Supply Lines: Ford every revenue stream

Supply Lines

Japan may be a country of beer and sake drinkers, but for Viennese vintner Alexander Zahel, it's one of the biggest and most profitable markets. That was until the coronavirus crisis hit.

"We typically export 10,000 to 15,000 bottles to Japan each year," said Zahel. "In 2020, we'll be lucky if we see 50% of that — and that all depends on the country opening up again in October, which currently looks uncertain."

The pandemic has disrupted drinking patterns globally. While the masses are buying more booze from grocers and liquor stores to drink at home, that hasn't been enough to fill the gaping hole created by declines in shipments to restaurants, bars and sporting venues that were closed to slow the virus. Global alcohol consumption isn't expected to return to pre-Covid-19 levels until 2024, according to researcher IWSR.

"Our wines typically accompany omakaste sushi tastings, where patrons are guided by their sommelier," said Zahel, who's been in charge of the family wine business since 2012 and regularly travels to Japan to promote his product. "Austrian wines just aren't that well known, you have to put in the effort to convince customers."

Alexander Zahel in the Zahel wine cellar in Vienna. Credit: Hilary Merzbacher via Zahel

The Zahel family has been making wine in Vienna for almost a century and exports more than 50% of the output from vines on 33 hectares in the Austrian capital. Shipping its biodynamic wines to 22 countries, international sales collapsed across the board due to the pandemic, though Sweden — which has stood out for its laxer handling of the virus — proved to be an unlikely savior.

"Sweden's alcohol market is very regulated, but we won a tender two years ago to sell in the government-run Systembolaget," said Zahel, 33. "It's been a godsend during the crisis."

Zoe Schneeweiss in Vienna

Charted Territory

Americans are buying more New Zealand wine than ever, making them its top consumer over the past five years, according to a study from by New Zealand's official data agency. The country's wine shipments to the U.S. totaled a record NZ$177 million ($115 million) in the first quarter of 2020, followed by U.K. and Australia, which all together accounted for about 76% of New Zealand's wine exports.

Today's Must Reads

  • Green shoots | It's no V-shape, but significant rebounds in sentiment indicators on Bloomberg's Trade Tracker show that the worst could be over for shipments as economies gradually re-open worldwide.
  • No-deal alarm | Some 110 business leaders have warned U.K. Prime Minister Boris Johnson of dire consequences if he fails to sign a trade deal with the European Union before the Brexit transition period ends in six months.
  • Ethics quizzed | Two senators asked the top U.S. trade official for details about officials who allegedly sought private-sector consulting work while still government employees and said the episode raises questions about policies at the Office of the U.S. Trade Representative.
  • Trump and AMLO | President Donald Trump plans to meet with Mexican President Andres Manuel Lopez Obrador next week at the White House to celebrate the revised North American free-trade agreement.
  • Tough break | India's economic ties with China runs deep, making the recent escalation in political and trade tensions between the two powerful neighbors all the more worrying for businesses.
  • Readying curbs | The U.S. is preparing to roll out long-delayed sanctions to punish senior Chinese officials over human-rights abuses against Muslims in Xinjiang, part of a toughening of the Trump administration's stance toward Beijing.
  • Stephanomics podcast | Host Stephanie Flanders hears from a German pharmaceutical executive about why it's so hard for Europe to extract itself from Chinese supply chains. She also speaks with WTO Chief Economist Robert Koopman and Renaissance Capital's Global Chief Economist Charles Robertson on the future of global trade and investment.

On the Bloomberg Terminal

  • Potential shock | There could be meaningful sales downside for e-commerce and local-services companies such as Pinduoduo and Meituan if another virus outbreak restricts business operations in the second half, Bloomberg Intelligence's scenario analysis shows.
  • Locals mitigate | A rise in expenditures by Hong Kong residents could narrow the city's retail-sales losses through December, Bloomberg Intelligence says.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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