Wineries: The Next Year

I'm assuming it takes at least a year to get a vaccine and get retail and travel back to some kind of normal. It might be longer, especially for air travel. So what is the outlook for wineries for this time? The key thing here is that one prediction doesn't fit all.

Wineries come in all sizes from a few hundred cases to millions. Many are owned by larger companies. The vast majority of wineries are smaller and family owned -- many you have never heard of. There must be dozens of Sonoma County wineries making about 500 cases a year. The vast majority of wine sold is from the big boys. Gallo owns over 50 wine labels selling about 75 million cases of wine worldwide each year.

You won't be seeing crowded tasting bars again for awhile

Wineries have three sales channels:

• Direct to consumer is tasting room traffic, mailing lists and wine clubs. Most smaller wineries rely on this for their livelihood.
• Wholesale to restaurants. Some small-to-medium use this as a large part of their business. From Sonoma you've likely seen Sonoma-Cutrer Chardonnay and Jordan Cabernet in nicer restaurants.
• Wholesale to retail stores. Groceries and wine shops make up the bulk of sales for many, especially the larger wineries.

You can see that some will rely on out-of-town visitors. Even here the traffic will be uneven. If they are near a large population area they could be okay. If they require people traveling long distances, especially by air, the turnaround may be farther out.

Even if an area sees a good return of wine tasters the social distancing rules will keep the total number of visitors to a tasting room down as you won't see people standing two-deep at the tasting bar anymore. This will be the same issue with those doing a large part of their business wholesaling to restaurants as their total customer volume will be down so their wine sales will also suffer.

The wineries that do the better part of their selling in retail outlets will be in the best position financially and these are generally the larger wineries. I expect many that haven't done much of this in the past will try to break in, but it's a tough thing trying to wrestle shelf space from existing wines and from the big wine conglomerates.

So wineries because of their size, their sales channels, and their location will do okay or suffer over the next year or more. Some will go out of business and some will be sold. If you have some favorite small family-owned wineries that you'd hate to see close up you can help by buying the occasional case of wine.

Breweries, by the way, are facing similar problems.