Lifestyle

The End of Aperitivo – How Coronavirus Is Affecting the Drinks Industry

This year has been something of a disaster so far, from flooding to bushfires to coronavirus (COVID-19) spreading across the globe. When it comes to the virus, you could argue the panic it has created is worse than the virus itself, with a lot of misinformation on social media and incredibly selfish behaviour in the loo roll section… Meanwhile, the Americans have stopped drinking Corona beers and the Italians have issued restrictions across the country, affecting over 60 million people, including myself.

Life in Italy

At the beginning of the breakout, the overall feeling here was that people were overreacting and there was no need to panic. On the first day of the countrywide “lockdown” the feeling shifted, and these restrictions are making more sense to everyone. Okay, some people are still going to work, but everyone wants to protect the elderly and they have grasped the need to avoid the virus spreading as fast as it would if everyone simply continued as normal.

Things are changing fast. Yesterday, when I was first preparing this article all the cafés and restaurants were allowed to stay open until 6pm as long as people were kept a minimum of one metre apart. This meant the end of aperitivo hours at least until 3rd April, a key part of the after-work routine for millions of Italians. Apart from adding signs telling people to keep their distance, there isn’t much more these venues can do, and therefore many were closing after lunch at 3pm. A friend of mine runs a pub in the outskirts of Florence and he was told not to open at all, together with all the nightclubs and other bars across the country.

A new decree was issued last night and now ALL cafés, bars, restaurants, shops etc are to remain closed at least the next two weeks. I wouldn’t be surprised if they decide to keep it this way until the 3rd of April or longer as everyone now constantly studies the numbers; how many new cases; how many deaths; where is it spreading (Florence so far has had only 3 cases, all recovered).

The museums, schools, gyms, libraries, cinemas, churches remain closed, with all sporting events being held behind closed doors – if they are being held at all. The supermarkets are closed at the weekends and during the weekdays they limit the number of people entering at once. The general message here is to stay at home as much as possible (I’m getting cabin fever just thinking about it, but I agree with the necessity…).

The police are supervising roads, train stations and airports as well as doing checks around the cities and towns. If they feel you are not taking the appropriate measures or are trying to travel without a valid reason, they are allowed to take action, which can even lead to a three-month prison sentence. So, if you feel a cold coming, you better stay home. I’m carrying an official document and my passport with me every day I go to the office just in case I get stopped and need to explain where I am going. After these new restrictions I feel I should just work from home. As of today officials have asked people to also have this documentation with them when going out to walk the dog or to visit the supermarket. Strange days indeed!

Florence sky after rain
Florence, Italy

This may all sound very intense and restrictive (because it is), yet there is a general sense of camaraderie you can really feel when coming across other people. On Tuesday, for example, it was a lovely sunny evening and when I went for a walk with the dog, there were many other people walking or running and enjoying the rays. People are greeting each other but without touching and clearly staying positive whilst keeping their distance (it’s like living in Finland..haha). You can go out to get some fresh air as long as you are responsible in your behaviour and do not interact with other people. Although, I have to say this has changed a little since the news from last night and you really should avoid going outdoors as much as possible. If you do go out, you should go alone and not stay too long. It is forbidden to visit friends or family unless you have a very serious reason to do so.

But as I said the situation here is changing by the day. Hopefully, Italy will start to see the benefits of this lockdown soon. There is a lag of about two to three weeks because the way the virus spreads, so we will not know how well these restrictions are working for another 10 days or so – but the logic of it is compelling. This lag time makes it difficult to understand the relative inaction by the UK and US Governments, but time will tell if they have gambled with people’s health or not. Obviously, the number of cases has increased in Italy, but that is mainly due to their vigorous testing on daily basis. The key is to slow the spreading.

Sunset in florence

Impact on trade

Just when we all need a stiff drink, everyone is affected, from small businesses to large enterprises worldwide. Many drinks events have been cancelled altogether for the year or postponed to avoid crowds.  

VinItaly has been postponed until June.

ProWein in Dusseldorf has been cancelled, with uncertainty whether it will go ahead at all this year.

VinExpo Hong Kong and ProWein Asia will now take place in July.

At the moment, the London Wine Fair is going ahead from 18–20 May. As are many other events across the UK.

Psychopomp & Circumstance Distillery in Bristol has been making its own hand sanitiser using 65% ethanol and gin botanicals. They are adding free sanitisers in with their gin orders (customers should bring their own pump/spray bottles for the sanitiser) and customers are encouraged to donate money to charity instead. Clever and innovative thinking without taking advantage of the situation.

According to The Drinks Business, Pernod Ricard is expecting a hard hit on its profits as China is its third-largest market, generating some 10% of the group’s global sales and 15% of its operating profit. Diageo, the largest drinks group in the world, has cut its full-year profit forecast by up to £200 million. Remy Cointreau had already abandoned any profit forecasts after the unrest in Hong Kong. The Drinks Business states that Remy Cointreau’s nine-month sales fell by 6.5% in organic terms, a third quarterly decline and double the drop analysts expected. In 2019, China was the source of about half of their growth.

Many other drinks groups in Europe and Australia have already been affected this year due to the protests in Hong Kong, and now with COVID-19. The bigger groups are confident of a quick recovery once the virus has been contained, although no one really knows how bad the impact will be and how long until it is business as usual.

Then there is travel retail. With flights being cancelled left, right and centre, it is clear the travel industry will be hit hard. Baiju sales will suffer significant losses as it is mainly bought by Chinese consumers. Also, Scotch and Cognac are at the top of the list for Chinese tourists. The top three largest export destinations by value for Scotch in 2019 were the USA, France and Singapore. With 25% tariffs still in place for Scotch whisky US exports, the Scotch Whisky Association is expecting at least £100 million in lost exports over this year. And now with coronavirus spreading across the globe, 2020 is not looking great for Scotch. The smaller distilleries will suffer the most.

In Japan, all distillery tours have been cancelled for the time being. I’m sure this will be a common theme across the globe soon as everyone is avoiding the masses and travel is slowing down in many areas.

sunset sky in florence

Overall

The economic impact of coronavirus will be huge, and we have not even seen the worst yet. With growing number of cases spreading across the UK and the US, there will be a lot of damage done to the drinks industry. Bars and pubs might have to close completely for a specific period outside of Italy, travel will be restricted even more, and exports will slow down.

Is it possible that this virus will have a long term impact on people and consumer behaviour in the future? That might not necessarily be a bad thing. I’m confident people will always have a taste for alcohol, and therefore the drinks industry will recover. What I am more interested is whether people will simply revert to type and visit bars and larger events as before? Or will they be spooked by the virus so much that they change their habits (if everyone would wash their hands properly it would be a good start…)? For example, Florence has seen a huge number of American tourists and students for years now, but it’s clear the city (even the country) will see a huge drop in tourists for months and months to come. In times of crisis, there is always the opportunity for us to change….

Meanwhile, stay positive!

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