Changes in the wine industry ushered in as a result of the pandemic are here to stay, especially the trend of consumers ordering more wine online, according to an industry panel assembled Thursday at the Sonoma County Fairgrounds.
Direct-to-consumer wine shipments in the United States reached a record high of more than $600 million in October at almost 1 million cases sold, said Danny Brager, a longtime alcohol beverage consultant who was part of panel at the North Coast Wine Industry Trade Show and Conference.
That sales channel is growing and Brager said he agreed with an estimate by consulting firm bw166 that the direct-to-consumer market represents about 10% in total U.S. wine sales. The growth signifies that Americans’ preference for ordering online has continued even as coronavirus vaccines have become more widespread and restrictions on businesses selling and serving wine have eased.
“This is a channel that is thriving coming out of COVID,” he said.
Still, there are challenges, especially as restaurant sales are still lagging as a result of closures from the pandemic, said Dale Stratton, president of the Wine Market Council, an industry trade group. The number of restaurants permitted to sell alcohol dropped by 40% from January 2020 to January 2021. Though that number has rebounded some though is still about 11% below pre-pandemic levels, he said.
“There is just going to be fewer accounts,” Stratton said of wineries trying to place their bottles on restaurant wine lists. “The on-premises business is going to continue to be challenging.”
The wine industry also faces a strong headwind with younger consumers who prefer a wide array of drinks, especially new items such as hard seltzers and ready-to-drink cocktails that were not prevalent on supermarket shelves five years ago. “We are struggling with the younger consumer,” Stratton said though he added that vintners emphasizing a “wellness” aspect of their product could have some success.
“We are not going back to the way things were back in February 2020,” he said. “The marketplace is more dynamic that it has ever been … the impact of this pandemic has changed everything.”
For grape growers, the market has become more balanced and wineries are looking to enter into more long-term contracts, said Brian Clements, a partner at Turrentine Brokerage in Novato. That is especially the result of 2020 crop in the North Coast that was massively affected by smoke taint from wildfires that there. That crop was followed up with a lighter 2021 yield in the region.
For example, the California bulk wine market had about 5 million gallons for sale last month, which is its lowest level since 2013. “When we look at this kind of volume available, it puts a lot of pressure on the marketplace if you’re a buyer,” Clements said.
You can reach Staff Writer Bill Swindell at 707-521-5233 or firstname.lastname@example.org. On Twitter @BillSwindell.
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