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.
Barriers to retailers serving consumers must be removed now. Thank you Tom, let’s work to make sure wine retailers can survive by new laws opening up direct commerce through direct shipping.
Tom,
I’ve been in this biz for 40 years and the only thing that came close to this disruption was a very positive one back when 60 Minutes ran the French Paradox show. That pumped up the industry unlike any cultural change we’d ever seen. The second time they showed it, the same result – a giant leap for wine-kind. I’m looking forward to seeing how necessity breeds invention in this situation.
My biggest concern is that every time an industry in the US is challenged it eventually leads to greater consolidation. The industry may well be changed after this but I don’t think we’ll like what we see.
coronavirus is not a problem for the wine industry, high prices for wines ,,, visitor center with astronomical prices, bad services and worse hours of attention than bank of america
Great post. It is going to be a challenging time but you are right to see an opportunity to try and tear down more of the obstacles blocking consumer access. Delivering service of food (and hopefully wine) will be one of the few things that can help keep people sane during these trying times. The states with laws that hinder this are going to have grumpier constituents.
Though, not to be a debbie downer, I do need to through water on the optimism that this in going to go away when it gets warmer. It’s fairly warm in Malaysia, Qatar, Israel, Egypt, etc which are dealing with this pandemic as well. So far this virus doesn’t look to be taking the typical seasonal pattern of the flu.
Our best hope is the quick development of a vaccine but we must all be ready to accept that a endgame could be much further down the road.
I can’t help but keep thinking as we are only 48 hours into the Tasting Room shutdown that you can and should totally exploit this current situation in all the future arguments before courts.
Granted this isn’t exactly going to be the “new normal”, but who would have thought even two weeks ago that governments would order the closure of private business to slow community transmission. I’m not by any means decrying the governments’ decisions, I believe they were right and proper, but this shows how far we have come to an online on demand economy
Disruption is an opportunity for change. I do agree that this is a critical time to engage in ‘Positive Change for the Industry’ not “Exploiting”.
Relevant airtime with policymakers now is not going to happen. The loss number is staggering but when compared to Healthcare, Auto, Travel, Home, Tourism… Wine & Spirits is not even going to make the first page. Outside of California, not even the 2nd page.
Here in New Jersey ‘Liquor Stores’ were labeled essential businesses yesterday and will not be closing. With many offering direct free delivery. So no increase in direct sales from our state.
#DrinkSafe