Their Cup Runneth Over

As vineyards drown in surplus wine, artisan cheese makers face an uncertain future.

Few things go together like cheese and wine. Two of life’s little pleasures you might say. But at the moment the two industries are facing a number of challenges.

In Europe, vineyards are now drowning in surplus wine, while artisan cheese makers around the world face an uncertain future owing to the perishable nature of products and the restricted direct-to-consumer sales when it comes to replacing cheeses bought by restaurants.

Both are victims of extraordinary market conditions and of course the coronavirus.

For wine, the ramifications of Brexit and new 25% tariffs placed upon imports to America from France, Germany, Spain and the UK were already beginning to be felt before the pandemic hit. Factor in a new trade deal between China and Australia and it becomes clear that external pressures were already taking their toll.

As Alexandre They, chairman of the French-based Independent Winemakers’ Federation, explained to The Times: “The problem is that 2019 was not a good year for us, and that this year we are facing a crisis that we have never experienced before.”

1bn litres of wine at risk?

If 2019 was bad, then 2020 is likely to be a stinker. The fall in exports and the closure of bars, restaurants and shops across Europe has led to a lack of storage and wine surplus.

That, says MEP Eric Andrieu, is something that has put one billion litres of wine at risk.

Andrieu’s comments follow a statement from the European wine trade group, Comité Européen des Entreprises Vins (CEEV), which suggests that Covid-19 has led to a 30% fall in volume and 50% drop in value of the EU wine market. The group, whose members also account of more than 90% of European wine exports, also confirmed a universal fall in exports since the outbreak.

Logistics and long-term problems

With lockdowns enforced in many EU countries border closures have also been in force and these, coupled with further logistics problems, have meant that wine due for export remains in tanks. That presents a 10m hectolitre headache for producers preparing for the 2020 upcoming wine harvest.

The predicament for winegrowers’ is reminiscent of the ‘wine lake’ crisis of the mid 2000s, said Eddy Wax in Politico. That forced the EU to overhaul farm policy to reduce the overproduction of wine ‘stimulated by its own subsidies’ under the Common Agricultural Policy.

As Jean-Marie Barillère, president of the CEEV, warned, “We should all understand that what we are facing is no short-term crisis. It will take time and require investments to recover wine markets.' 

Is distillation the answer?

President Macron clearly agrees. In a letter sent to the European Commission he argues for the approval of a ‘crisis distillation’ programme that would see surplus wine being distilled into alcohol or ethanol to make products such as hand sanitiser.

“The crisis we are experiencing is unfortunately only the beginning of a long period,” he said. “The volumes not sold during these months will not only weigh on the market for the coming seasons but, in many regions, will hamper the next harvest due to the lack of storage capacity in the cellars.”

Although the CEEV has pulled together a Covid-19 Wine Package suggesting both emergency and recovery measures in an attempt to mitigate the effects of pandemic today and in the future, it is believed that ‘legal adaptations’ are required to ‘dynamise’ the aromatised wine category and the creation of non-alcoholic and low alcohol wine categories.

However, Ignacio Sánchez Recarte, secretary general of the CEEV, believes it will be critical that the wine sector recovers on export markets, particularly across the Atlantic.

“For this, a quick resolution of the commercial dispute with the USA is needed as well as further efforts to gain access to other markets,” he said.

In the meantime, as Andrieu told The Times, although “less remunerative”, distillation will enable winegrowers to “get by” and undertake this year’s harvest.

What next for artisan cheese producers?

For those within the artisan cheese community, there are fewer options available and it’s simply a race against time, as some small dairies face extinction during the coronavirus lockdown.

With the forced closure of the hospitality sector, many lost up to 90 percent of their business overnight, said Helena Horton in The Telegraph.

This left small producers with maturing rooms full of cheese as cows, sheep and goats continued to produce milk every day.

As a result, it’s believed that more than 500 tonnes of cheese may have been thrown away over a two-month period, equating to over 5m litres of milk.

That, warned Catherine Mead, chair of the Specialist Cheesemakers Association, “has put the future of Britain's farmhouse and specialist cheesemakers in the balance” – meaning many could be lost forever.

Although those producing soft and blue cheese are most at risk, even hard cheese producers will begin to struggle, as storage rooms hit capacity and demand begins to drop.

Of course, cheesemakers aren’t the only artisans to be derailed by coronavirus, said Clare Finney in The Independent. Yet the perishable nature of their product, the means of its production, and the psychology of panic buying in the midst of a pandemic, makes them particularly vulnerable.

US sales fall by up to 70%

In the US, it’s a similar story. Figures from the Vermont Cheese Council reveal that its artisan cheesemakers have seen a 50 to 70 percent drop in sales and that’s something that’s being played out across the country among independents.

This has seen some producers attempting to divert more of their milk supply away from fresh, soft cheeses towards those that are “less perishable” and can keep for “many months”, said Anne Saxelby in Eater.

With low-moisture cheeses improving with age and reaching their peak of flavour anywhere from three months to two years after they were made, she believes producers are turning to these “to capture the value” of milk produced, something that might lead to a “baby boom” of coronavirus cheeses down the line.

Is diversification the way forward?

Producers are attempting to fight back in other ways, too. With wholesale sales having dried up many firms are having to reinvent their route to market, diversify and open up online stores to survive.

In the UK, although some reports suggest foodservice is down by around 60%, the demand in retail and e-commerce sales has significantly risen. With some firms having seen a 600% increase in these areas, companies such as St Andrews Farmhouse Cheese Company and Cambus O’May in Scotland intend to build upon this to provide a buffer in the short-term.

Mail order through cheesemongers like Neal’s Yard Dairy is another option, but as Graham Kirkham of Lancashire Cheese told the Independent, “350g cheese sold here and there doesn’t begin to fill the hole of whole wheels of Lancashire.”

However, even with a redirection in the flow of products, direct-to-consumer sales simply cannot replace the sheer volume of cheese being purchased by restaurants and chefs, warns Saxelby.

‘Fromagissons’ calls for patriotism

In France, where sales of traditional French appellation cheeses have dropped by more than 60% during lockdown, a new campaign called “Fromagissons” is urging its people to consume more cheese in an act of patriotism for the dairy industry.

A statement from French dairy industry body, France Terre de Lait, called for consumers to “eat cheese in solidarity” with producers of cheeses such as Saint-Nectaire, Reblochon, Cantal and Camembert, explaining that they now faced “great difficulty” with the closure of main distribution channels and the apparent shunning of “pleasure” foods by consumers whilst in confinement.

Furthermore, with April being the peak of milk production in France, some dairy producers have chosen to drastically reduce milk production, but that’s not an option for everyone.

CNAOL figures suggest €157m deficit

As Michel Lacoste, president of Conseil National Des Appellations D'Origine Laitières (CNAOL), a group of 45 dairy traditional dairy producers, explained to Agri Culture, 2,000 tonnes of cheese should’ve left cellars in April. Yet, by month end, some 1,500 remained.

“If they are not distributed before May 11, they will be out of date, ” he explained.

According figures released by CNAOL, the Protected Designation of Origin (PDO) cheese sector, which has an annual turnover of 1.9bn euros, lost 157m euros between March 16 and April 30.

Clearly, these are worrying times for both industries. The strategy has been to avoid a huge surplus of both cheese and wine – which would send prices plummeting, something that all producers fear. But first and foremost it’s about survival and getting through the next few months. Coronavirus has caused huge imbalance across both markets and there is no one-fits-all solution.

Will buyers turn their backs?

While cheaper wines can be turned into disinfectant, distilling doesn’t work for producers of wines like Barolo, said The Local. That’s something that could see Europe’s most prestigious winemakers hit the hardest. With wine being Italy’s most lucrative product (exports totalled €6.4bn in 2019) there is a real fear that a combination of coronavirus and tariffs could also see buyers turning their backs on the market in at least the short-term.

Indeed, while retail sales are increasing across Europe, wine consumption is expected to fall to 108m hectolitres with exports dropping by 14% this year.

To regain a balance there, support on EU and export markets will be needed in addition to the use of EU production management tools as mooted by Barillère.

Oversupply ahead?

While dairy has received European Commission funds to help with private storage in Europe, and prices have stabilised somewhat as a result, many believe this will only delay an oversupply problem. After all, simply turning cheese into butter and milk doesn’t make the situation go away, it just pushes it further down the line. In the meantime, cash flow remains the key consideration for small producers and operators who have been forced to change their operating models almost overnight. And even with help on the private storage front, will the market demand for new produce be there from consumers? 

Interestingly, there may be still be a slight overall growth in cheese consumption and thanks to demand from Asia, exports could continue to increase. However, the closure of restaurants has and will continue to have an impact on the high-value cheese market for as long as this and wider government restrictions remain in place both across Europe and the US.

Until then, the fate of the world’s favourite pairing hangs in the balance as regulators and producers attempt to find their way through what remains an unprecedented crisis.