Constantin Sevciuc, Chateau Cristi Director-General: “The main lesson that the pandemic taught us is adaptability. A lesson in adaptability that is difficult to learn in other conditions”

was the situation at Château Cristi when entered the new ‘playing conditions’?

At the time when the pandemic started, we had a continuously growing trend on all the markets in which we were present. In addition, we were broadly present on the Romanian market before the pandemic. However, it has blocked several development plans, especially on the Romanian market. The biggest problem we faced as a result of the pandemic crisis was the decrease in exports and consumption in our wine - the premium segment and the main distribution channel. The main distribution channel of products in this segment is, obviously, HoReCa channels. Thus, closing borders and suspending hospitality business cancelled our sales agenda for three months.

What were the first actions taken by the company?

First, we have immediately complied with all protection requirements. We ensured the transition to remote work where it was possible and practically the whole office worked from home for two months. We applied drastic security measures, sanitary measures where remote work was not possible, especially when it comes to field and winery work. Therefore, social distance, the revision of the working regime and many protection measures that we implemented kept each of us away from COVID so far.

Second, we reviewed the structure of spending. It has become very clear that marketing and communication are crucial during this period. Even if now people do not consume wine as usual, the brand must be with people and we have redirected many resources, planned for other directions, to marketing.

During the pandemic, we organized two music festivals. We were the first to launch such a virtual event. Many promotional activities, including online tasting. We have adapted to new realities, which has generated numerous positive impressions. We are now reaping the rewards of all these actions, because as soon as the country started getting out of all pandemic-related restrictions, we feel that the end customers, the intermediaries, HoReCa have a completely different attitude towards us. We assume that this whole business has been catalysed by the right actions taken during the general self-isolation period of the country.

Was this intensification of communication planned or was it one of the opportunities of this period?

An opportunity arose and we made the most of it. All communication and all people have moved to online environment. Business communication has moved to Zoom, as has communication within the company. Online media consumption has grown exponentially. In such conditions, not taking advantage of such an opportunity would have been a shame.

Has the pandemic created any opportunities to diversify manufacturing?

We have developed a business line that is not related to winemaking. Given that everything stagnated and a group of unemployed people appeared, we mobilised in record time and launched a factory for the manufacture of medical masks in one month, which are now made in accordance with all international standards. Based on the production capacity, we are, in fact, a regional player. We can provide masks not only to Moldova, but also to a part of Romania and Ukraine. We look forward to relaunching exports so that we can work with these countries.

How could such production be possible under total isolation conditions?

It was not easy at all. The core team worked and continues to work non-stop. We slept 2-3 hours a day during one month, to launch this factory, which offered over 200 jobs.

Is the new business a one-off deal or a longer-term investment?

The optimist in me says that, in fact, in maximum one year, Europe will forget about this pandemic, but the realist in me says that this culture of Uber protection and Uber sterilization in Asia will also be extrapolated in Europe, whether we like it or not. It is common to see about 20% of people wearing masks on the streets and in the subway in Asia. I assume that this practice will move to Europe as well. This is the reason why I do not think of this project as an on-off deal. We assume that it will work for many years to come.

Was the pandemic also an opportunity for social action?

We have decided not to make public actions related to the support provided to the state and, first of all, to the doctors. We have organized two fundraising rounds to help doctors fight COVID. We donated money and masks. We are still trying, as much as possible, to help doctors and authorities.
What are the forecasts for the development of the core business?

It is too early to make any kind of forecasts for now. Nevertheless, after half a year of crisis, we register drastic reductions in consumption. Tourism industry is extremely affected. This creates problems in many other segments as well. Wine is not a staple. This is why the market will react quite harshly. The premium and upper mainstream segments will diminish quite a bit. Obviously, consumption will migrate to cheaper wines. Moreover, this trend will be amplified by overproduction. For several years in a row, Europe has based part of its economy on huge stocks of wine. If we add the pandemic, we can expect a drastic reduction in prices with the decrease of consumption. This will lead to a drastic decrease in raw material prices. Based on the first purchase prices of grapes this year, we can assert that farmers will suffer quite a bit, because the prices of the raw material collected by large wineries will be very, very low. Lower than last year. If we add the crisis in agriculture caused by the drought, which did not end yet, the situation will be quite serious, not only in viticulture, but also in agriculture in general. I am aware that the state cannot offer any aid to the sector. However, on the other hand, if we do not support our agriculture, we will generate consumption for the agriculture of Romania and Ukraine, whose agricultural products will invade the market of the Republic of Moldova. It is a two-sided coin. Either we give our market to our neighbours or the state makes an effort and finds additional resources to protect the domestic producer.

What are the plans for maintaining the investment rhythm? Will these plans change in any way?

As for the major investments, they have already been made. The necessary vineyards were planted; a large part of the winery's equipment was re-equipped. The major part was made for the re-equipment of the winery. However, investments continued during the pandemic. The pandemic has not affected investment plans and I do not think these figures will be adjusted. Profitability and redemption figures will be rather adjusted. However, the pace of investment will remain the same.
What COVID taught you in the first place?

The main lesson that the pandemic taught us is adaptability. A lesson in adaptability that is difficult to learn in other conditions.

The series of interviews "Foreign investors vs. COVID-19" are part of the gratitude campaign addressed to all foreign investors in the Republic of Moldova who during the pandemic demonstrated a high sense of social responsibility, an example model of employee care and proactivity in reconceptualizing the business . Campaign launched by The Moldovan Investment Agency with the support of the ‘Economic Policy Advice to the Moldovan Government’ project, implemented by GIZ Moldova with the financial support of the German and Swiss Governments.