While much of the news about the coronavirus still looks grim, this post by Rob McMillan of Silicon Valley Bank appeared in my newsfeed last night and gave me a bit of a lift. Rob has his finger on the financial pulse of the wine industry and he has some good news for when the lockdowns begin to lift.
Today, as you can see in the below chart, off-premise sales have exploded! Danny Brager of Nielsen calculates to replace the lost revenue from restaurant sales, corresponding alcohol sales in off-premise accounts have to increase by at least 20%.
Looking at the chart you can see wine sales increased by 29%. Add online sales to that and we appear to be back to around 10% growth rate in wine sales, at least for the present!
People are eating at home and apparently are getting reacquainted with the joys of wine at the dinner table, without the markups that restaurants charged.
McMillan thinks that even after restaurants begin to open up, this trend towards more eating at home with wine on the table is likely to continue. The challenges faced by restaurants will not be magically disappear. That’s not so good for the restaurant industry but perhaps good for the wine industry.
Of course the fly in this ointment is the plight of the small wineries with greatly reduced tasting room traffic, fewer restaurant sales, and no access to the big retailers and grocery stores where most of the boost in sales is happening.
But Rob is even bullish on their prospects if they invest in phone and online sales, quality videos to help market their brand, and innovative remote marketing strategies.
McMillan is no Pollyanna. He’s been bearish on wine industry growth for several years. The fact he thinks there is opportunity here is reason for some optimism.