Winery Trade Associations Are Coping with the Covid-19 Crisis
April 24, 2020
WineAmerica, the national organization of American wineries, issued a press release on April 23 regarding the results of a survey of winery trade associations that are members of their State and Regional Associations Advisory Council (SRAAC). This survey included responses from 30 members of SRAAC on the impact of the Covid-19 virus on both their organizations and their perceptions of the impact on the wineries they represent. Probably the best news resulting from the survey was that none of the trade associations knew of any wineries in their state or region that had closed permanently. However, if the pandemic crisis continues into the summer, possibly until the end of July, associations predicted that an average of 10 wineries could fail, with the highest number being 100.
This survey was conducted by WineAmerica as a follow-up to one released on March 26 that looked at the immediate economic impact of Covid-19 on all U.S. wineries. In the survey, responses were received from 1,085 wineries in 49 states, approximately 10% of the 10,491 wineries in the country (according to Wines Vines Analytics). The estimated total financial loss to wineries due to coronavirus in March totaled $40,439,764.
At this point, the impact of the pandemic on trade associations surveyed “has been modest,” according to WineAmerica. Only four associations have laid off any employees to date, and those associations hope to rehire those workers when the situation improves. A total of 21 associations reported that they had had to reduce or eliminate certain of their functions, with marketing affected for 14 associations, education in 8, events in 7 and research in 6 associations. Half of the associations anticipate they will lose members. With resulting revenue losses combined with reduced funding from government cutbacks, 33 percent of the associations are concerned their association may not survive the crisis.
The wine trade associations participating in the survey had to return their results by April 17. In the midst of this crisis, a week can be a very long time, with numerous events unfolding. Consequently, Wine Business Monthly contacted a number of the associations who participated in the survey to learn what has been happening in their locations, including the past week. Lisa Ellis, director of the Illinois Grape Growers and Vintners Alliance, reported that “We’re cautiously optimistic, and are preparing for when we can open.” Then she added that this afternoon (April 23) the Governor, J.B. Pritzker, had announced that Illinois will be closed down until May 30. “We’re trying to help people weather the situation and are taking it one day at a time,” Elllis said.
The Governor of Maryland, Larry Hogan, also is considering re-opening the state and may announce a plan for doing so soon, according to Kevin Atticks, executive director of the Maryland Wineries Association. He reported, “The State Department of Commerce has implemented a Recovery Task Force. I’m on it, representing the wine, beer and spirits industry. We’re making recommendations to the state for a consistent opening.” He continued with the question, “What will be the rules?”
Atticks also mentioned that sales to go and by delivery had been really strong in Maryland and have proved to be a lifeline for local wineries.
Sam Filler, executive director of the New York Wine and Grape Foundation, said that New York is confronting the possibility of re-opening upstate New York, including the Finger Lakes region, while New York City and possibly Long Island take longer to return to the new normal. He then posed several questions: “How are tasting rooms going to operate, to protect their employees and their guests? What are the winery’s liabilities if they reopen?” He also noted that some tasting room staff may be better off staying on the supplemental income received from the government than by going back to work.
Finger Lakes Wine Alliance executive director Carmela Barbagallo believes that the past six weeks have been a revolution “in how we’re doing things.” She noted that wineries are switching to more digital operations, even in small wineries, and there has been a rise in online and shipping orders for wine, although it will be hard for those numbers to compete with tourism-type sales from traffic in the tasting rooms.
There is some reticence about opening winery tasting rooms in Ohio, according to Donniella Winchell, executive director of the Ohio Wine Producers Association. “Wineries don’t want to be the source of the corona virus,” she said. On the other hand, winemakers are concerned with not having emptied tanks from the 2019 harvest before this harvest happens in the fall.
Winchell noted that re-opening in Ohio may have local health departments managing the regulations around re-opening and she raised the concern that there could be different regulations for wineries in one location from another close by. “We need to create a template that meets the needs of the industry but also meets the regulations of the government. We need consistency.” She also mentioned that more supplies – masks, gloves, thermometers – are needed by the wine industry. “We’re praying for a vaccine!”
Another source of concern for Winchell is funding for the trade association. “40 percent comes from winery dues, but 60 percent is from consumer events,” she said. Wineries are paying their dues, according to Winchell, but consumer events have been cancelled. “Small trade associations with less disposable income will be struggling, but if you’re a giant trade association, you’ll be Ok. I hope this is temporary!”
Tom Cosentino, executive director of the Garden State Wine Growers Association in New Jersey summed up the concerns of many trade associations: “We’re waiting – where do we market? What will the rules be? How do we emerge out of this? What will the health implications be?” He commented that while no wineries have closed yet, small wineries may not ultimately make it – it’s day-by-day. On the positive side, he said, “We have the land. We can set up areas in vineyards and picnic tables on the grounds, and spread people out, not have all customers in one tasting room. Wineries are doing virtual wine tastings; they are calling wine club members with special deals; some wineries are getting into direct shipping. We’ll adapt to the new landscape.”
The results of the winery trade associations survey, including a list of the associations that responded, are available on the special Covid-19 section of the WineAmerica website, www.wineamerica.org/Covid-19.