Covid-19 Pandemic: a Major Impact on U.S. Wineries
April 29, 2020
In order to keep abreast of the rolling impact of the pandemic situation on the wine industry, WineAmerica, the national association of American wineries, has been conducting a series of surveys. The results of their first survey on the economic impact of Covid-19 on American wineries was released on March 26 and included data from the first three weeks of March, with estimates for what might occur going forward in April. Another survey of the pandemic’s impact on wine trade associations was reported on April 23.
On April 28, WineAmerica published the results of a second survey of American wineries concerning the impact of the Covid-19 pandemic. The survey, which focused on data from March 15 to April 15, was sent to every winery in the country. Responses were returned from 727 wineries in 45 states; 70% were from wineries producing fewer than 5,000 cases, 24% produced between 5,000 and 25,000 cases, 4% between 25,000 and 50,000 cases, and 2% more than 100,000 cases.
In March and April, wineries of all different sizes often schedule special winery events or participate in wine trail weekends to encourage tourists to visit their tasting rooms and to increase wine sales during an otherwise slow season. Since the start of the Covid-19 crisis, the average winery canceled more than five special events, and rather than welcoming an average of 1,482 visitors during March 15 to April 15, wineries saw an average of 124 visitors.
Wineries reported that during this period, sales lost in the tasting room averaged 74.5%. Wholesale sales, for both off- and on-premise accounts, were down on average by 29.9%. With sales dropping, winery owners, marketing and tasting room managers had to be creative and come up with new strategies to sell their wine. A variety of new ways to sell wine were devised, and the survey reported that 84% of the respondents had used curbside wine pickup; 63% reduced shipping costs; 60% created special Direct-to-Consumer promotions; 54% made home deliveries by winery personnel; 53% had wine club special promotions; 28% held virtual wine tastings; and only 5% responded that their winery did “none of the above.” In addition, Direct-to-Consumer sales went up by almost 8%.
The survey also included the following data:
Employment: The average winery laid off 5.28 employees, temporarily or permanently, because of the Covid-19 crisis.
Production: 85% of wineries have continued production, but 62.3% at a slower rate than normal.
Purchase of grapes and bulk wine: Looking ahead to the harvest this fall, the survey asked wineries if they intend to purchase grapes or bulk wines at the same level as in the past. Wineries responded that they anticipate decreasing grape purchases by an average of 22% and decreasing bulk wine purchases by 9%.
New expenses: Unanticipated expenses for items such as hand sanitizers, cleaning services, and other products or services not part of normal operations increased by an average of $910, with a median of $150.
Current combined loss: Including both lost sales and unanticipated expenses, the average winery lost $51,201 during this time period.
Anticipated loss of sales in May: If the current situation continues through the end of May, wineries anticipate losing an average of $63,100 in lost sales.
Anticipated greater expenses in May: If the current situation continues through the end of May, wineries anticipate greater expenses on an average of $5,900.
Recovery time: If wineries are able to resume operations on June 1, the average winery said it would require about 18 weeks to return to normal business in terms of employees, visitors, sales and other factors.
Governmental role: A total of 72 respondents, or 9.9%, were not ordered to close by any level of government. A total of 27% of wineries think that the federal government has been helpful, but 46% say it has not. In contrast, 70% think state government has been supportive of the wine industry, while 18.5% think they have not been, and 11.5% are not sure.
The full report of the “Covid-19 Impact: Challenges and Innovations, April 28” is available on the WineAmerica website, www.wineamerica.org.