{"id":448267,"date":"2020-05-16T14:43:13","date_gmt":"2020-05-16T14:43:13","guid":{"rendered":"http:\/\/www.moldova.org\/en\/?p=448267"},"modified":"2020-05-24T13:46:05","modified_gmt":"2020-05-24T13:46:05","slug":"coronavirus-drains-the-wine-industry","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/coronavirus-drains-the-wine-industry\/","title":{"rendered":"Coronavirus drains the wine industry"},"content":{"rendered":"Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>

Until the coronavirus pandemic, the Moldovan wine industry was flourishing. In 2019, Moldova exported 15,67 million decalitres of wine<\/strong>, while the total exports\u2019 value reached 3,086 billion lei<\/strong>. Most of the Moldovan wine arrived in China, Romania, and the Russian Federation.<\/p>\n

In a country where winegrowing accounts for 7% of total exports and 3% of the country’s GDP<\/span>, the coronavirus pandemic has hit small producers hard, disrupting the plans of the big players of the industry as well.<\/p>\n

About five wineries were forced to temporarily cease their activity, as their employees were massively infected with COVID-19.<\/p>\n

On April 25, villages of Etulia and Cismichioi, from Vulcanesti district, were put into quarantine. That happened after four locals who were employed at Etulia Winery<\/strong><\/em>, which is part of Bostavan Wineries Group, tested positive for COVID-19. Next, it was decided to test all employees and their relatives for coronavirus \u2013 a total of 174 persons, out of which 77 were infected.<\/p>\n

\"\"

Source: Wine of Moldova<\/p><\/div>\n

“Wine products are not essential”<\/strong><\/h3>\n

83%<\/strong> of the wine produced in the Republic of Moldova last year was exported. Data for March showed that export volume decreased by 9% and export value by 11%, as compared to the same period in 2019.<\/p>\n

According to the evaluations made by the National Office for Vine and Wine (NOVV), this year exports of wine products may decrease by 30% or even 50%, as compared to 2019.<\/p>\n

Head of the Policy and Regulation Service in the Field of Wine Products Sector within the Ministry of Agriculture, Liliana Dascaliuc, said that exports were reduced by 20% in the first three months of 2020<\/span><\/strong>, although the data are preliminary. “Winegrowing will be affected in the same way as the entire agriculture, even the whole economy. Wine and wine products are not essential,”<\/em> commented the expert.<\/p>\n

Zero income<\/strong><\/h3>\n

Vlada Vutcarau is the co-founder of the ATU urban winery<\/em><\/strong>, a family business that produces up to 40 000 bottles a year. The coronavirus pandemic and the state of emergency have reduced sales by 90%, while the tourism activity has zero income<\/span>. “We are talking about huge losses. We continue to produce, but the revenues come from sales, not from production,”<\/em> explained Vlada.<\/p>\n

\"\"

Facebook| ATU Winery<\/p><\/div>\n

However, there is a positive aspect \u2013 according to the young woman \u2013 the business has moved online and \u201cwe focused on the local producer. When buying local, we invest in our people and the money stays in the country.\u201d<\/em><\/p>\n

88%<\/strong> of Moldovan companies are negatively affected<\/strong> by the declining demand for products and services, said a study<\/a> of the US Chamber of Commerce.<\/p>\n

So, the authorities have implemented some measures<\/a> to support economic agents, including wineries. These measures include reducing the VAT rate from 20% to 15% for the hotels, restaurants and catering sector.<\/p>\n

The co-founder of ATU winery, Vlada Vutcarau, claimed that the supporting state measures do not help them that much.<\/p>\n[aesop_character img=”http:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2020\/05\/vlafda.jpg” name=”Vlada Vutcarau” align=”left” force_circle=”off”]\n

“We do not receive visitors. Therefore, we do not generate VAT. This reduction does not provide any benefit at the moment, because we do not record any income anyway. We do not have the revenue, from which to save those 5% and distribute them to salaries.”<\/p><\/blockquote>\n

She also believes that the measures announced by the authorities represent political games and the state avoids taking responsibility. “Maybe it can’t afford it.”<\/em><\/p>\n

Trouble never comes alone, as the co-founder of the winery believes. This year’s drought worries her just as much. “Time will tell us what we will be able to harvest this autumn. There could be an even bigger crisis,” <\/em>she said.<\/p>\n

\"\"

Source: Facebook| ATU Winery<\/p><\/div>\n

Corn instead of grapes<\/strong><\/h3>\n

On April 10, the Commission for Emergency Situations adopted Provision No. 16. One of the included regulations concerned the subsidy mechanism for economic agents: the enterprises that have totally or partially stopped their activity would be granted a subsidy in the amount of the paid income tax, along with other social contributions.<\/p>\n

The director of the Milestii Mici<\/em><\/strong> winery, Viorel Garaz, wondered if the state has financial resources to subsidise entrepreneurs. “As long as the economic agents do not work at all or carry their activity to a very small extent, their contributions to the state budget are very small. If the subsidies are not paid immediately, the companies will shut down their activity and will no longer need them,”<\/em> explained the specialist.<\/p>\n

The Milestii Mici winery produced almost 1,2 million bottles of wine in 2019, out of which almost 60% were exported. Following the pandemic hit, the company recorded a 60% decrease in sales on the local market<\/span>. Exports fell by 40% and, since March 8, the winery has not been visited by any tourists.<\/p>\n[aesop_character img=”http:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2020\/05\/viorel.jpg” name=”Viorel Garaz” align=”left” force_circle=”off”]\n

“Our plans for one year or two have been turned upside down: to extend the restaurant, to acquire electric vehicles, to plant vines, to open a network of stores. The saved money went to rent, salaries and utilities\u2019 payment.”<\/p><\/blockquote>\n

COVID-19 diminished the budget for planting vines. Milestii Mici winery decided to sow 36 ha of corn instead of the Feteasca variety of grape.<\/p>\n

Also, the winery had to terminate the contracts with several retired employees. The overall number of workers was reduced from 206 to 142. “We cannot pay the indemnity for technical unemployment to pensioners. They at least have a pension, but young people who stay at home with their children … We decided to pay them at least something,\u201d<\/em> said Viorel Garaz.<\/p>\n

\"\"<\/p>\n

The underground galleries of\u00a0Milestii Mici are located at a depth of 85 m and have a total length of 200 km. They store almost 2 million bottles, which is why it has reached the Guinness Book of Records<\/strong> as the world\u2019s largest wine collection by number of bottles.<\/p>\n

Challenges over time<\/strong><\/h3>\n

The state of emergency in the Republic of Moldova is not the first hit to winemakers. In 2006, Russia banned the import of wines because it would not have complied with sanitary regulations. At that time, almost 80% of the total wine production was exported to Russia<\/span>. Estimates showed that the embargo losses exceeded $ 100 million.<\/strong><\/p>\n

Next, in 2013, three months before signing the Association Agreement with the European Union, Russia put again an embargo on Moldovan wines.<\/p>\n

\"\"

Source: Facebook| Andrei Cibotaru<\/p><\/div>\n

“It is a crisis that affects us all and we have to contribute by consuming more local wine. Behind a bottle of wine is an entire industry: there are vine growers, people who work in production, winemakers, people in the laboratory. Besides, there is the glass industry, the cardboard packaging industry, there are people who deal with label design and so on. Buying a bottle of wine, in fact, maintains an entire chain of several sectors,”<\/em> commented the author of the finewine.md blog and wine expert, Andrei Cibotari.<\/p>\n

This text is a translation. The original article here<\/a>.<\/p>\n

Photo: Wine of Moldova<\/p>\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>Until the coronavirus pandemic, the Moldovan wine industry was flourishing. In 2019, Moldova exported 15,67 million decalitres of wine, while the total exports\u2019 value reached 3,086 billion lei. Most of the Moldovan wine arrived in China, Romania, and the Russian Federation. In a country where winegrowing accounts for 7% of total exports and 3% of […]<\/p>\n","protected":false},"author":31,"featured_media":448268,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,4,56,11],"tags":[712,609,642,713,172,35,714,27,711,710,709],"class_list":["post-448267","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-society","category-reportaje","category-tourism-en","tag-atu-winery","tag-coronavirus","tag-covid-19","tag-etulia-winery","tag-exports","tag-important","tag-milestii-mici","tag-moldova","tag-wine-of-moldova","tag-winegrowing","tag-winemaking"],"content_social_share":"Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>

Until the coronavirus pandemic, the Moldovan wine industry was flourishing. In 2019, Moldova exported 15,67 million decalitres of wine<\/strong>, while the total exports\u2019 value reached 3,086 billion lei<\/strong>. Most of the Moldovan wine arrived in China, Romania, and the Russian Federation.<\/p>\n

In a country where winegrowing accounts for 7% of total exports and 3% of the country’s GDP<\/span>, the coronavirus pandemic has hit small producers hard, disrupting the plans of the big players of the industry as well.<\/p>\n

About five wineries were forced to temporarily cease their activity, as their employees were massively infected with COVID-19.<\/p>\n

On April 25, villages of Etulia and Cismichioi, from Vulcanesti district, were put into quarantine. That happened after four locals who were employed at Etulia Winery<\/strong><\/em>, which is part of Bostavan Wineries Group, tested positive for COVID-19. Next, it was decided to test all employees and their relatives for coronavirus \u2013 a total of 174 persons, out of which 77 were infected.<\/p>\n

\"\"

Source: Wine of Moldova<\/p><\/div>\n

“Wine products are not essential”<\/strong><\/h3>\n

83%<\/strong> of the wine produced in the Republic of Moldova last year was exported. Data for March showed that export volume decreased by 9% and export value by 11%, as compared to the same period in 2019.<\/p>\n

According to the evaluations made by the National Office for Vine and Wine (NOVV), this year exports of wine products may decrease by 30% or even 50%, as compared to 2019.<\/p>\n

Head of the Policy and Regulation Service in the Field of Wine Products Sector within the Ministry of Agriculture, Liliana Dascaliuc, said that exports were reduced by 20% in the first three months of 2020<\/span><\/strong>, although the data are preliminary. “Winegrowing will be affected in the same way as the entire agriculture, even the whole economy. Wine and wine products are not essential,”<\/em> commented the expert.<\/p>\n

Zero income<\/strong><\/h3>\n

Vlada Vutcarau is the co-founder of the ATU urban winery<\/em><\/strong>, a family business that produces up to 40 000 bottles a year. The coronavirus pandemic and the state of emergency have reduced sales by 90%, while the tourism activity has zero income<\/span>. “We are talking about huge losses. We continue to produce, but the revenues come from sales, not from production,”<\/em> explained Vlada.<\/p>\n

\"\"

Facebook| ATU Winery<\/p><\/div>\n

However, there is a positive aspect \u2013 according to the young woman \u2013 the business has moved online and \u201cwe focused on the local producer. When buying local, we invest in our people and the money stays in the country.\u201d<\/em><\/p>\n

88%<\/strong> of Moldovan companies are negatively affected<\/strong> by the declining demand for products and services, said a study<\/a> of the US Chamber of Commerce.<\/p>\n

So, the authorities have implemented some measures<\/a> to support economic agents, including wineries. These measures include reducing the VAT rate from 20% to 15% for the hotels, restaurants and catering sector.<\/p>\n

The co-founder of ATU winery, Vlada Vutcarau, claimed that the supporting state measures do not help them that much.<\/p>\n[aesop_character img=”http:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2020\/05\/vlafda.jpg” name=”Vlada Vutcarau” align=”left” force_circle=”off”]\n

“We do not receive visitors. Therefore, we do not generate VAT. This reduction does not provide any benefit at the moment, because we do not record any income anyway. We do not have the revenue, from which to save those 5% and distribute them to salaries.”<\/p><\/blockquote>\n

She also believes that the measures announced by the authorities represent political games and the state avoids taking responsibility. “Maybe it can’t afford it.”<\/em><\/p>\n

Trouble never comes alone, as the co-founder of the winery believes. This year’s drought worries her just as much. “Time will tell us what we will be able to harvest this autumn. There could be an even bigger crisis,” <\/em>she said.<\/p>\n

\"\"

Source: Facebook| ATU Winery<\/p><\/div>\n

Corn instead of grapes<\/strong><\/h3>\n

On April 10, the Commission for Emergency Situations adopted Provision No. 16. One of the included regulations concerned the subsidy mechanism for economic agents: the enterprises that have totally or partially stopped their activity would be granted a subsidy in the amount of the paid income tax, along with other social contributions.<\/p>\n

The director of the Milestii Mici<\/em><\/strong> winery, Viorel Garaz, wondered if the state has financial resources to subsidise entrepreneurs. “As long as the economic agents do not work at all or carry their activity to a very small extent, their contributions to the state budget are very small. If the subsidies are not paid immediately, the companies will shut down their activity and will no longer need them,”<\/em> explained the specialist.<\/p>\n

The Milestii Mici winery produced almost 1,2 million bottles of wine in 2019, out of which almost 60% were exported. Following the pandemic hit, the company recorded a 60% decrease in sales on the local market<\/span>. Exports fell by 40% and, since March 8, the winery has not been visited by any tourists.<\/p>\n[aesop_character img=”http:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2020\/05\/viorel.jpg” name=”Viorel Garaz” align=”left” force_circle=”off”]\n

“Our plans for one year or two have been turned upside down: to extend the restaurant, to acquire electric vehicles, to plant vines, to open a network of stores. The saved money went to rent, salaries and utilities\u2019 payment.”<\/p><\/blockquote>\n

COVID-19 diminished the budget for planting vines. Milestii Mici winery decided to sow 36 ha of corn instead of the Feteasca variety of grape.<\/p>\n

Also, the winery had to terminate the contracts with several retired employees. The overall number of workers was reduced from 206 to 142. “We cannot pay the indemnity for technical unemployment to pensioners. They at least have a pension, but young people who stay at home with their children … We decided to pay them at least something,\u201d<\/em> said Viorel Garaz.<\/p>\n

\"\"<\/p>\n

The underground galleries of\u00a0Milestii Mici are located at a depth of 85 m and have a total length of 200 km. They store almost 2 million bottles, which is why it has reached the Guinness Book of Records<\/strong> as the world\u2019s largest wine collection by number of bottles.<\/p>\n

Challenges over time<\/strong><\/h3>\n

The state of emergency in the Republic of Moldova is not the first hit to winemakers. In 2006, Russia banned the import of wines because it would not have complied with sanitary regulations. At that time, almost 80% of the total wine production was exported to Russia<\/span>. Estimates showed that the embargo losses exceeded $ 100 million.<\/strong><\/p>\n

Next, in 2013, three months before signing the Association Agreement with the European Union, Russia put again an embargo on Moldovan wines.<\/p>\n

\"\"

Source: Facebook| Andrei Cibotaru<\/p><\/div>\n

“It is a crisis that affects us all and we have to contribute by consuming more local wine. Behind a bottle of wine is an entire industry: there are vine growers, people who work in production, winemakers, people in the laboratory. Besides, there is the glass industry, the cardboard packaging industry, there are people who deal with label design and so on. Buying a bottle of wine, in fact, maintains an entire chain of several sectors,”<\/em> commented the author of the finewine.md blog and wine expert, Andrei Cibotari.<\/p>\n

This text is a translation. The original article here<\/a>.<\/p>\n

Photo: Wine of Moldova<\/p>\n

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