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Home
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Working Papers
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COVID-19 and Global Beverage Markets: Implications for Wine

Working Paper No. 249

Published: 2020
Category:
Economics

COVID-19 and Global Beverage Markets: Implications for Wine

Glyn Wittwer & Kym Anderson
Full Text PDF
Abstract

Policy responses to the coronavirus COVID-19 pandemic in the first half of 2020 have caused a global economic recession, the severity of which has not been seen since the 1930s. How is that affecting the world’s beverage markets, and what does it mean for the wine industry this and next year?
Of course no-one can answer this question with any precision, because it depends on many factors that remain very uncertain. Nonetheless, the European Commission (2020) has warned that the volume of wine consumption in the European Union (EU) would be 8% lower in 2020 than the previous five years’ average, bearing in mind that the 70% of sales that are off-premise are expected to be a little above average this year as many people self- isolate at home and avoid restaurants, bars and pubs. Social distancing makes large celebrations and partying impossible and so is especially damaging to sparkling wine sales. Maxime Toubart, Chairman of the Champagne producers’ organisation SGV, suggested on 5 May that Champagne sales in March and April were down 80%.
How might sales declines compare with EU wine production? What about in other parts of the world? How different will those impacts for wine be from those affecting beer and spirits? With the help of a global model of a new model of global beverage markets (Wittwer and Anderson 2019), this article specifies hypothetical shocks and estimates their effects on various nations’ beverage production, consumption, trade and prices. The latest global macroeconomic projections from the IMF (2020) are drawn on to simulate the market impacts of (i) a downturn in incomes in 2020 on beverage demand and the response of suppliers and (ii) an optimistically assumed reversal as early as 2021. In what follows we explain the nature of the exercise, present global results (including their sensitivity to alternative consumer responses in China), highlight caveats and stress that these are not forecasts but simply projections based on explicit assumptions about a very uncertain environment, and draw out implications for wine producers.

Submission

Please send your papers as PDF files to the editor, Victor Ginsburgh, at vginsbur@ulb.ac.be
Papers will be quickly reviewed, prior to potential posting on the website. Decision will be to post or not, possibly with short comments, but without referee reports. The decision will be based primarily on the suitability of the paper’s topic to the aims of the Association.
Such decisions are independent of publication decisions for the Journal of Wine Economics.

Working Paper publication requires that at least one author
is a regular member of AAWE.

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