trade and that channel has dried up, although home delivery has increased.” Gilvesy adds that the coronavirus presents a real challenge to a lot of winemakers, especially regarding sales.
“There’s real uncertainty on the part of buyers. Two out of three of our recent international orders have been canceled: the wines were all packed up and ready to leave the cellar,” he explains.
However, those selling to large supermarkets are doing well, Gilvesy opines. Vineyard work is going on, with extra care taken. “Vines are going to grow, we can’t stop that, but we’re keeping to social distancing in the vineyards, while there’s not much work going on in the cellar at the moment,” he says.
Wine is Essential
Here, we should spare a moment’s thought for winemakers in the southern hemisphere, who have been hit by the COVID-19 crisis in the middle of harvest.
In South Africa, when President Cyril Ramaphosa imposed a total lockdown at midnight on March 26, it looked like grapes would have to be left out unpicked on the vines, before the government added wine to the list of essential services.
Back in Badacsony, one bright spot for Gilvesy is the potential of the fledgling 2019 wines, a vintage which he describes as “special” with high quality across the board for all grape varieties; 2018, by way of comparison, he describes as a very good vintage, although notes there were some problems with Riesling. His new Váradi Furmint 2018 is now out and it is worthy of comparison to a high quality Furmint from Tokaj (HUF 4,450 from Bortársaság).
Franz Reinhard Weninger, a biodynamic producer with wineries in Balf, in western Hungary, in the region of Sopron; as well as just over the Austrian border in Horitschon, in the Mittelburgenland region, says sales have been around zero for the last two weeks, but he is ready to batten down the hatches.
“We learned our lessons from [the financial crisis of] 2008, so I think we’re well prepared. We’re trying to save on spending money and doing a lot of the work ourselves,” he says. Weninger adds that it’s interesting to see how shocked most of the big importers are.
“We, the small ones, are rethinking our business, by making bike deliveries and such like,” he asserts. Weninger also laments that price pressure is already being applied on winemakers.
“Some distributors are trying to use this situation to get better payment terms, but we’re not playing this game. I have no wine that will suffer from being in the bottle for a few more months or even years.”
Traveling to international wine fairs is often a feature of the life of many winemakers seeking foreign markets, which is off the table right now with every major event canceled (Vinitaly in Verona had initially been postponed from April to June, but is now skipping a year).
“It’s a good thing I stopped a lot of traveling to fairs a few years ago, so I see this was already the right way. I believe that we don’t need to travel for a lot of things: We can do them online,” says Weninger.
The overall market impact of COVID-19 is still too early to tell, opines Zoltán Heimann Jr. of Szekszárd’s Heimann winery.
“The company is running: we’re mostly working in the vineyard, but soon we’ll have to continue cellar work, as well. Gastronomy has obviously plummeted, but people are still buying wines,” he says.
The Heimann winery has decided not to hold back and is launching its new Heimann & Fiai (sons) wine range, comprising two Kadarka and four Kékfrankos wines from the 2018 vintage, as planned this month.
“This feels nice; at least we’re doing something about the market stop,” declares Heimann Jr., whose Facebook moniker is in fact Kadarka Man. He sees this new range as an opportunity to develop stylistically with the Kadarka and Kékfrankos grape varieties. (The two Kadarka wines were reviewed in the first Budapest Business Journal of this year).
Three of the four Kékfrankos wines are from single vineyards and, having tasted them recently, it is impressive how distinctive each wine is from the next, as well as how elegant they are.
They not only show how Kékfrankos can convey the intricacies of different vineyards sites, but also totally smash the assumption that Szekszárd’s predominantly loess soils (although there’s also terra rossa and limestone) make uniform wine.
All four Kékfrankos offerings were spontaneously fermented in whole bunches, which Heimann Jr. says can add more layers and length to the wine, though less color.
At the time of going to print, Batti Kereszt Kékfrankos 2018, from an east-facing vineyard surrounded by forest where the grapes ripen later, was already on the shelves of Bortársaság (HUF 5,650) with the rest of the wines on their way. This is the most intense of the four; very Rhône-like, with juicy blood orange and pomegranate note alongside more typical Kékfrankos notes of sour cherry and raspberry.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.