The Effect of COVID-19 on the Spanish Wine Industry

Introduction

A global pandemic is not a new scenario for humankind, as there are several precedents of pandemics throughout human history that have affected human activities and global economic growth. Humanity is currently facing COVID-19, an infectious disease caused by the Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) that was first detected in Wuhan, capital of China's Hubei province, in late 2019.

Coronavirus disease has been classified as a global pandemic (WHO, 2020) with almost 3,013,280 deaths worldwide and 140,858,072 million infections, according to data provided by Johns Hopkins University as of 20 April 2021 and is described by the International Labour Organization (ILO) as “the most serious crisis since World War II” (ILO, 2020). As far as Spain is concerned, as of 20 April 2021, the number of infected people is 3,410,199 while the number of deaths stands at 76,981 according to data provided by the Spanish Ministry of Health.

Although wine is one of the most widely consumed beverages in the world (Gutiérrez-Escobar et al., 2021), the pandemic has had a devastating effect on the wine industry since its inception by decreasing global wine revenues by 14% by 2020 (Lu, 2020). Alongside the devastating effects of the pandemic on the wine industry are other crises, such as the damage caused by climate change and the outbreak of bushfires in some of the world's major wine-producing regions. Thus, while the French region of Burgundy had its earliest harvest season in history in 2020, California experienced four of the five biggest fires in the last two decades and Australia's 2019-2020 bushfire season was the fifth deadliest in the country's history (Canavati et al., 2020).

In this context, the Spanish wine industry has not remained unaffected by the impact of the COVID-19. Spain is a world reference in the wine sector, ranking first in the world in terms of surface area and export volume, as well as third in terms of production (OIV, 2020), which highlights the economic weight of the wine industry in the Iberian country. However, due to the coronavirus outbreak, Spanish wineries are facing unprecedented adversity in their business. Following the declaration of the state of emergency by the Spanish Government on 14 March 2020, the main sources of impact for the wine industry stemmed from the temporary closure of establishments in the hotel, restaurant and catering sector (Horeca), as well as the cancellation of events due to mobility restrictions. During the 99 days of the Spanish state of emergency, which ended on 21 June, there was no wine consumption linked to the flow of tourism, as no travel between Autonomous Communities was allowed, nor was the arrival of foreign tourists. As a result, wineries and specialised retail outlets have started to develop and implement the online services and home deliveries, increasing online sales considerably (AFI, 2020).

The main focus of the chapter is on analysing the impact of COVID-19 on the Spanish wine industry, describing and quantifying a phenomenon on which there is no academic literature, since although the impact of the pandemic on the wine industry has been studied at a general level, it has not been analysed for the Spanish case. The wine industry generates a Gross Domestic Product (GDP) of more than 23,700 million euros in Spain, equivalent to 2.2% of the Spanish GDP, providing more than 427,700 jobs and representing 2.4% of Spanish employment (AFI, 2020). However, despite the importance of the wine industry for the Iberian country, the effect of COVID-19 on this industry has not been analysed. In this way, the research aims to fill this gap in the academic literature.