The Coronavirus (COVID-19) is affecting every industry, and tanking the global economy as a whole. Even in the wine and spirits world, it’s causing profit loss.
Distilleries have canceled tours, whiskey trading is experiencing losses of more than 200 million, bars in Asia are quiet, and auction houses are halting selling their top whiskeys.
According to the World Health Organization, there are 110,029 Coronavirus cases in 105 countries, with 3,817 deaths, as of March 9. Internationally, government officials are encouraging citizens to self-quarantine.
Bottom of the barrel
For large, publicly-traded wine and spirits companies in the United States, stock prices are plunging in lockstep with the rest of the market.
Constellation Brands (STZ) was down 8.38 percent as of March 9, while Brown-Forman (BF-B) was down 5.65 percent.
International brand Diageo recently announced a potential $260 million loss due to fewer travelers in airports and decreased alcohol consumption in key Asian markets, according to the Financial Times.
Canceled Events, Closed Doors
In Japan, which currently has the ninth most Covid-19 cases worldwide at 488, whiskey distilleries have begun to cancel events and shut down operations.
Suntory’s Yamazaki and Hakushu distilleries, Nikka’s Yoichi and Miyagikyo distilleries, and several of the smaller whiskey-making sites like the Shizuoka distillery have all canceled their tours indefinitely.
In China and several other countries, restaurants were ordered to close for weeks, meaning wine and spirits brands lost out on typical revenue from diners.
“Some cities in Hubei are under complete lockdown. No one is allowed to leave their home without authorization in order to prevent cross-infection,” Yoshi Shibuya, CEO of ASC Fine Wines, told Wine Spectator.
Significant industry events such as ProWein, the annual wine trade fair in Düsseldorf, have been canceled to avoid large group gatherings and reduce the risk of one attendee infecting hundreds or thousands of others.
“It’s a disruption in the marketplace,” Rob Tobiassen, president of the National Association of Beverage Importers, told Wine Magazine. “These are major events where importers and foreign producers get together to talk business.”
In the United States, wine-making hub Napa Valley currently doesn’t have any confirmed cases, but the city said they’re prepared to cancel public events and even shut schools if necessary, according to the Napa Valley Register. However, there are 69 confirmed cases in California, and cruise ships with infected passengers have been disembarking in the state.
What brands can do to protect themselves
China, the country of origin of the outbreak, has slowly seen a decline in cases after several weeks of mass isolation of the population. The virus is still new in the United States, so it’s unclear how much longer it may circulate or what the ramifications on businesses, restaurants, and brands will be.
With no current vaccination or treatment for the Coronavirus, the stock market remains unstable. For brands fearing quarterly losses and decreased sales, it’s good to have a backup plan. There are a few marketing tactics they can take to try and give sales a boost.
With more than 80 percent of alcohol consumption happening outside of bars and restaurants, brands can increase marketing to promote at-home or “drinking in” of their products.
For brands that have yet to partner with the at-home delivery services, such as Drizly, now can be a great time to start offering your products on the app. Customers who are choosing to not spend time in crowded, public spaces, such as bars, they might be looking to order in their favorite bottle and enjoy a drink at home while the virus passes.