Guest column from WineAmerica President, Jim Trezise
WineAmerica’s third survey of American wineries showed that many have weathered the coronavirus storm, but have lost money, and will take months to get back to pre-Covid levels. This survey focused primarily on the month of May following two previous ones covering earlier periods.
Almost all states are now in some phase of reopening, so this survey provides a good statistical snapshot of where they will be coming from—i.e., the bottom.
The sample of about 300 wineries averaged 8,879 cases of production, $963,530 in sales, and 9 employees pre-Covid, though the average winery had to lay off three due to the crisis. Hopefully, they will return soon.
The crash in tourism has been painful. Respondents’ average annual visitors were 20,971, with 1,554 originally expected in May but only 181 showing up, for a 88% decline. The average winery had to cancel nearly 5 special events, which are major magnets for tourists and sales.
Only 13% stopped production altogether, but slightly over half slowed it down.
In May, the average winery lost 70% of tasting room sales, and although Direct-to-Consumer (internet) sales increased by 66%, they’re from a much smaller base so didn’t make up for the on-site loss. Wholesale sales were down 9%.
Most wineries aggressively employed or increased new marketing strategies like curbside pickup (87%), reduced shipping costs (66%), special DtC promotions (63%), home delivery by winery personnel (53%), wine club specials (52%), and virtual wine tastings (34%). Only 1% said “none of the above”!
During May, the average winery lost a total of $30,416, counting both reduced sales and unanticipated expenses, and expects that figure would rise to $35,490 by the end of June if the current situation lasts that long. And the average winery estimated that it will take 24 weeks (6 months) to get fully back to pre-Covid normal in terms of operations.
The wineries have been proactive about seeking government aid, with 70% applying for the Paycheck Protection Program (PPP), 49% for the Economic Injury Disaster Loan, 6% for USDA Disaster Loans, with only 20% not seeking anything. A majority of respondents favored an extension of the PPP time period and a reduction in the 75% payroll requirement (both of which have now been passed into law).
Only about one-third of respondents feel the federal government has been helpful, while 60% say their states have been.
Half of the respondents have opened their tasting rooms in a limited capacity, with 84% having specific guidelines or best practices to protect their employees, visitors, and their businesses. In addition, 55% report unanticipated expenses associated with the reopening.
WineAmerica’s surveys are designed to provide real-life, real-time data to our Congressional supporters so they can advocate on our industry’s behalf. We are proud of the grit, collaboration, and creativity of “wine people” nationwide, and expect to be able to report significant progress over the coming months.