The best-case scenario entails business resuming as usual in two or three months and the worst-case scenario entails focus only on retail in the remaining months of 2020.
Without taking exports into account, Cramele Recas makes 60% of its sales in retail channels and 40% to the hotel, restaurant and catering sector.
“It is much too early to anticipate the end of the year; anyway, we have two possible scenarios. The best-case scenario would allow us to resume operations as usual in two or three months, with an about 20% to 25% loss compared with last year’s revenue in Romania. The worst-case scenario would see the business focus exclusively on retail, with a 40% loss compared with 2019 revenue,” says Ciprian Rosca, chief commercial officer of Cramele Recas.
Cramele Recas posted EUR50 million revenue last year and expected 15% growth in 2020 before the pandemic.
Cramele Recas made 23 million liters of wine in 2019, some 87% of which bottled. About half of the bottled wine is exported.
“The coronavirus crisis, which drove the entire country into lockdown, has caused problems for Cramele Recas, too, due to the restrictions imposed. Our national and export activities have been affected.”
The problems Cramele Recas is facing in Romania are those on the on-premise segment.
Cramele Recas caters to all price categories, from retail wines branded as Schwaben Wein and Castel Huniade to premium wines for the on-premise segment such as Solo Quinta and Cuvee Uberland.
“Anyway, we expect the first half of April to provide us with a clear picture of the market trends, but we estimate the modern retail segment will see a slight rise.” The rise will be driven by the hypermarket segment. A small decline should occur on the cash & carry segment because of the disappearance of the hotel, restaurant and catering customers, and also because wine is not high on the necessary products list.
“On the other hand, we believe traditional retail will overcome the challenge using its advantage – proximity, so we don’t expect any more than 20% to 25% decline.”
Cramele Recas does not have a solution to offset the loss of premium wine sales, designed for the on-premise segment. It could try to sell some premium products in hypermarkets, which can ensure proper storage and display, but consumers are no longer spending as much time in stores as they did and usually skip the wine shelf. Even if they do not skip it, they still buy the brands and assortments they know, without comparing the labels, Ciprian Rosca says.
“We estimate people are buying less and slightly cheaper now. As for our exports, we are optimistic that the supermarket chains in the countries that took the same lockdown steps as Romania will continue operations.” The problem is getting the wine there, so Cramele Recas is now reconsidering transport options.
Investments will not be put on hold, because Cramele Recas has never had a short-term approach of the business, the executive says.
(English version by Loredana Fratila-Cristescu)