Article Written: February 18, 2020
Updated: February 23, 2020
By Sean Overpeck (CFE)
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At the time this article was written the latest Covid-19 numbers from mainland China are not promising with additional fatalities outside of China with 80,000+ people infected with over 2000 confirmed cases in over 30 additional countries. The largest cluster of patients outside of China is from the Diamond Princess cruise ship docked in Yokohama, Japan with 640 cases, and in South Korea with over 600. Also, the French Health Minister Olivier Veran said that there is a “credible risk” the novel coronavirus outbreak could turn into a worldwide pandemic even though Michael Ryan, executive director of the World Health Organization’s Health Emergencies Program, said the organization is still not classifying the coronavirus outbreak as a "pandemic" because they were not seeing an "efficient community transmission outside of China."
The global death toll now stands at over 2,500 including twenty people outside mainland China (Philippines, Japan, Hong Kong, France, Italy, Iran, South Korea, and Taiwan). Now, this is of course if the Chinese and Iranian Governments are reporting accurate numbers to the WHO. Half of China’s population (780 million) is under travel restrictions and Hubei Provence with over 60 million has been under a lockdown quarantine since January 23, with 11 million in the city of Wuhan itself. Over 3000 healthcare workers are infected with the latest casualty being the Wuhan hospital director Liu Zhiming, head of the Wuchang hospital who died from the coronavirus this morning, the first hospital head to die of the virus. The most famous healthcare worker is Doctor Li Wenliang, a whistleblower who tried to warn people of this new virus in Late December 2019 and died in early February. China is now designating medical workers who died while working to combat the virus as “martyrs.” Besides the horrible loss of life and the fears of how this virus will possibly spread across the world, questions are coming up about whether the Chinese Government is being truthful about how it started.
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| Coronavirus Hits China's F&B Industry Hard / Doctor Li Wenliang |
Another factor is the economic impact on the world, which will send major nations like China, Australia, United States, Germany, Canada, Great Britain, and many others into recession or worse. Events from sports to technology have been delayed or canceled. Japan is still moving forward with the Summer Olympics, but that may change. One area of concern to Japan is what happened in Pyeongchang, South Korea during the 2018 Winter Games when nearly 300 people to include some athletes got sick from the norovirus.
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| Coronavirus Hits China's F&B Industry Hard / Beijing is empty - Picture Courtesy of Beijing Boyce |
Major companies that have manufacturing in China are at a standstill with the quarantines. Apple warned investors that the outbreak is hurting its business more than previously expected. The closing of Chinese I-Phone production plants has also disrupted supply chains globally and will reduce the supply of smartphones worldwide. Marcel Thieliant, a Capital Economics senior Japanese economist said the slump in tourist arrivals will most likely knock around 0.4 percentage points off Japan's GDP growth in the first quarter. However, he added there was "a growing risk" that an outbreak of the virus in Japan could hurt consumer spending. His firm now expects Japan's economy to shrink by 0.5% in 2020. Social activities have dropped by 80-90% just after the Chinese New Year which, traditionally, is one of the most active periods for gathering and gifting says Janet Wang, a writer for The Buyer.
A large hit group of businesses that not too many people are taking notice of is the Food and Beverage Industry. According to the Beijing Boyce which focuses on the cities bar scene, revenue has dropped 95%. On February 5, the Beijing Evening News reported that only 13% of the city’s 87,000 food venues remained open during the epidemic. A February 13 post by Global Times stated that the national catering sector losses have hit $72 billion USD, with 93% of all restaurants shut. Those that are open allow only three people to sit at one table, and that every other table remains empty to help avoid any airborne spread. When you enter an open restaurant, the staff must record your temperature, name and phone number. Some venues have closed rather than deal with fines from the police if their staff does not wear masks. Misinformation about the coronavirus as well as xenophobia is also spreading across social media, with local Chinese restaurants far away from China and the quarantine zones paying the price - with some losing up to 50% of their revenue and not because of doctor's orders, it's because of fear.
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| Coronavirus Hits China's F&B Industry Hard / Social Media Bringing Business Back and ending xenophobia |
Another area of food and beverage taking a major hit is the wine industry. According to The Grape Wall Of China by Jim Boyce, trade events are being canceled or postponed throughout the country. The biggest he says is Chengdu’s annual China Food and Drinks Fair, which has 3,000 exhibitors, 300,000+ visitors and over $3 billion USD in purchases. It’s where the wine trade finds potential clients and learns of new products to get a sense of the state of the industry. Winery and sales reps, wine critics and writers, plus viticulturists cannot attend any events because of the lack of flights to and from China, quarantine rules, closed bars and restaurants across the entire country, and of course, the virus threat makes that all but impossible.
“China is already the largest online wine and spirits market in the world. This epidemic will further amplify the significance of e-commerce in China and is likely to accelerate further the onset of ‘New Retail’,” writes Janet Wang from The Buyer. The oldest operating winemaking company in China is still the largest according to Through The Cellar Door. The Changyu Winery was founded in 1892 in Shandong Province and they are also not going to be immune from massive sales and crop losses.
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| Coronavirus Hits China's F&B Industry Hard / China Wine Regions |
China is the sixth-largest wine producer in the world according to WineLand. China makes more wine than Chile, Portugal or South Africa. Until recently it made more wine than Argentina or Australia. Yet outside of China, the country’s wines get little attention.
According to Statista, China produced over 900 million liters (24 million imperial gallons) of wine in 2018 and has the second-largest vineyard area worldwide. The most prominent vineyards are located in Ningxia, Shandong, Hebei, Jilin, Shanxi, and Shaanxi provinces as well as around Beijing and Tianjin. Alcoholic beverages produced from fermented grapes have been produced in China since around the times of the Han dynasty (206 BCE – 220 CE). The market value of wine in China reached approximately 61.36 billion US dollars by 2018 and is projected to reach 80 billion by 2022. Most Chinese prefer to drink red wine, and the country is now the world's largest market for red wine. China's consumption of red wine has grown by 136% since 2008, whereas it has declined by 18% in France, the second-largest consumer. Cabernet Sauvignon takes up more than 60 percent of the total vineyard area in China, according to Yulin Fang, President of the College of Enology at Northwest A&F University.
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| Coronavirus Hits China's F&B Industry Hard / Wine Sales |
Even when the coronavirus begins to stabilize and hopefully go away, the impact to restaurants, bars, and shops as they reopen, will take months if not years to recover, especially for the wine scene according to The Grape Wall Of China. The trade was already struggling before the virus, due to falling wine imports, and the trade war with the USA, which caused wine sales along with local production to drop. Many Chinese wine trade professionals expect at least a 20% or greater decrease in sales this year. Maintaining cash flow for survival is the utmost priority. Many producers have already written off Q1, and even Q2 profits, and expect to see a wave of bankruptcies to manifest during the first half of the year, especially among small and medium-sized retailers.
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| Coronavirus Hits China's F&B Industry Hard / A Wine Tasting in China - Picture Courtesy of Jim Boyce |
The impacts of food and beverage will be felt far and wide, not just in China or the surrounding area, but the entire world. One of Australias biggest markets is China and according to The New York Times, export growth slowed in 2019 and could take another hit in 2020 from the coronavirus outbreak. Chile sells about a third of its exports to China according to Quartz, and Chilean officials are now hastily trying to offload shipments of wine, cherries, and seafood elsewhere in Asia, according to Bloomberg, after Chinese purchases fell between 50% and 60% since the coronavirus outbreak first began. China has become Latin America’s second-largest trading partner. It is now the top importer of goods from Brazil, Peru, Uruguay, and Chile. The United States and Europe will take hits on the wine and food industry as Napa, Willamette, Bordeaux, Stellenbosch, and many other wine regions rely on purchases plus tourism from China.
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| Coronavirus Hits China's F&B Industry Hard / Chinese Wine Store |
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| Coronavirus Hits China's F&B Industry Hard / Wuhan, China |
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** Wine Dine And Play’s Top 100 Best Restaurants A list focused on travels and the best dining experiences from around the world. **
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The world’s best restaurants is a subjective list of who is writing it and changes on a regular basis. The Wine Dine and Play best experiences are based on my highest rated stared restaurants, meaning that the visit was an outstanding or extraordinary experience. From cafés, chains, mom + pops, hole in the walls, to fine dining including a few Michelin spots. Visit the Top 100 page to see the entire list.
A few to tease you with…
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Refined and elegant creole fare since 1880
New Orlean’s, Louisiana, USA
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Old-world classic Italian & Mediterranean
New Smyrna Beach, Florida, USA
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Country-style local ingredients w/French flair
Constantia, South Africa
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“In wine there is wisdom, in beer there is the strength, in the water there are bacteria.”
- David Auerbach
Who is John Galt?
TTFN
Is this the real # from February 1, 2020, or fake news? You decide…
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| Coronavirus Hits China's F&B Industry Hard / From the Taiwan News Agency. Are these real death toll numbers, or fake news? |
