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Jerry Lockspeiser: What happens next?

Published:  26 August, 2020

One of the many reasons people like working in the wine trade is the sense of common bond. Trade outsiders may doubt how friendly people who are direct competitors can really be. But they often are. People can’t help liking and respecting each other. The bonhomie that wine engenders helps, as does admiration for the labour, love, and sheer dedication of those who make the stuff. From producers to distributors, retailers, and communicators, an unstated feeling of shared mission is in the air. Now, too, the trenches spirit that comes with having backs against the wall.

Years ago, I marvelled at the unity of Wines of Argentina’s collective effort to promote their country’s wines, individual business interests kept in check to the benefit of the common good. I have enjoyed many open and amicable conversations with peers at trade tastings, awards events, and dinners with major customers, even when we were fighting for the same spot on a retail shelf, or competing to win the agency for a new supplier. When a battle was won or lost, recognition that “it was only business” allowed the camaraderie to continue unabated. You win some, you lose some, the journey continues.

Will this sense of solidarity and support wither in face of the Covid enhanced decline in wine sales as companies fight for their individual survival, while others seek to maximise the unexpected upturn in their sales? Or will it blossom, further uniting the trade, as neighbours and rivals assist each other through these unprecedented times?

It seems that adapting to life with Covid often accelerates already incipient trends. Most obviously, the pre-existing decline in wine consumption and sales just got worse. Both the on- and off-trades have each lost around four million cases of sales since 2015. Despite some off-trade suppliers experiencing booming sales, early pandemic assumptions that people stuck at home during lockdown would drink themselves silly seem wide of the mark. Most wine drinking is social, and despite zoom drinks with friends and fun wine tastings, the reduced ability or willingness to socialise in person is telling.

Online has rocketed, spurred by lockdown life. Tesco’s announcement of a near doubling of its online sales in the period and their offer of permanent employment to 16,000 temporary fulfilment staff demonstrates their belief that it will continue. Many people who had never bought things like wine online before are expected to continue to do so even when they feel safe going back to physical shops.

Working from home has proved both efficient and preferable for many. A mid-July Morgan Stanley survey reported in The Telegraph found that 82% of employees want to continue working from home, although only 17% want to do so five days a week. In the UK only 52% had gone back to the workplace, against 75% or more in the other major European countries. As companies assess the relevance and cost of largely empty offices, rents may be driven down, and the economics of office property put under increasing strain.

The pandemic highlighted expectation for companies to behave ethically in all aspects of their business and this trend can be expected to remain higher to some degree at least. Whether helping NHS staff through supply of meals and accommodation, switching production to make PPE or ventilators, not charging excessive prices for goods in short supply, or looking after staff appropriately, the idea that business is about more than maximising profit regardless of the consequence is gaining traction. The good guys should gradually win more customers while the bad lose.

The pandemic economy has shone a spotlight on an old business truism: cash is king. Without it you go bust, no matter good your business idea, brand, or service. While the UK government’s quick financial response in providing loans and the furlough scheme were welcome – shame on those who have fraudulently mis-used either – the shadow of what happens as the support fades away remains. There is an ominous feeling that the worst is yet to come. On-trade businesses requiring 70% plus occupancy to be viable look increasingly unlikely to be so unless major costs such as rent are lifted for a lengthy period. This in turn asks questions about the financial position of the landlord and their ability to survive without revenue. The revenue shortfall can only be passed around for so long before eyes turn again to the government.

Perhaps the biggest change in living with Covid lies in the role of the state. Far from an already existing trend, this is a complete volte face. Business – at least corporate business – has classically been anti-state, or rather anti-government interference in its freedom to trade as it sees fit.

This is summed up in America as “get the government off our backs”. Not now. Now the government is expected to use the power of the state to save our bacon, both personal and business. We want them to steer us back to health and to ensure our finances survive. The UK economy shrank 20% in the second quarter of the year, by some way the worst of the G7 major economies. The Office for Budget Responsibility predicts unemployment may pass 10%. UK government debt recently passed £2 trillion; the first-time public debt has been more than 100% of GDP since 1960. Whether the money is being spent appropriately is open to question, but the recognition that modern societies need active governments to secure the wellbeing of the nation should not be.

Everything suggests the year ahead is going to be very, very tough. We need to stick together. We need to call on the sense of solidarity and common cause in our trade more than ever. This is a time to seek what unites us, not that which divides. We have a strong base to work from.

Jerry Lockspeiser donates his fee for this column to ActionAid, an international charity who work with women and girls living in poverty around the world.