COVID-19: The Impact on California’s Wine Industry

COVID-19: The Impact on California’s Wine Industry

Despite a sharp increase in wine and liquor sales at retail stores during the COVID-19 economic shutdowns, California wineries expect up to a 66% loss in revenue this year.

As the novel coronavirus, SARS-CoV-2, and the deadly respiratory virus COVID-19 made its rampage across the globe, major industries saw their operations come to a halt. As governments and health officials pleaded for individuals to remain home to mitigate the spread of the virus, many businesses closed their doors and sent employees home to avoid the contagion.

While nearly every industry has been impacted in some aspect by the COVID-19 pandemic, those who depend on interaction and direct sales with consumers have been hardest hit. Entertainment, tourism, and restaurant businesses have seen their attendance and revenue plummet, even as economies begin to reopen. As a combination of these industries, the California wine industry has taken a severe hit during this shutdown, and winery owners and operators are just now beginning to get a clearer picture of what to expect this season.

No Crowds In Wine Country

With a majority of the major wineries and winegrape growers operating out of California and the San Jose region, the hit to the industry means huge economic losses for California. According to Jon Moramarco, a wine industry analyst, the losses could reach up to $6 billion across the industry due to COVID-19’s ability to shut down the entire economic infrastructure. Over 10,000 wineries have been forced to close their doors to vacationers and tourists as the virus spread across the country - meaning not a drop of wine poured into a single glass in wine country for months. The lack of patrons in tasting rooms and wineries has meant a devastating loss for operations that depend on a steady stream of visitors - especially as the spring and summer months drag on. The result is less in-store revenue and a shift in focus toward retail sales.

The Unexpected Shift to Retail

When US consumers realized that they would be spending a lot of time in their homes, they hit the stores to stock up on essentials - including wiping store shelves clean of wine and liquor. At first glance, this could appear to be a great thing for wineries and distributors. However, depending on a specific winery’s distribution channels, this sudden, seismic change in consumer behavior may prove fatal.

With many wineries basing their main revenue sources on tasting rooms, on-premise sales, and other entertainment-based income, the sales a winery can make on retail sales may not begin to scratch the surface of the losses accrued. While some analysts believe retail sales will increase by 10% this year, the expected losses for on-site sales and revenue are believed to be up to 80%. For many wineries, the lack of a retail presence and inability to make income will increase their chances for closure the longer the pandemic hangs on.

Bringing Hope To San Jose Wineries

As the shutdown restrictions ease, it is hoped that consumers will begin to venture back out to wineries and tasting rooms once more. While the return is likely to be slow, there are encouraging signs among other retail markets that consumers will quickly return to their previous buying habits.

This is good news for wineries - including those in San Jose such as Tessora's. With a move toward digital sales and curbside delivery, Tessora's and other savvy wineries have found new life through online, direct-to-consumer sales. Tessora's recently established curbside delivery, an engaging way for the winery to continue to interact with customers while keeping socially distant.

As restrictions ease, wineries will welcome back customers and patrons with increased health provisions and social distancing practices - allowing consumers to enjoy their San Jose wine country experience while staying safe. Now, more than ever, San Jose needs to enjoy a good time and make memories - Tessora's is a great place to experience the normal once again.