Wednesday, March 25, 2020

COVID-19 and BC wineries

Photo: Lorraine and Ted Kane of River Stone Estate Winery

It is clear that the wine touring season that should have started in April in British Columbia will not happen. Most consumers are restricted to their homes in the fight to contain the spread of the COVID-19 virus.

This is very dire news for wineries. Several key sales channels, including sales to restaurants, are seizing up. However, wineries and the BC Wine Institute are moving quickly to revitalize other channels for selling BC wines.

The first response of most wineries has been to offer free shipping of wines to on-line customers. A recent BCWI survey found that 86% of the responding wineries now offer free shipping (most wineries also said that their usual retail channels are holding back from ordering wines).

Online sales may well prove the salvation of the wine business at this time. A recent report from Rabobank, an American bank dealing with agribusiness, said that “E-commerce is exploding across the industry.” The bank reported huge percentage increases in wine sales from both existing winery customers and from new customers.

“Wineries are set to see a dramatic drop in tasting room sales,” the bank said. “Data shares with Robobank indicates that winery tasting room sales were down 40% during the first two weekends in March, compared to the February average.”

The same trend is likely to play out for British Columbia wineries.

The closure of restaurants has been catastrophic for winery sales in the United States. Rabobank reports that the “on-premise channel sells about US$ 10 billion per month. If the ban on sit-down dining lasts two months (perhaps at a very minimum), the channel would likely see at least US$ 15 billion, likely closer to US$ 20 billion, in lost sales for alcohol alone.”
Obviously, the numbers in Canada will be much lower but the trend is likely the same.

That is why wineries are working so hard to rev up on-line sales with free shipping. Typical is this recent announcement from Mission Hill Family Estate:


Our online shop is stocked with current vintages of our Legacy Collection, Terroir Collection, and Reserve Collection wines as well as a hand-picked selection of library releases that are drinking beautifully right now.

Our commitment is to accommodate our guests’ request with minimal interruption. Going forward, all orders, regardless of the quantity purchased, will receive complimentary shipping until further notice.

As a typical example from a small winery, here is what Michal Mosny at Winemaker’s CUT has released online:

As the situation caused by the Coronavirus (COVID-19) quickly evolves, we want to assure you that Winemaker’s CUT Estate Winery is operating as usual, and all our vineyards and wines are being well taken care of.
During COVID-19 pandemic we would like to offer FREE SHIPPING on any order of 4 bottles and more. This offer is valid until the state of emergency in our province will be called off to support social distancing / isolation.
Some wineries limit how far afield they will ship wines. Others imply, or say so expressly, that they will ship directly to consumers across the country, including into Alberta or Ontario.
“It is still technically illegal,” BCWI president Miles Prodan said in a webinar this week. “What is the risk of shipping direct? It depends on your risk tolerance. It is up to your individual decision – but I can’t imagine they would be enforcing the rule with vigor.”
Neither can I but one never knows with the Liquor Control Board of Ontario.
The BCWI has encouraged the wineries to have websites up to date. The BCWI itself is developing digital tools to help the industry. It is also advocating with government for concessions to help wineries conserve cash. That includes asking that fees be waived and asking the Liquor Distribution Branch to pay wineries for product within 30 days rather than 60 days.
No doubt, wineries are communicating even more often with the members of their wine clubs. Even if those members are themselves conserving cash, wineries need to look down the road to when the world is normal again. Out of sight, out of mind is not a strategy for survival.
I was struck by the commentary to customers by Lorraine Kane, co-owner with husband Ted of River Stone Estate Winery, a small producer near Oliver with excellent wines. It also happens that she is a physician.  Let me reproduce her words here:
I have to confess I have been pretty stressed for the last week. As you may know, in addition to my small contributions at the winery, I am a rural GP. It has been a week since I saw the Italian ICU doctor talk about having to decide who gets a ventilator and who doesn’t. Then, COVID19 was declared a pandemic.

As we all now know, this virus is coming soon to a community near you. No longer is the question ‘if’ but instead ‘when’ and ‘how’.

I am worried about our parents, our kids, my patients, our staff and our customers and way down the list, our business. Mostly, I just want to keep everyone safe. At my clinic, we have changed all the visits we can to virtual visits and are trying to keep up with who to test and how to prepare.

At the winery, we are no longer doing tastings and have set up a drive through service. Honestly, our whites were just bottled last week and aren’t ready for release yet and usually we aren’t even open yet, so not doing tastings is not that big of a deal. We opened early last weekend to help with cash flow as we have purchased another piece of land! So much for that, but there is always the line of credit. We will be okay.

This new land purchase is exciting news, and this is not how we wanted to tell all our wonderful supporters, but there it is. The land is another 10-acre parcel, already planted and nearby. Ted has been busy planning and pruning now that the 2019 whites and rosé are in bottle.  Spring is progressing despite COVID and soon the vines will start pushing and budding out so the pruning needs to get done.

With regard to the wine shop, we are hoping to be able to have guests safely use our patio and picnic area. Maintaining mental health and social connections is very important and will become even more so as our worries become reality. I am very proud of the water feature we put in last spring and it looks like the fish have survived the winter. Stay tuned on how you can safely visit us. It is about physical distancing while maintaining social connections. For those who are stuck in more urban areas, we are planning to do virtual tastings and vineyard tours.


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