A conversation with Florian Ceschi and three conclusions on the COVID19 situation
Last week we had the opportunity to share an interesting dialogue with Ciatti’s global wine and grape broker, Florian Ceschi.
We have decided to share some of the conclusions that stemmed from that talk.
AN OPPORTUNITY FOR THE OFF-TRADE CHANNEL
Ceschi’s opinion is that at this point there is a clear distinction between on-trade and off-trade channels.
The on-trade channel (whose strategy is to distribute the product through channels linked to direct consumption: bars, restaurants, nightclubs, hotels, among others) is over.
However, this crisis is causing all producers to focus on the off-trade channel which is not directly linked to wine consumption, such as supermarkets, amongst others.
From the viewpoint of the expert from Ciatti, this is an advantage for wines sold in large volumes such as bulk wines, which normally focus their sales on supermarkets and not so much on catering destinations.
“At the moment, the big players are probably suffering less than the small players since the only place where one can now distribute wines to the market is to the supermarkets.
Most of the time on-trade was more cost-effective but this crisis has changed that and currently the operators who can allow themselves to purchase containers in order to sell to supermarkets are the ones who will suffer the least this year”.
The bulk wine industry sells a commodity product in large volumes and that means large players. The markets of bulk industry are seeing a lower negative impact compared to the rest of the industry.
WINE AS AN ESSENTIAL PRODUCT
In most countries, the lockdown is having an impact although, at least, wine is considered an essential product.
Imports and exports have noticeably slowed down yet wineries are still running and imports and exports continue.
In fact, currently, we are already seeing that there are countries who prefer to pay more for the same wine that they have already been buying but now feel the need to guarantee that they will have wine to bottle.
Europe is stronger because wine purchasing and selling transactions can be done through trucks and not ships.
Right now, logistics companies and effective secure solutions are key in order to keep international businesses safe.
ALTERNATIVES FOR THE INTERNATIONAL CONSULTANTS
This crisis is providing an opportunity for prestigious international consultants. At Ciatti, we are receiving a great deal of requests from new clients who cannot travel to the importing countries such as Asia that currently need to import wine. As international consultants, we have experts in those countries who enable export managers from wineries to not have to travel in order to sell their wines.
At the moment we have to trust the experts. We are receiving wine samples at home and we are working from home by looking for importers for those wines. We receive the wine and we ship it to the end customer.
Importing companies have also indicated to us which type of wine they are looking for, whether for a blend or for a final product, and we take care of finding it and delivering it to them.
This crisis is also going to boost domestic wine consumption yet a country such as Spain for example is bound to export and others like the United Kingdom to import; there comes a point where the market cannot be balanced with domestic consumption.
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The Ciatti Company is the world’s largest and most comprehensive bulk wine and grape brokerage. Aside from its home base in Novato, California, nine additional offices around the world provide clients the kind of information and intelligence that today’s competitive global wine industry demands.
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