Crystal Ball Gazing

crystal ballThis may be the most foolhardy thing I’ve done in awhile. Making predictions just isn’t my bailiwick; my crystal ball is as cloudy as everyone else’s. But Tom Wark posted a serious of questions on his blog about the future of the wine industry the other day, and I found myself thinking about what I thought about each question. So I might as well throw in my two cents.

ONE
Fifteen thousand restaurants have, so far, closed for good across the United States. Undoubtedly that number could double or more. Assuming an effective COVID therapeutic or vaccine in 12 months, what will this loss of restaurants mean for on-premise wine sale after the treatment is available?

Fine dining will return although  with fewer establishments. After all, someone will have to provide restaurant service to the people who have made money during this crisis. The low end of the market will also return—people will want to eat out again although high unemployment will be a severe drag. It’s the restaurants in the middle—the $30 per entree business that will struggle because of high costs and low margins. The high end market—the classed growths, high reputation wines will be fine. But the restaurants selling interesting, pricey, off the beaten track wines to younger people will struggle for customers. Millennials and younger cohorts have been hit hard again trying to get their careers off the ground. Their disposable income will be constrained for years to come. But one silver lining. Thankfully, I would guess premiumization is at an end.

TWO
Both alcohol producers and retailers are selling more online today due to the COVID pandemic. What percent of these online buyers will remain online buyers going forward following a treatment or vaccine and what percent will abandon the shopping cart, so to speak?

A substantial portion of this trade will stay online. It’s convenient and you have the whole world at your fingertips when shopping online. Much of the wine world will follow the Amazon model although I suspect there is room in the market for boutique online sites that do a good job of highlighting interesting wines.

THREE
When will the sale of winery properties and brands ramp up? When will the vineyard sales ramp up?

Once the fantasy of a V-shaped recovery is put to rest and the devastation of the economy becomes clear, small to mid-sized wineries with a good reputation will be looking to sell.  Even if Congress manages another bail-out, that can’t go on forever. My guess is when Covid ramps up in the Fall, many will throw in the towel. Interest rates to finance takeovers will remain low.

FOUR
Will the announcement of successful COVID treatment or vaccine result in a national celebration akin to the announcement of V-E Day at the conclusion of the European portion of World War II?

No. A vaccine has to be produced and distributed before it can be effective, which will be a monumental task, especially with the low levels of trust in society. The hopeful anticipation of a vaccine in this country has been delusional. A successful phase 3 trial, which we may have by winter, is just the beginning of a long process.

FIVE
What kind of response will it take for the anti-racist social justice movement that has touched the wine industry to result in proportional representation of African Americans in the U.S. wine industry and what will be the impact if the various efforts don’t nudge the needle on representation?

Everyone has to consider how their own actions have made racial justice difficult to achieve. The wine industry is no exception. But the problem, it seems to me, is in part cultural. Winemaking and wine appreciation have a white European heritage. African Americans trace their cultural roots through Africa, the Caribbean, and the American south where there are few traditions related to wine. It will take concerted effort by African Americans and a more welcoming attitude on the part of the rest of us to make the wine industry more appealing to African Americans. I worry that the consciousness-raising that has occurred in recent months will fade. We have to make sure that doesn’t happen.

SIX
Is there anything specific about the operating and regulatory structure of the American wine industry that accounts for the underrepresentation of African Americans in the industry?

Wine production happens in rural areas. Except in the South, African Americans tend to be concentrated in cities. I think that means change has to be driven by the restaurant/sommelier/wine education community that is also located in cities or suburban areas. Tasting groups, wine bars, etc. have to be more welcoming to African Americans. Again, we have to think about our own actions and how they inhibit racial justice.

SEVEN
Does a new President in January 2021 impact the health of or trends within the wine industry in any significant way?

Sales of sparkling wine will go through the roof. Getting rid of this cretinous, morally bankrupt, loon and his band of enablers will make our hearts sing. But the reality is more sobering. Every ideal and institution has been shredded, thousands of lives lost, and the economy is in shambles. So the question is, how will this impact the wine industry. Nothing can be accomplished without hope. A new President will give us that. We will need symbols of the good life to help us through. Wine will give us that.

EIGHT
Is it plausible, given the continued expansion of the numbers of small craft brewers, distillers and wineries, that sooner rather than later state requirements that in-state and out-of-state producers sell to wholesalers will be abandoned?

We have made some strides in getting rid of three-tier. If the small wineries and distributors survive, I suspect that progress will grow. But if consolidation becomes rampant we may lose our political clout. The big guys will always try to reduce competition. It’s how they roll.

NINE
Besides the extraordinarily high cost of annual label changes, what will be the impact of all wine sold in America being required to including ingredients on their labels?

95% of wine consumers probably won’t care. But 5% will care deeply about this and will stimulate conversations about what is legit. And it will give us wine writers more to write about. We get to explain what Isinglass is.

TEN
Will FERMENTATION: The Daily Wine Blog make it to its 20th Anniversary in four years?

Yes. Especially if the battle for rational distribution has not been won.

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