1 NOVEMBER 2020 WineT ourism.com IMPACT OF COVID -19 ON GLOBAL WINE TOURISM 2018 Image: Vineyards of Côtes du Rhône, France 2 Global Report of Covid -19 Impact on Wine Tourism WineTo urism.com presents the Global Report of Covid -19 Impact on Wine Tourism. The report is based on a survey that w as conducted during the period November 16 – November 23, 2020. The survey was distributed to 10 080 wineries worldwide and answers were collected from 1 203 wineries. An Overview of the Survey The main objective of the survey was to evaluate the impact of the covid -19 worldwide pandemic on the su pply side of wine tourism (impact on wineries). An online questionnaire was distributed to the wineries to analyze the financial impact the pandemic had on wineries, as well as the wineries’ future perspective on wine tourism. Additional questions were ask ed to smaller groups of wineries to better understand the type of wine tourism they derive income from, the motivation for engaging in wine tourism, and the visitor type the winery caters to. Distribution of Wineries Based on Countries Australia , 52, 4% France , 178 , 15% Germany , 86, 7% Italy , 466 , 39% Spain , 126 , 10% Argentina Armenia Australia Austria Belgium Brazil Bulgaria Canada Chile Croatia Denmark France Georgia Germany Greece Hungary Israel Italy Lebanon Moldova New Zealand Palestine Portugal Russia Serbia Slovenia South Africa Spain Sweden Switzerland Thailand UK USA Uruguay Romania Sample Analysis Number of Countries Involved – 34 Number of responses – 1203 Response rate – 11.9% 3 Survey Questions The survey included 5 questions covering two main aspects. The first part intended to evaluate the impact of covid -19 on the wineries’ current op erations. The second part of the survey concerned the wineries’ future perspectives. The survey questions: What is your winery’s turnover in wine tourism during 2020 compared to the previous year? What is the level of international visitors at your winery during 2020 compared with the previous year? When will your wine tourism activity return to normal levels? What will be winery’s investment in wine tourism post covid -19? How do you view the development of wine tourism in your region in the next 10 years? Wineries are busy enterprises all year round, especially during harvest times. We have tried to be mindful of the time wineries have available to participate in these types of studies. It is a balance between asking many, complex questions that few winer ies may have time to respond to, and asking a few, central questions that can be easily answered. We believe we have struck a good balance with our survey judging by the overwhelming response from the wineries. This report provides us with many interesting answers, but also many questions which we hope to address in future surveys and reports. Summary of Results Covid -19 has had an extremely large impact on the wine tourism business for wineries. The majority of wineries expect that wine tourism will return to pre -covid levels no earlier than 2022. More than 80 % of wineries expect that wine tourism will grow in their region during the coming 10 years. 4 The Financial Impact of Covid -19 on W ine Tourism O perations Summary Wineries were asked to asses s how their turnover from wine tourism and their level of received international visitors have changed in 2020 compared to 2019. The vast majority of wineries experienced a significant loss both in turnover and in the level of international visitors received. Survey question: What was your winery’s turnover in wine tourism during 2020 compared to the previous year? 10% of the wineries did not experience any change in revenue from wine tourism 2020. Interestingly, a further 6% have even experienced an increase in income during 2020. Further 0 50 100 150 200 250 300 350 400 450 Increased turnover in wine tourism No significant change Lost 10 – 50% Lost 50 – 80% Lost 80% or more NUMBER OF WINERIES CHANGE IN TURNOVER 122 70 246 375 390 Compared to 2019, the surveyed wineries estimated the following turnover effect on wine tourism 2020: – 31% of wineries lost 10 -50% of their income. – 53% of wineries lost 50% or more of their income. – 10% of wineries will not experience a significant change of their income. – 6% of wineries will increase their income. Over 83% of the surveyed wineries have seen their turnover negatively impacted , and in most cases, this effect has been drastic, cutting income by over half compared to the previous year. 5 analysis of the data shows that between the countries with robust sampling sizes (country survey sample>50: Italy, France, Spain, Germany, Australia) there was considerable variation in the proportion of wineries that predicted an increase in wine tourism income for 2020: Australia – 22% of wine ries has increased their income Germany – 11% of wineries has increase d their income. France – 7% of wineries has increase d their income. Italy – 2% of wineries has increase d their income. Spain – 1% of wineries has increase d their income. In Australia, every fifth winery saw an improvement in its wine tourism turnover. In contrast, less than 1% of Spanish wineries report a turnover increase in 2020 compared to 2019. Italy also shows a very low proportion of wineries that have managed to capitalize on the ir wine tourism in 2020. France and Germany have fared somewhat better. Recommendati ons and Conclusions The covid -19 pandemic has undeniably had a substantial, negative effect on global wine tourism revenue. Although this has been the general consensus provided by anecdotal evidence, this claim can now be substantiated by empirical data from over 1000 wineries surveyed. At the same time, we see that a smaller proportion of wineries have come out on top this year, increasing the wine tourism revenue. Why is this? The recommendation is to look closer at these wineries and understand what fa ctors have allowed them to not only sustain but even escalate their wine tourism activities. Such studies could be used to compile a set of best practices and guidelines to help other wineries both rebuild their wine tourism in the short term, as well as m aking the wineries less susceptible to external shocks in the long term. 6 Survey question: What has been the lev el of international visitors to your winery during 2020 compared with the previous year? Global travel restrictions are the primary explanation to the dramatic decrease in international visitors. Consequentially, those wineries that have built up a wine t ourism business model geared toward international wine tourists are particularly vulnerable economically. Recommendations and C onclusions The recommendation is to look closer at how wineries in specific countries and regions tend to cater to international vs domestic tourism. A pre -existing base oriented toward domestic tourism will have provided wineries with robustness against the shortfal l of international visitors (and missed revenue therefrom). In the absence of such a domestic base, wineries will have to take action to increase the number of domestic visitors they attract. Success in doing so will depend on what type of experiences the winery plans to offer and how these are marketed, as well as other factors outside the winery’s control, like geographical proximity, accessibility, customs and tariffs, etc. How have these factors influenced a winery’s decision to cater toward either dome stic or international tourism? 0 100 200 300 400 500 600 Down more than 20% Down more than 50% Down more than 90% no particular change NUMBER OF WINERIES CHANGE IN NUMBER OF VISITORS 149 400 569 85 Compared to 2019, the surveyed wineries experienced the following changes to the level of international visitors: – 47 % of wineries saw a decrease of over 90% in international visitors. – 33% of wineries saw a decrease of over 50% in international visitors. – 12% of wineries saw a decrease of over 20% in international visitors. – 7% of wineries saw no noticeable change in international visitors. 7 Future P erspective on W ine Tourism Summary Wineries were asked to estimate when wine tourism activity would return to pre -covid levels, how much they plan to invest in wine tourism post -covid, and how they see the development of wine tourism in the long -term. 9 out of 10 wineries believe the wine tourism industry will recover by 2022 at the latest. A majority of wineries will sustain or increase their investment in wine tourism post -covid. Survey question: When will your wine tourism activity return to normal levels ? Closer loo k at the wineries that have positive approach to wards wine tourism recovery , showed us: – 31% of Australian wineries – 41% of French wineries – 24% of German wineries – 29% of Italian wineries – 33% of Spanish wineries 0 100 200 300 400 500 600 700 2021 2022 2023 2024 and more NUMBER OF RESPONCES YEAR OF RECOVERY 98 – 31% of wineries thi nk that wine tourism will go back to normal level in 2021. – When Majority of them – 58% – believe that wine tourism will recovery in 2020. – The rest of the wineries – 10% – consider that recovery will take more time and wine tourism will go back to normal level in 2023 or 2024 and more. 358 661 28 Think that wine tourism will recover in 2021. 8 Recommendations and Conclusions Almost 9 out of 10 wineries believe that by 2022 the wine tourism industry will have returned to normal levels. There is no large variation between countries in their answers: about a third is a bit more optimistic and believes the recovery will come under 2021, and about two -thirds say 2022. France stands out as the most optimistic country in this context, with over 40% of respondents believing the industry will recover in 2021. It is possible that this is due to the strong domestic tourism trend that has taken place in France – many French wineries have noted th is in the survey comments when answering the questions. Survey question: What will be your winery’s investment in wine tourism post covid -19? 0 50 100 150 200 250 300 350 400 450 Invest less than before Invest more than before Invest same level as years before No Idea NUMBER OF RESPONDENTS FUTURE INVESTMENT 127 393 375 308 The majority of the wineries (32%) are planning to increase investment in wine tourism in post -pandemic period 9 Analyzing data showed that most of the wineries are very positive about future of wine tourism. – 31% of wineries are planning to keep the same level of investment in wine tourism in the post -pandemic period. – A minority – 11% – are planning to decrease investment . – 26% of wineries do not have any clear idea of how they will approach wine tourism investments in the future. Recommendations and Conclusions Results of the survey showed us that the majority of the wineries have a positive vision of the future of wine tourism since they are planning to increase or maintain the same level of investment in the post -pandemic period. Besides the positive approach and willingness to invest, wineries should also invest in a more sustainab le and stable future, they should diversify their markets, products, and services, to anticipate future external shocks and fluctuations. Survey question: How do you view the development of wine tourism in your region in the next 10 years? 0 200 400 600 800 1000 1200 No Idea Wine Tourism will go down Wine Tourism will go up Wine Tourism will stay on same level NUMBER OF RESPONDENTS LONG TERM VISION OF WINE TOURISM 34 93 177 959 10 Following countries has very positive attitude towards the long -term development of wine tourism: 78% of Australian wineries 75% of French wineries 89% of German wineries 82% of Italian wineries 81% of Portuguese wineries 83% of Spanish wineries Only 3% of respondents have negative idea about long -term perspectives of wine tourism development since they think that this sector will go down in next 10 years. 10% of the wineries think that wine tourism will stay on the same level. 7% of them do not have clear picture about future growth of the sector. Recommendations and Conclusions As most wineries agree that the wine tourism sector will be a n essential tool in the future, the recommendation is to look closer at how wineries can develop and improve their wine tourism offerings, in conjunction with their region, to be able to use the full potential of the growing wine tourism sector in the futu re. Big majority of the wineries (80%) across the world think that win e tourism will continue growth in long term. 11 Supplemental Survey – M ajor Drivers and Characteristics of Wine Tourism Experiences at W ineries Summary A supplemental survey was carried out on a subset of the responding wineries. 82 wineries from different parts of the world were asked questions to evaluate their operations in wine tourism. The main objective of the in -depth study was to evaluate: The biggest source of income from wine tourism activities. The primary motivation for the wineries to engage in wine tourism. Typical visitor s’ profile to the winery. Survey question: What is the most important source of income for your wine tourism setup? For the majority of the wineries (57%) the main source of income comes from cellar door sales. 36% cited wine tastings and tours and other wine experiences. Only 7% claimed accommodation as their main source of income. cellar door sales Accommodation Wine tourism experiences 0 5 10 15 20 25 30 35 40 45 50 SOURCE OF INCOME NUMBER OF RESPONDENTS 29 6 44 12 Recommendations and Conclusions There is a lot of potential in developing the types of wine tourism wineries offer. Wine experiences are most commonly viewed as a catalyst and a natural introduction of the winery’s wine to the visitors, boosting cellar door sales in conjunction with the experience. However, over a third of wineries claim that the experiences themselves are a primary income stream. It would be insigh tful to further explore how experiences are priced and packaged at wineries where they are considered a real income source and not just for marketing or upselling value. For those wineries able to offer accommodation as an experience, the ability to entertain the visitor for a long time in an immersive environment at the winery provides an opportun ity for a strong income stream, as well as leaving a strong bond with the visitor for a long term relationship. Survey question: Why do you offer wine tou rism? 0 5 10 15 20 25 30 35 40 45 50 long-term marketing value in Wine tourism Additional income from wine tourism experiences Both NUMBER OF RESPONDENTS MOTIVATION FACTORS 45 33 3 13 The survey showed that the long -term marketing value o f engaging in wine tourism activities is the main motivation factor for 41% of the respondents. A further 55% cited the long -marketing value, in combination with direct income from these acti vities, as the main motivation for offering wine tourism. Only 4% of the wineries indicated that additional income from wine tourism experiences is the main motivating factor to be involved in wine tourism, without acknowledging any long -term marketing value of such activities for the winery. Recommendations and Conclusions For most wineries, the perceived value of wine tourism activities is often the ability to market the winery, create long -term connections with visitors, and perhaps most immediatel y inspire them to make cellar door purchases and the end of their experience at the winery. We would recommend wineries to take a second look at the wine experiences offered. In many cases, the pricing can probably be reviewed without scaring away visitors (wineries tend to underestimate visitors’ willingness to pay for an experience, especially a high -quality and unique experience). High -quality experiences also have a long -term marketing value in and of themselves – visitors will likely be more prone to m ake cellar door purchases after a wine tasting or winery tour, but will likely also keep them as repeat customers in the long -term. These visitors are more likely to recommend the winery to others, to order wine online from the winery, and even come back f or repeat visits just for the sake of the experience. 14 Survey question: Who is the typical visitor to your winery? 15% of wineries receive more sophisticated wine tasters where the quality of the wine experienced weighs more heavily than other aspects of the experience. 28% of wineries had no tendency to attract one or the other of the two types of visitors: both casual and m ore sophisticated wine tourists frequent their winery. 0 5 10 15 20 25 30 35 40 45 50 sophisticated wine tasters(wine geeks) combination of both More casual wine tasters NUMBER OF RESPONDENTS VISITORS’ PROFILE 46 23 12 57 % of the wineries indicated that the majority of visitors at their cellar door are more casual wine tasters. 15 Recommendations and C onclusions The majority of wineries receive visitors who are more casual wine tourists. The array of wine experiences that these visitors can appreciate is almost unlimited – for these visitors, the winery and wines function primarily as a backdrop for the ambiance, hospitality, and uniqueness of the experience itself. The quality of the wines or details of the wine production process tends to be less important for these vis itors, as long as the experience is delivered with high quality and with friendliness and attentiveness. The majority of wineries whose main visitors are sophisticated wine tasters indicate that they have cellar -door sales as a main source of income, follo wed by wine tourism experiences. A hypothesis worth exploring is if professional wine lovers are actively purchasing more expensive or larger volumes of wine when they are visiting wineries compared with casual tasters. 16 Conclusions and Recommendations The covid -19 pandemic has undeniably had a substantial, negative effect on global wine tourism. W orldwide pandemics, international and domestic closure of borders had a huge financial impact on the wineries that are operating in wine tourism. However, as the survey showed us, there was a small group of wineries that have come out on top this year, increasing their wine tourism revenues. If we would take a closer look at this group of wineries, we could understand the factors that allow ed them to not only sustain but even escalate their wine tourism activities. These wineries could be used as best practice examples to help other wineries both rebuild their wine tourism in the short term, as well as making them less susceptible to externa l shocks in the long term. Innovation is the keyword for the wineries to rebuild their operations, as well as to deal with future fluctuations of the market. Being innovative helped wineries to adapt their work to the huge decline of international travel and maintain revenues . Judging from the comments to their survey answers we conclude the following: Designing innovative wine tourism experiences by implementing digital tools helped them to maintain links to their customers. Some wineries had grown their income through an increase in online sales, online wine tastings, and digital tours to wineries. Covid -19 had an unprecedented impact on international tourist arrivals . As UN -W TO states, it declined by an average of 70% in the January -August period. 1 Win eries that had their wine tourism business model based on international visitors turned out to be in a vulnerable situation. However, wineries in certain countries and regions tend to cater to domestic rather than international tourism. A pre -existing base oriented toward domestic tourism will have provided wineries with robustness against the missed revenue from international visitors. 1 UNWTO, 2020, Impact Assessment of the Covid -19 Outbreak on International Tourism 17 Wi
