How Indian wineries are coping with the Covid-19 Fallout

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I spoke to some stalwarts of the Indian wine industry about how the Caronavirus had affected them, posing questions about the impact of the sudden countrywide lockdown and other government measures to contain Covid-19. They responded candidly about the seriousness of the situation without descending into the slough of despair and were grateful for being able to save this year’s harvest. The lack of sales opportunities was their biggest worry.

Fratelli Vineyards

Fratelli Vineyards, Akluj, Maharashtra

Fratelli Wines – Kapil Sekhri, Director
It’s going to be a very challenging year for Fratelli Wines as we first got hit by unseasonal rains and then COVID 19. It’s really a year of just managing cash flows and keeping our head above water. Regarding the harvest, our Chief Winemaker Piero Masi and Alessio Secci luckily finished the whites but the reds have been done by our young winery team so the jury is out about them. We are operating with minimum workers and taking all precautions during the lockdown. In the vineyards the government has allowed the labour to come back so hopefully we should be fine with all pruning work. Looking forward to meeting in better conditions!

Grover Zampa Vineyards, Nashik

Grover Zampa Vineyards – Vivek Chandramohan, CEO At this point of time, no one is sure when the lockdown in Mumbai and Pune will end. With the help of AIWPA we got permission to carry out basic winemaking activities which was a big relief as we were able to complete 100% of our targeted quantity – about 28% higher than last year and our wine is of exceptional quality this year. I don’t think anyone will be spared from this pandemic. Our sales are at a complete stand-still. Given social distancing norms, on-premise sales will be the most affected as people shy away from this kind of exposure. In India, the highest on-premise sales are of wine and wineries are bound to be affected, at least in the short term.

While lockdowns are an efficient way of flattening the curve, they are not the cure. Intermittent lock-downs (which may become the norm until a vaccine is developed) are bound to affect the economy and things will definitely get worse before they begin to get better. While I understand that the plight of migrant labour is dire, the wine business is not affected as most of the workers come from nearby homes. However, if companies scale down production for next year, it will have a massive impact on the grape farmer as his very survival depends on it.

As for the immediate future, we need to re-invent and adapt quickly to a changing reality. We need to re-look at how business is done and change the way  we reach the consumer. With huge losses ranging from 1000 to 30,000 crores annually in alcobev revenues, state governments will have to consider alternative solutions, such as online sales, beyond the traditional methods.

Grover Zampa Vineyards – Ravi Viswanathan, Chairman 
On the happy side the harvest of 2020 and the good work in the vineyards and wineries will allow us to produce the best wines we have ever done. On the less happy side, it is unclear whether post crisis we will return to the old world or not. It seems quite possible that the Horeca business in particular may never return to its old ways. I hope that chefs and restaurant owners will be able to re-invent their business successfully. On our part, we will of course try to help as much as we can and adapt our wines to the new environment.

KRSMA Estates, Hampi 

KRSMA Estates – Krishna Prasad Chigurupati, Founding Chairman
Uma and I have been very busy running our Granules India factories and taking care of all the workers. Since we are an essential service, the lockdown does not apply to us. With respect to the wine business, we had finished our harvest before the lockdown. All the wine went into barrels by mid-February and hence there were no problems. However, since  all the wine outlets have been shut we do not have any sales.  I am not sure there is anything we can do at this point in time. We have to wait till the lockdown is lifted.

Looks like the Wine Manufacturers Association is making representations to the government, but my feeling is that other than allowing us to run the wineries, there will not be any relaxations with respect to the opening of outlets till the lockdown ends. It looks like different states will end it at different times.
There will definitely be a huge impact on revenues this year, and spending power will also come down drastically. As the profit & loss of all companies will be hit, this will be a challenging year for the wine industry.

Sula Vineyards

Sula Vineyards, Nashik

Sula Vineyards – Rajeev Samant, CEO and Founder
I think overall we have been fortunate that this crisis hit us after winter which is our most important sales season, and also that we were able to complete our harvest notwithstanding the restrictions on movement. Of course, we are impacted by the total loss of sales for about two months but I hope we can bounce back. Our plans have gone for a toss and now we are hunkering down and conserving cash like everyone else but I do hope that by the end of May things will open up again. We are concerned about hotels and restaurants where we fear sales are going to be very badly hit and we aren’t sure if shops and drinking at home is going to make up for it. Fingers firmly crossed!

We crushed all our contracted grapes and we have more than enough wine for this coming year. Only time will tell if it’s excess or not. Our bottling and dispatch has been suspended for now. But the 2020 harvest was completed successfully and winemaking is in full swing. We are categorised as a food processing industry so we have permission for a small number of workers to continue important tasks. A limited number of staff are working from home to plan for when we re-open. Quite a few  are on paid leave for the month of April and we’ve added days of paid leave to make up somewhat. They will return to work once offices reopen hopefully by mid May. Everyone has been very understanding of the situation and I’m very proud of our employees in this extremely difficult situation.

Regarding the economy and migrant workers, the next six months are going to be very difficult indeed. People are already losing their jobs and their work. A lot depends on the moves the government makes to get things going again. We are keenly looking forward to more announcements from them – until April 28th as I write this, there haven’t been enough measures of financial support for companies and workers. India needs more help from the top!

Vallonne Vineyard

Vallonné Vineyards, Nashik

Vallonné Vineyards – Shailendrra Pai, Founder and CEO
Covid-19 and the restaurant lockdown has dealt a body blow to the wine industry in various aspects – wine tourism and sales at the winery and sales in other restaurants and retail stores. At Vallonné, we have stopped all commercial activities – restaurant, cellar door sales, accommodation etc since 15 March, a few days before the national lockdown. Since we are in a small village, we did not want to endanger the health of the locals by having people from Mumbai coming there. We have a little over a thousand visitors visiting us every month which contributes to the wine sales, apart from food and stay. Ever since we started our hospitality offerings, we have focussed on maximising sales of wines at the winery because that’s where the wine is at its best, people can interact with the team that makes the wines, taste and then choose what they want to buy.

Now all of that has come to a halt and we do not know when we will be able to restart and reach the level of activity that we had earlier. Harvest time is when a lot of visitors come to participate in the harvesting and we have completely lost out on that. Again, the summer vacations for schools in Maharashtra are between April and May, so we have missed that too. Wine sales in restaurants and retail stores, of course, have been hit hard.

All wineries got together to appeal to the state authorities to allow production to go on and the local administration gave us the required permissions immediately. That was a big help because we did not have to delay or miss out on any aspect of the harvest. Fortunately, we managed to secure 100 per cent of our harvest. We had completed more than 90 per cent before the lockdown and for the remainder, the winemaker and three other members of the winemaking team came in and stayed at the winery. To maintain the norms of appropriate social distance, we worked with a team of just four people and maintained utmost hygiene levels with gloves and masks for all and frequent sanitising. In the vineyards, we worked with a minimal staff for harvesting and then pruning. It took longer but we managed to complete it all. Luckily most of our team mates live in Nashik, hence there was no problem on the labour front.

I am happy to report that this vintage has been very good for most of our wines – the cabernet sauvignon,  merlot, riesling , syrah and viognier. We are doing fine under the circumstances and I must say that this unprecedented situation has taught us a few new skills!

Grapes growing in the Nashik vineyard

Vintage Wines Pvt Ltd – Yatin Patil, Managing Director
Wine producers were already grappling with low yields due to unseasonal rains in October and November And the nation wide lockdown came into effect  in the midst of the harvest. Although, many Nashik wineries finish their harvest by mid-March, we at Reveilo had just started ours. Fortunately, as an agricultural produce we were allowed to harvest our grapes. And, with the help of  the All India Wine Producers Association, the wineries got special permission from the District Collectors to carry out crushing and operate other critical processes. This was allowed not only at Maharashtra wineries but also for wineries in Karnataka.

Although the issue of crushing was sorted out, sales and cash flows have been majorly affected due to the lockdown. Added to this, the outlook for the F&B industry is very grim and on-premise sales will be affected in a big way for a long time to come. We expect a shift in the consumption pattern, where retail will see an increase as people will shift to consuming wine at home. So going forward all brands will have to focus on retail.

The majority of wineries do not employ migrant labour as our labour force is mostly local but wine tourism and related F&B activity will be affected by the lack of migrant labour as well as the loss of customers. What’s more, due to increased borrowing to tide over losses, wine producers overall costs will increase. If the situation doesn’t improve quickly, decreased revenues and increased costs will further add to the industry’s woes. All we can do now is hope for better times to come.

 

York Winery, Nashik

York Winery – Kailash Gurnani, Chief Winemaker and Director
Fortunately we harvested our last vineyard just two days before the state lockdown so we did not have any troubles on that front. The Wine Producers Association made a formal application and those wishing to operate were allowed to do so. This helped us to finish off the ferments and press the reds off the skins. At the moment we are completing the essential tasks and will soon commence the post harvest winery clean-up.

However, there have definitely been some compromises on the production front, but fortunately nothing too major. I’m grateful that I was able to secure my wines and harvest. As 90-95% of the harvest is usually completed by mid to end March, there has definitely been some impact on grape farmers, but it’s no more than the one due to bad weather in the last monsoon.

The biggest concern is Sales, which are zero at the moment. Mumbai, Pune and Delhi are our major markets which also happen to be major COVID hotspots. We don’t know what to expect in the weeks ahead, but it’s definitely going to be a big blow to us. We are already running a very lean operation so there isn’t much we can do to reduce our overheads and fixed costs.

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