Wine industry amidst COVID 19
Challenging times are ahead for the North American wine industry. Photo: globalnews.ca
The novel COVID19 virus is having a massive impact on the global economy. Like most businesses, wineries too are struggling amidst the lockdowns, business restrictions and the general economic disruptions it has caused. Results of a survey of US wineries by WineAmerica, which captured 10% of the industry, were released on the 26th of March, and already showed massive impact. With over 40% of employees laid off, 75% declines in sales forecasts for April, and a total loss of $40.5M for the industry in the month of March, COVID 19 has clearly taken a toll on the US wine producers.
Unsurprisingly, smaller wineries seem most affected by the crisis, as confirmed by differences between mean and median figures in the report. This is also consistent with the feedback BarrelWise is hearing from wineries in British Columbia, Washington and California. With lower cash reserves, lower ability to access conventional bank loans, and fewer contracts with major retail (or government, in the case of Canada) distribution partners, boutique wineries are operating in survival mode. While we have not yet heard of any production stoppages, even at small facilities, reductions of 60% - 70% are not uncommon. Capital expenditure is on hold, and barrel budgets are reduced across the board. With vineyards struggling for headcounts, 2020 harvest yield likely to suffer. All of this suggests the effects of COVID 19 will be felt for many months to come.
The industry is persevering in the face of adversity
But, as always, when the going gets tough, the tough get going. And wine people are certainly a hardy bunch! With tasting rooms closed across North America, wineries are pursuing new sales strategies, refocusing on online sales and curbside delivery. In conversations with BarrelWise a number have reported strong Club Member sales, as the local communities rally around their favourite producers. Some new releases have also performed strongly, despite the disruptions. Wineries and restaurants are continuing to collaborate by offering discounts to clients of their partners, and (with the government’s blessing), are helping guests recreate the same food and wine paring experiences in take-out form.
Customer taking advantage of curbside pick up to stock up on wine. Photo: Auburn Road Vineyard/Scott Donnini
What BarrelWise is doing to help
The BarrelWise’s primary objective is to save wineries time in the cellar. Our secondary objective is to give winemakers the insights and control needed to eliminate wastage and quality issues in the cellar. So, as the pandemic subsides and the industry rebuilds, we are excited to help wineries do more with less.
For now, the team’s focus has been on doing its part to flatten the curve. All 6 of us are following the Canadian government’s guidance for social distancing and avoiding contact with others. In addition to the regular civic duties, our engineering team has picked up an amazing side project – BarrelWise is working with the University of British Columbia on designing a novel sanitation tool for medical masks. The team is leveraging its design creativity, rapid prototyping know-how, and existing supply chain partnerships to deliver a functional solution to Canadian hospitals in time to make a difference. The project has been awarded a grant by Gnome BC, a Canadian non-profit research organisation, to fund the development costs
Socially distanced Dan and Adrien testing the sterilization oven prototype. Photo: BarrelWise
We are all in this together
Although the virus has temporarily affected our ability to initiate and service winery trials, BarrelWise is very fortunate to have dedicated and supportive winery partners all along the West Coast. We expect to be close to full capacity in terms of new installations when travel restrictions lift, and are planning several demo events to showcase our equipment. So, if your winery could benefit from a faster, cleaner, more consistent way to do routine barrel work, please get in touch.
We wish everyone excellent health, and the best of luck with your businesses. If there is any way that BarrelWise can be of help to you, please do not hesitate to reach out.
The BarrelWise team in our (currently inaccessible) workshop. Good times... Photo: BarrelWise