VINEX Regional Manager Report: Vasile Hincu
Our regional manager for Eastern Europe casts his eyes over what the situation is across the region following the outbreak of Covid-19, what impact it has had in different countries and what the outlook is like going forward.
How has the situation overall been in Eastern Europe following the outbreak of Covid-19?
The general rule here is that drawdowns dramatically decreased, compared to the situation in Spain or Italy. Being major supplying countries, the buyers tried to load as much as possible within current agreements to hedge the risk of closed borders, reduced workforce due to the virus etc. The logic says that in about one or two months the drawdowns should revert to normal in countries like Moldova.
What restrictions have been in place in terms of people working and moving?
In Moldova the lockdown stared on March 17 covering all kinds of business, including those in the open air, as well as shops (excluding grocery), parks, HoReCA, public services, schools, and universities.The public transportation was reduced dramatically in terms of numbers of units and in working hours (only six hrs per day). All flights has been cancelled.
In Ukraine its almost 100% like in Moldova. In Romania it seems to have been a little bit more relaxed than in Moldova. For example, all kind of shops are working there, and not all flights have been cancelled etc.
Have there been any delays and problems in reaching ports and getting wine out of the region?
We have not heard of any delays being reported. Ports and cargo transportation has been working normally. Yes, it’s more complicated for example to transit from Romania by ground, as Romania left only four transportation corridors open in the country. Ukraine, though, closed 90% of its border points - from 200+ to only 23 only. So, sometimes the queues could be long.
What impact has there been on prices so far in 2020 and then after Covid-19?
Due to the uncertainty in the market producers and suppliers are looking to sell at discounted prices any stocks they still have available. There are situations when Chinese buyers, for example, have pre paid for their wine (this is a normal rule here for Moldova-China deals) but have gone on to delay the drawdown. So, with this in mind, suppliers are keen to secure their position and will consider a 7-10% discount on normal prices.
Which grape varieties and price points are still most in demand across Eastern Europe?
Pinot Grigio, Sauvignon-Blanc, Chardonnay, Merlot. In the descending order.
What do you see happening in the months ahead in terms of prices and availability?
Entry level wines should maintain their normal level of sales which is good news for our key producers in Moldova, Ukraine, Bulgaria, and Romania. Higher priced wines will depend very much on the purchasing power of the buyer. And it will differ from market to market. In Moldova, for example, we have already seen have a drop in wine retail sales. The economic crisis has already started in some of the less prepared economies as we are already feeling it.
What is likely to happen with the 2020 harvest and workers being able to work in vineyards during the summer?
There are no restrictions currently in place. What do you see happening with prices for grapes and varietals in the coming months?
This is hard to answer for both buyers and suppliers. On one hand we expect a normal harvest season in both the southern and northern hemispheres, but people’s purchasing power will be significantly reduced. All of which leans towards price reductions. But again, it depends on how much respective governments will support their individual economies. What will be the incentives, the economic measures etc to keep peoples income at an acceptable level? The last big economic crisis was a long time and people’s behaviours have changed a lot since then.
Which countries are likely to do well at this time and which countries are in a worse position?
Those countries that have been able to get big safe parachute payments and have had lower infection rates will be in a better position. These countries have the possibilities to keep consumption "alive". It’s all about consumption and money circulating through the economy...but it’s not as simple as it sounds.