Tracking the Impact of the Coronavirus on the 3-Tier Market

The wine industry has weathered many obstacles, be they fires, phylloxera, or prohibition. Today we face uncharted waters with the coronavirus. Our path forward may be challenging, but we will get through this together. The better we are able to keep the pulse of the situation, the better we will be able to adapt.

As of TODAY, based on recent experiences and communication with our vast network of industry leaders, here is what we are seeing in our industry.

Current Observations 

  • Wine events and in-store tastings
    • All trade and consumer events have either been postponed or cancelled.
  • Premium vs value products 
    • Consumers are still drinking, but often are trading down to what they perceive are lower priced/value wines (less than $20)
  • Access to our distributors
    • With all the closures across the country, distributors have cancelled “work withs” and not allowing suppliers into their offices
  • On-Premise
    • On-premise accounts (bars, restaurants, hotels) that are not already closed are experiencing a significant decline in customers and sales, resulting in less wine sales, including wine-by-the-glass (which drives volume). Some are offering carry out along with wine.
    • On-premise employees, who are typically good consumers, are receiving lower wages and tips and are spending less on non-essential services and goods (wine).
  • Off-Premise
    • Consumers of wine still want to drink, but are more likely to drink at home.
    • As of now, foot traffic remains good to strong and hopefully this trend will continue.
    • Retailers are still purchasing and are focused on the challenging logistics of maintaining stock in their stores. Some are offering deliveries and or curbside pick up.

Recommendations to Consider (based on current observations)

  1. Communication. It’s an important time for you to be in contact with your network (your customers and your colleagues) to learn about the changing market which will direct you towards making good decisions downstream.
  2. “Fish where the fish are.” Today, focus on the retail segment and where you have established relationships

Some retailers are still seeing salespeople and others are only talking by phone.

  1. Be flexible. Be flexible, creative, and adaptable to new ideas to sell your wines.
  2. Be mindful of your accounts receivable. This will potentially become a bigger problem over time .
  3. Look for delivery and consumer curbside pick-up opportunities.

While we may be in uncharted waters, one thing we can count on is that with uncertainty will come innovation.

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