Coronavirus side effect – The first week of confinement saw a 42%* increase in alcohol sales (spirits, beer and wine combined) in the Bay!

Even if this figure may impress, on closer inspection, we are not talking about consumption, but sales.

Normally, 90% of the alcohol purchased by individuals is consumed immediately, but it is very likely that consumers are stocking up at home. No one at this stage can talk about actual consumption. This data will only be reliable in a few months with a little hindsight.

Coronavirus wine industryIn the meantime, we have decided to dig deeper into the subject of the impact of Coronavirus on the wine industry, by addressing a well-known figure in the wine market with Jacques Brix.

Established in the United States for a very long time, he brings together French and European companies wishing to enter the American market (coopers, bottle suppliers, etc.) and local winegrowers and winemakers. He is also President of the French Association of Wine Executives, and a stakeholder in several specialized publications.

Tell us about the impact of confinement on the distribution of wine?

There are 12,000 wineries in North America, 75% of which are small. It is these small operations that suffer the most from shelter-in-place because they had to stop direct selling overnight. In particular, they lost their tasting rooms.

It is important to note that there is a highly regulated distribution system in the United States put in place after Prohibition. It requires all alcohol producers to go through a three-tier distribution system (producer – wholesaler – store); A way for the federal administration to guarantee the quality and the origin of the alcohol sold…

To avoid this channel, most of the small wineries were until then, selling directly through their tasting room, their “tasting club” and sales to restaurants. Now, when they are trying to enter this famous distribution channel, distributors are not very interested in referencing small producers with low volume … They prefer to work with large estates.

And if these wineries understood the opportunity to switch to 100% online sales, they were not structured to switch to this new model overnight. E-commerce cannot be improvised in a few days.

The tasting rooms are all closed, the small producers had to lay off most of their staff.

Yet our state should be relatively spared. Indeed, with about 65% of the national wine production, and around fifty large estates, they were already widely selling through the famous distribution channel and had structured for online sales.

What about suppliers of industry related products?

When I ask the French suppliers with whom I usually work (coopers, suppliers of all kinds of equipment, etc.), if there is a change in their business volume, the answer is rather that they notice a slowdown in the decision making.

At this stage we can say that the winemakers are making more rational purchases, the future being uncertain. But the harvest is coming, and even if the investments are more careful, they will be done.

Do you think that the online sale and wine tasting will transform distribution in the long term?

Absolutely! I think that a large number of individuals will eventually abandon retail.

And this should also have an impact on the knowledge and education of wine … Virtual tastings are flourishing. I cannot predict the future, but I think this trend will continue.

If done right, it forces the sale in advance … Indeed, to taste the same wine as the winemaker that animates the online tasting, the consumer must have bought the wine upfront …

Millennials should love this. It is a trend to follow and that may change things in the region.

Does this pandemic have an impact on wines imported from France?

Yes, there is a drop in import sales. First of all when there is a disaster, we tend to buy local products to help the local economy, but especially the delivery times have doubled. If we add the additional recent wine import duties, it’s all bad news for sales.

The good news is that wine is a product that improves over time, so stock management is much less of a problem than in other sectors.

Some French domain names from the Northern California region

*(source BACtrack)

Thank you Jacques Brix

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