On 7 July, Victoria State Premier Daniel Andrews announced that a strict lockdown would be imposed on Victoria’s capital city, Melbourne. With the added pressure of bushfires and Covid- 19 disrupting supply chains and consumer spending, how are wineries in affected areas expecting to stay afloat and how long will it take for them to recover?

Prior to lockdown, favorable economic conditions for wine production mixed with Australian consumers’ willingness to spend more on premium wine products was looking encouraging for wine producers.

However, with on-trade transactions accounting for a volume share of nearly a quarter in 2018, Covid-19 is sure to deal a heavy blow to their optimism.

Balgownie Estate, a premium winery and hotel in Bendigo, has been fielding cancellation calls from Melbourne tourists since the day the second lockdown began. The hotel is located almost 150km north-west of Melbourne, a city of around 5 million.

It has been almost entirely reliant on weekend tourists from the city during the last few months of Covid-19 shutdowns. “The accommodation part of our business was about 90 per cent tourists from Melbourne,” explains manager Juan Corradi.

Wine sales could be boosted by e- commerce

With the wine producers’ main routes to the consumer closed off, the wine market in Victoria is unlikely to recover quickly without vital financial help.

On 10 July, a $534m package was announced as a pledge from the government to support affected businesses. Treasurer Tim Pallas warned “literally billions of dollars” would be written off the state’s economy with a major knock-on effect for the national economy.

Global wine producers forecast significant declines this year, with a return to normality expected to be several years away. This is only likely to be compounded in Australia, now that such a dense, urban location has been locked down just as the country was planning its recovery.

The re-imposed restrictions will force many consumers online yet again, making e-commerce an ideal channel to organize sales – at least until the ban is lifted. It remains to be seen whether this will be enough to overcome the current economic pressure and keep consumers buying their favorite wines.

For more insight and data, visit the GlobalData Consumer Intelligence Centre

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