Short and long term impact of corona virus on Champagne

Some of the consequences are obvious and common to all sorts of industries:

- employees unable to come to work,
- customers cancelling orders,
- cash running out and
- activity grinding to a halt.

Social distancing in the vineyardsMore specifically, in Champagne a special derogation has been given to vineyard workers so that they can tend the vines. Without this essential work now and in the coming weeks, come September the harvest itself would be put at risk. Fortunately, it’s easy to maintain social distancing in the vineyards and most people work on their own anyway.

Another worry that already upon some champagne makers and which is looming ever closer for others, is what to do about bottling.
Many vignerons, especially the smaller ones, call upon a contractor to bring in and set up the bottling equipment. Since it is only needed for two or three days a couple of times per year, it’s not worth the vigneron investing in the equipment his or herself. At the moment however the contractors aren’t working or can’t work. But the champagne still needs bottling.

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It won’t spoil if it’s left a few more weeks or months on lees, but everyone is hoping that in a few months’ time things will be getting back to something like normal and that they will be able to start selling again. To do that however they have to have the bottles ready and you can’t just turn on a tap and produce that stock because, after bottling, the champagne needs to rest for several weeks or months before being released for sale. So, the window for getting the bottling done is getting ever smaller if the producers are to be ready for the recovery when it comes.

So much for the immediate worries, although there are many others I haven’t mentioned, but what about the longer-term impact of corona virus?
As some wise person once said, ‘It’s difficult to predict, especially about the future’, so any ideas can only be speculation, but a couple of things are likely to be affected

This year’s harvest.

GrapesWith sales taking a big hit at the moment, it’s likely that a large harvest will not be needed this year. The big buyers (the négoces) will have adequate stock in their cellars to meet demand when the markets get going again and won’t want to buy as many grapes as they would do in a normal year.
That’s potentially very bad news for many grape growers and champagne houses who rely on selling a significant proportion of their harvest to the big houses. The livelihood of these, usually smaller, growers depends on there being a healthy balance between the volume they sell and the price per kilo they get paid. If either one is out of whack, they could face serious problems.

So, what about the other side of the equation: the price of grapes?

If the demand for grapes goes down this year the price per kilo will probably go down as well, or at least not increase. On the one hand that might be seen as a good thing because the price of grapes in Champagne is notoriously high - between 6-7 euros per kilo and sometimes even more, but falling prices are a problem for those who sell grapes.

It’s also not beyond the bounds of possibility that to bring in some much-needed revenue that the growers might accept even lower prices from buyers in a position of strength.

Whilst none of this is certain, what does seem inevitable is that those in a weak financial position now will be under even more pressure come the end of the year.
Will this mean some growers and perhaps some houses going out of business? Perhaps.

Will some small operators be obliged to sell their vineyards, and will it be the big brands with resilient finances that snap them up? More than likely.

What will that do to the balance of power between small operations who traditionally own the majority of the land and the large operations who already control the lion’s share of sales and who are always looking to buy more vines?

For the time being there are only questions and no sure answers, but the effects of corona virus on Champagne are likely to be felt for months if not years to come.