Wine In The Time Of Corona
This is my 30th year working in the American wine industry. Nothing even approaching this kind of disruption has ever occurred.
The impact of social isolating and business shutdowns due to the CoronaVirus is going to devastate the Ameican wine industry.
We are talking billions of dollars in losses, many talented people forced out of the industry and a number of wine-related businesses shuttering their doors forever. Some wineries will go under. Some restaurants, after being forced to close by government decree, will never re-open. A number of bars will finish their lifespan.
There are only two real hopes on the horizon to mitigate all this sooner rather than later: That a vaccine is quickly developed or that the virus diminishes significantly in the face of warmer weather, leading to the governments allowing re-openings of hospitality businesses. And with this must come a renewed comfort level among Americans that allows them to venture out.
What happens when bars and restaurants close. These venues represent about 20% of the volume of wine sales in the U.S. By the time March and April are over, that percentage will drop to somewhere in the neighborhood of 3-4% of the total volume of wine sales for those months. And those sales are highly unlikely to transfer over to off-premise retail sales.
In California and likely other states, we are about to see the closing of wineries to visitors. The decree will hardly matter as visitation to wine regions is plummeting as we type. These winery closings will likely last through March and April at least. Direct sales from wineries about to be devastated.
And all this happens while a 25% tariff has slowed sales of a number of imported wines, significantly harming both wine retailers and restaurants.
But here’s what I also know. The wineries and wine retailers that understand how to exploit online sales, marketing, promotion, delivery, and shipping will win…or at least not lose nearly as bad as some others.
And here’s something else I know. As I work with the National Association of Wine Retailers in their continual effort to open more states for retailer to consumer shipping, I will be exploiting this panic/emergency/whatever-you-want-to-call it to emphasize to lawmakers just how important it is to retailers and consumers that liberalized retailer shipping laws be instituted.
Just recently I listened to oral arguments in a retailer wine shipping case now at the 6th Circuit Court of appeals at which the attorney for a wholesaler association argued to the three-judge panel that if the court rules the state’s anti-retailer shipping law is unconstitutional, then the proper response should be to shut down all retailer shipping by the IN-STATE retailers who currently possess the privilege of wine shipping.
How’s that going to fly?
With apologies to Gabriel García Márquez, wine in the time of Corona is not pretty. But the industry will survive, slightly altered. Until that survival is assured by positive measures, I wish all my colleagues in this industry the best of luck.