As a new year begins, we at Ciatti wish all of our friends, clients and business associates a very happy, healthy and prosperous 12 months ahead. We thank you for your continued support and have our fingers crossed that 2021 will be a more straightforward year for the world than its predecessor was.
As every January, this month’s report looks back at the year just passed and ahead to the new one. It’s always risky in this business to feel confident in forecasting how the next 12 months will go, but this year – given the unprecedented times we are living through – it is even riskier, so apologies in advance if the respective ‘Looking Ahead’ sections from each office seem a little reticent.
What do we know for sure? COVID-19 bifurcated the bulk wine market in the last nine months of 2020 and this is likely to continue in the first half of 2021. In the off-trade – which has largely stayed open as normal – and online, wine sales have been robust or even outperformed past years as consumers stock up. On-trade and tasting room demand, meanwhile, has in recent months often been reduced to negligible levels by government-imposed restrictions and by some consumer hesitancy as to the health risks. Off-trade/online demand may have recouped some of the lost on-trade sales volume-wise, but the deficit in value was and is far harder to offset. Caution pervades the bulk wine market: purchasing proceeds in small increments.
Industry and individuals have had to adjust to living in a world in which governments have been forced to tell people how to live their lives. Some of the changes the wine industry has had to confront – such as doing business remotely online – were already there in the background and have simply been driven to the fore by circumstances. Others – the lack of conferences at which to gain a global picture, sampling by post – have taken more getting used to, even if they have potentially had positive economizing side-effects time and money-wise.
COVID-19 vaccines are now rolling out across the world, raising hope that life can return to some normality by mid-2021. Is there huge pent-up demand for the way we lived before – socialising at bars/restaurants, holidaying abroad – or is the shift to quieter living a more permanent one, especially as COVID-19 will have scarred consumer confidence and high streets alike? The busyness of Europe’s HoReCa sector last summer, when restrictions were temporarily eased, suggests the former, but the economic hangover from COVID-19 is likely to be considerable and felt more keenly by consumers in 2021 and beyond.
This month’s report includes mixed news for free trade. A Brexit Update details how the new EU-UK Trade & Corporation Agreement, in force from 1 January, provides for free trade in goods including wine. A US Tariff Update, however, details the latest escalation in the ongoing tit-for-tat tariff battle between the US and the EU which, although a dispute about civil aircraft subsidies, has (as ever, it seems) ended up affecting the wine trade. With the US also in a tariff battle with China, and China having recently slapped 107%+ import duties on Australian wine, tariff wars are probably here to stay in 2021.
Wine is often caught up in these disputes because it is an iconic and sometimes emotive product. Sharing a bottle with a group of friends – at home or in a bustling restaurant – is what many picture in their mind’s eye when they look to the year ahead with hope for better things. Ciatti is there to help you every step of the way in 2021, whatever it may bring – just give us a call. Happy New Year, and stay safe.