Coronavirus Hits Heart of Italy’s Famous Cheese, Wine, Fashion Makers – The Wall Street Journal

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That is slowing visitors to the region and disrupting manufacturers. A

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NV supplier had to get special permission to transport its goods out of the area, while some producers of famous made-in-Italy food and wine have had to halt operations. Smaller, family-owned companies are particularly vulnerable to blockages because they often have only one factory, meaning they can’t shift production elsewhere.

For some, the domestic disruption comes on top of supply-chain problems and store closures in China.

Italy’s €97 billion ($107.9 billion) fashion-and-textile industry was first hit last month when production in parts of China ground to a halt and most fashion brands, including

Prada

SpA and Giorgio Armani SpA, were forced to shut some shops as authorities sought to contain the virus there.

Then Chinese shoppers, the fashion industry’s biggest customers, stopped arriving in Italy. Around 1,000 Chinese buyers, journalists and influencers skipped last month’s women’s fashion shows in Milan, dealing another blow to an industry that employs almost 700,000 people in Italy and exports two-thirds of production. Several shows, including Armani’s, were held behind closed doors.

Now, Chinese companies are worried that as the virus spreads through Italy, their Italian suppliers won’t be able to send the leather needed to make everything from shoes and bags to car interiors, said Rino Mastrotto, who owns a leather-making business in Veneto.

“We have reassured our Chinese clients that the product will arrive, but they are nervous,” said Mr. Mastrotto. “Orders from China are falling, and while some of that slack is being picked up by other countries, China is just too big and it can’t be replaced.”

Foreign buyers of Italian textiles and finished products from around the world—including in the U.S.—have canceled orders in the past week, said Claudio Marenzi, the chairman of fashion-industry trade group Confindustria Moda. The cancellations have hit the entire supply chain from companies producing fabrics to those churning out clothing and accessories.

“The window in which we can convince our customers that the products will keep coming is closing quickly,” said Mr. Marenzi. “We have a few weeks left before clients start changing suppliers permanently.”

As the epidemic spread in Italy, Armani closed its Milan headquarters last week as well as factories in northern Italy, most of which are in hard-hit Lombardy and Veneto. The factories started up again this week and its headquarters has reopened, but most employees are working from home, a spokeswoman said. She declined to comment further.

Salvatore Ferragamo

SpA, which had to close many of its 90 stores in China, declined to comment on the impact of the virus in Italy. Prada, which also has temporarily closed shops in China, also declined to comment.

Other characteristic Italian products are also suffering.

In Casalpusterlengo, one of the quarantined towns in Lombardy, Antonio Croce had to halt production of Gorgonzola because workers living outside the designated “red zone” can’t get to the production facility. Many customers typically come from outside the area, so his retail business has also dried up.

He has a permit to ship cheese ready for consumption, so employees who live inside the quarantine area—where they can move about freely—are able to fill some orders. They are also tending to cheese still aging on its way to becoming Gorgonzola.

“With new production stopped, we are going to have a period in 60 to 80 days when we won’t have any product to sell,” said Mr. Croce. “We’ll cross that bridge when we get to it.”

Sales have also slowed to a trickle in the neighboring San Colombano del Lambro wine-producing region, less than 10 miles from the quarantined area, as people steer clear. Still, Antonio Panigada, who runs the Banino winery, says it could be much worse: This is a slow time of the year, when the main preoccupation is pruning vines.

“If this had happened before Christmas it would have been a disaster, because that’s when we sell a large part of what we produce,” said Mr. Panigada. “I’m hoping my distributors will come once the quarantine is over. I have to hope they haven’t shifted suppliers by then.”

Food and wine producers were already facing the fallout from the virus’s spread in China, a key market for many made-in-Italy products.

“The Far East is completely frozen,” said Sandro Boscaini, chairman of Masi, which produces Amarone and other wines in Veneto and Tuscany. “Nothing is getting shipped there and our agents there are all blocked. Meetings, tastings and presentations, which are key for getting people in Asia acquainted with Italian wine, have all been canceled.”

The industry was already dealing with the fear of U.S. tariffs that never materialized and uncertainty around the U.K.’s departure from the European Union, said Mr. Boscaini, who exports about three-fourths of what he produces.

“We obviously weren’t expecting this new challenge of the virus,” said Mr. Boscaini. “All we can do now is hope that it passes quickly so we can get back to normal.”

Write to Eric Sylvers at [email protected]