Coronavirus: How Covid-19 is affecting the UK drinks trade

Emily Gray

Emily Gray

11 March 2020

From people choosing to stay at home, to distribution challenges, to travel restrictions, Covid-19 is having a negative effect on the UK drinks trade. But all is not lost, says Emily Gray

Just what will the impact of coronavirus be on the UK drinks trade?

UK Hospitality has reported that sales in restaurants and bars have dropped by 7% and hotel occupancy by 15%.

For bars and restaurants, business is slow as fears around public gatherings increase. Whilst Public Health England is yet to impose any widespread quarantines, the trade body UK Hospitality has reported that sales in restaurants and bars have dropped by 7% and hotel occupancy by 15%.

This is compounded by hundreds of multinational businesses placing precautionary travel restrictions on staff. If this continues into the summer and more large, social events are cancelled, this will have a greater knock-on effect on some areas of the trade.

According to UK Hospitality chief executive Kate Nicholls: ‘Hospitality businesses are on the front line... Bookings are down, footfall is down, and all signs point to it getting worse before it gets better.’

On the ground

What about events within the trade? Whilst the London Wine Fair is currently still set to go ahead in May, last week the organisers of the Raw Wine Fair made the decision to postpone their London show.

In a statement, the organisers said: ‘Alongside our hundreds of UK visitors, we were thrilled this year to also be welcoming over 500 international visitors from 33 different countries. The bitter-sweet nature of this also brought with it concerns of involuntary spread, worries about quarantine and flight cancellations.’

The cancellation of these events are more likely to affect producers who can’t showcase new products to distributors 

Hugh Sturges

Albeit a temporary setback, ‘the cancellation[s] of these events are more likely to affect producers who can’t showcase new products to distributors rather than retail or the consumer’ says Hugh Sturges, managing director of Jeroboams. ‘We could expect to see retailers continuing to sell the same range for the time being.’

Suppliers take stock

And what about this surge in stockpiling? With Italy now having extended its emergency quarantine measures nationwide, there is a high chance exports of wine from this country will be affected as ships become stuck outside ports and production is halted, if not simply because the workforce isn’t there.

Diageo has already predicted that profits will be hit by up to £200m this year

If other countries have to do the same, the effects are undoubtedly going to be wide reaching.

Stephen Crosland of Tanners Wines has reported shipments from Italy being late and says their biggest concern, ‘is if our warehouse staff or drivers get coronavirus, affecting our ability to pack and deliver orders’.

That said, the recent uncertainty around Brexit has meant that ‘many suppliers already have extra stock so there is no need to panic yet,’ says Chris Crosby, vice president of Billecart-Salmon UK.

For exporters things look arguably worse – industry giant Diageo has already predicted that profits will be hit by up to £200m this year as China’s on-trade all but closes down. The Department for Environment, Food and Rural Affairs (Defra) says that beer and whisky are amongst the UK’s top five exports to China, so it will hardly be the only one.

Positive thinking

All is not lost though. For off-trade suppliers and retailers this could be boom time as entertaining moves from the bars to homes. This will be especially true if we start to see large numbers choosing to avoid flying and cruise ships in favour of holidaying in the UK.

As well as the big supermarkets, local independent retailers could benefit, as people avoid commuting and heading into supermarkets, unless necessary. Stephen Crosland, purchasing director for Tanners Wines, says the company is preparing for an, ‘increase in mail order sales as people stay at home.’

This is echoed by Crosby:

‘We expect to see people ordering more than usual to make sure they aren’t going without, especially if they are confined to their houses. Retailers could use this as an opportunity to reward customers for ordering cases of their favourite wines rather than just bottles. There’s only so much planning you can do, but we want to be prepared so that we can ship orders out quickly,’ he points out.

As the cliché goes, moments of adversity can be the greatest opportunity.

 

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