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Pantry Loading: Off Premise Sales Surge for Shelter in Place

by Cyril Penn
March 31, 2020

While tasting rooms were shuttered and restaurant sales crashed, sales of wine in grocery stores and clubs surged in March as consumers stocked up to shelter in place.

Scanner data indicates sales of wines priced between $15 and $20 were up 62 percent by volume in the week ending March 15, while wines priced between $8 and $11 were up 44 percent and wines priced between $20 and $25 rose 75 percent. 

Under $3.99
  • March 8, up 2 percent
  • March 15, up 25 percent
  • March 22, up 38 percent
$4 -$8
  • March 8, down 4 percent
  • March 15, up 18 percent
  • March 22, up 25 percent
$8 – $11
  • March 8, up 2 percent
  • March 15, up 44 percent
  • March 22, up 48 percent
$11 – $15
  • March 8, up 10 percent
  • March 15, up 59 percent
  • March 22, up 48 percent
$15 - $20
  • March 8, up 15 percent
  • March 15, up 62 percent
  • March 22, up 46 percent 
Luxury: $20 - $25
  • March 8, up 33 percent
  • March 15, up 75 percent
  • March 22, up 51 percent
$25 plus
  • March 8, up 24 percent,
  • March 15, up 61 percent
  • March 22, up 35 percent
3-liter boxes
  • March 8, up 13 percent
  • March 15, up 98 percent
  • March 22, up 129 percent

Source: IRI

Large wineries that supply grocery chains and club stores—such as Constellation Brands, Bogle Vineyards, Delicato Family Wines, and Treasury Wine Estates—were all bottling to supply the market, with plenty of inventory available. Industry suppliers, meanwhile, continued operations to support wineries because they're part of the supply chain.

“We saw some plan-ahead buying,” Trinchero Family Estates chief executive Bob Torkelson said. “When people were urged to stay out of crowds and plan for a shutdown, there was a surge in foot traffic.”

“This is anecdotal,” Delicato Family Wines chief executive Chris Indelicato said. “I’m starting to get the impression people are drinking a little more at home too.”

“We’re continuing production and we’ve seen healthy demand on the retail side,” Ste Michelle Wine Estates senior director of communications and corporate affairs Ryan Pennington said. “Although, on-premise has fallen off a cliff."

Grinding Away

“We’re hanging in there. As long as we can continue to produce and ship wine it will be okay,” Indelicato said. “If they start closing facilities, that’s going to get a lot tougher. Sales so far have been up as people have pantry loaded.”

“We’re grinding. We’re taking it day by day,” Bronco Wine Company chief executive Fred Franzia said. “We’re in the business of moving product. If you don’t move it, you’re broke.”

“We’ve kept our sales force going and working on getting orders to the distributors,” Vintage Wine Estates chief executive Pat Roney said. “Big box stores like Costco are doing really well, and the chain groceries like Safeway are doing well. Interestingly, drug stores are not.”

Outlook Unclear

It remains to be seen if the acceleration of off-premise sales will balance out with the evisceration of on-premise sales, though it is doubtful. “On balance, we’re assuming it will be a net decline, but we don’t yet know to what degree,” Pennington said. “The big X factor is how long this shutdown is going to continue. We think a lot of the retail acceleration is due to stocking up and that eventually people will be stocked up and will slow down.”

Long Term Structural Change?

Wineries are also trying to discern whether changes occurring in the market—for instance, the acceleration of e-commerce, and success with third-party partners such as Vivino and Drizly—will continue. The shutdown could be a catalyst for greater acceptance of these channels by consumers, or it could be more of an anomaly.

“We’re going to see some of it as a new normal,” Roney said. “Ultimately on-premise will come back. You’re going to have softness in hospitality for awhile because people aren’t booking events. You are not going to have people getting on airplanes anytime soon. When tasting rooms do open up, they’ll probably largely be day trippers and locals, for months."

“We’re grateful that regulators in the three principal states we operate in have been allowing a good deal of flexibility, with curbside delivery, and flexibility for account partners as well,” Pennington said. “We’re curious to see if there’s a greater acceptance of some of that by regulators over the long term. Hopefully they’ll see the sky won’t fall when you offer accounts more flexibility.”

Health and Safety First

Employee health and safety is the chief concern. While many wineries are bottling at various facilities with differing configurations, they are making modifications for so-called social distancing.

“Everyone who can work at home, is, and the (production) team is working hard and trying to keep apart from one another to keep us running,” Torkelson said.

"We’re doing all the things we’re supposed to do. Meetings are becoming teleconferencing around the winery rather than getting together like we usually do," Franzia said.

Roney said the biggest challenge at the moment is just trying to keep everybody safe while keeping operations open and running. “We’re bottling at all of our facilities and are keeping our warehouse operation open. To the extent we can have people work at home we do. It’s about sanitation, sanitation and more sanitation right now. We’re sanitizing everything three to four times a day and trying to keep it safe for our employees.”

“You can’t just adjust to these things,” Franzia said of the COVID-19 crisis in general. "We’ve never been through anything like this where we're shutting things down.”

“It's about getting in the raft. You’ve got to paddle forward to where you think you can go," Franzia said. "The on-sale accounts are tough right now and the off-premise accounts picked up but you've got to keep grinding and can’t roll over."

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