Tide turning for WINES

It has been a period of hits and misses for the wine industry. According to industry insiders, all was not well with the wine world in the preceding two years. This is the third year in a row that the world wine production has not hit the straps. According to OIV (International Organization of Vine and Wine), the impact of this downfall in terms of the global wine sector is yet to be evaluated given the current context where the Covid-19 pandemic still accounts for a relatively high degree of volatility and uncertainty.

Champagne too was hard hit by the global economic crisis linked to Covid-19 even though its production was excellent in 2020. It suffered a historic drop in shipments which was 18 percent by volume and 17 percent by value.

But this does not lift the pall of gloom for the wine sector, which is plagued by global warming. Moreover, unprecedented frosting and forest fires are wreaking havoc on vine and vineyards in the larger part of Europe and in the US. Climate crises have forced French wine growers to light candles to protect their vines from late frost and thereby another agricultural catastrophe. Others in Europe tried to warm the vines with electric lines or sprayed the buds with water.

Vine growers are worried frost will kill large numbers of early buds, which appeared in March as temperatures rose above 20 degrees and disrupted the whole growing season. The frost is particularly frustrating after a similar phenomenon hit French vineyards last year, leading to some 2 billion Euros losses.

Closure and restrictions of HoReCa and retail outlets for two years too had caused serious problems for the wine companies during the pandemic.

As per a market study, India is the fastest- growing country in terms of wine consumption and it registered a growth rate of approximately 7 percent as against the global wine market’s growth rate of 4.28 percent CGR. The interesting fact to note that in India, vineyard surface area has grown to 151 kha in 2019 as against 131 kha in 2016. But this area has not grown beyond 151 kha after 2019. India accounts for only 2.1 percent of vineyards’ surface area of the world, ranking 11th in the global tally.

India was not affected by the vagaries of nature as far as wines are concerned but pandemic-induced restrictions did take a serious toll on the health of its wine companies, importers and F&B outlets. The return of near normalcy in the world (barring a few countries), opening of international travel and return of high footfalls in restaurants and bars are expected to help the wine economy to slowly bounce back to pre-pandemic levels. Hoteliers believe that corporate consumption (which was badly hit in 2020 and 2021) will give the much-needed boost to wine sales in hotels & bars in India.

However, for many homegrown wines in India, the pandemic time came as an opportunity. Gautam Khanna from Pullman and Novotel, New Delhi Aerocity says in his inputs that owing to an acute shortage of supply of wines due to lack of resources during the peak pandemic phase, there has now been a significant increase in demand for domestic wines.  Gaurav Dixit of The Leela Palace, New Delhi also believes that wine lovers were exposed to domestic wines in much larger numbers during the pandemic induced lockdowns and there is surely a huge opportunity for growth of homegrown wine labels.

Hardik Shah of Four Seasons Hotel Bengaluru says wine sales have picked up well over the last few months, but not to pre-pandemic levels as yet. But he is hoping to see an uptick once international travel regularises and business travel gains momentum.

Amit Sangwan of Hotel Fairmont Jaipur shares that consumer behaviour post-pandemic has had an impact on a majority of their consumers, who tend to support quality wines while a small number opt for value for money wines.

Amit Agarwal of Hema Connoisseur Collections Private Limited is cautious about spending too much on importing wines because hotels are currently busy liquidating their old stocks and not buying much of wines. Uma Chigurupati of KRSMA Estates Pvt. Ltd. feels that wine as a category will ‘beam’ as more consumers get outgoing, as their disposition to spend goes up, as they tend to get more experimental with their drinks and more progressive in their knowledge of palate.

What is heartening that the pandemic time has given a much-needed opportunity for many wine players to come closer to Indian consumers and this new-found familiarity should be capitalised on, to build a better relationship with consumers.

The tide appears to be turning in wine’s favour, though slowly, but seems to be surely.