As the Covid-19 Pandemic continues, and as the world starts to reopen, the wine industry finds itself in a very different position than it has been experiencing over the past 15 months as businesses far and wide sort of are returning to normal. But with all the changes that the Corona virus caused to so many industries, the wine world, like those others, has seen things change too, and there may be no going back to where things were like in 2019.
First, travel is still not back to the pre-Covid levels, but it's getting there. This is impacting international wineries across the globe. A case in point is how Australia and New Zealand's borders are still closed, just like Canada. This has restricted many a winemaker whose wines are imported to the USA from not only Europe, but the rest of the world from traveling and doing their usual visits to importers, seeing retailers who buy their wines, holding wine dinners and most of all, being part of the big wine events where they see their customers-the somms, wine buyers, retail shop keepers, along with the major wine reviewers.
Getting wines reviewed has also changed, as more winemakers and importers have chosen to go the ZOOM route, and hold virtual tastings. While still a great idea, and one we support as we suggested the concept in 2016 and was laughed at by importers, it has become so commonplace that the lack of uniqueness and too often, the low production value of many of these video based events has waned on the audience. So now that things in the USA are opening up, and people are starting to go out and about, the use of video in tastings has to change too.
In some places, capacity restrictions remain in place and confusion rules the day. Outside only. Inside with limitations. Local regulations, or even personal choices by wineries are making things unpredictable across the USA in tasting rooms, just like the lack of clarity surrounding airline travel internationally and what steps are necessary as they vary country by country as well as county by county here in the United States.
What does this mean? For wineries in the USA who are operating tasting rooms and sell Direct To Consumer, they are blessed by having loyal followers on their mailing lists. And given the downturn so far for international travel, it means wine lovers can visit more regions domestically and discover more new wines and wineries. This is a boon for the regions in driving distance to metropolitan areas, but also for the lesser known regions as well.
I for one have become enamored with the wines from Walla Walla Washington and have planned a five day deep dive there. My passion for wines from members of the Family Winemakers of California has caused me to book a trip to an upcoming event of theirs in San Francisco.
But it’s been my recent trips to the Baja California wine country in the Valle de Guadalupe, the Texas Hill Country and Arizona's wine region outside of Tucson with my partner in wineTOURia, Victoria Varela, that has opened our eyes and palates to so many under-discovered wines from those lesser known, and hardly regarded wine regions. We found many wines that easily rival what's being made in California, and in some cases show how great wines are being made in places on the wine roads less traveled.
For wineries in the USA, and for wine associations, marketing to the locals and regional wine fans is already starting. And as flights resume and rental car prices drop, travel to wine regions will rise and for wineries, their ability to grow their DTC - direct to consumer - business will rise as well. Prices will also rise as demand will increase and the profit margins made through a DTC or wine club approach that widely outpaces selling to wholesalers and distributors.
As services to wineries like WineDirect and VinoShipper address the state by state shipping and compliance issues, making it easier for wineries to ship to their customers near and far, we're going to see an even bigger effort from the smaller wineries for more direct to consumer mindshare and wallet share as they endeavor to take business away from the large wine holding companies. This direct to consumer mentality will over time shift the wine case allocations away from retailers, and even some restaurants, as the wine club and tasting room sales offer richer margins and deliver a more intimate relationship with the customer who have now grown accustomed to ordering wine online and having it delivered to their door.
And with this comes new opportunities. Wine right now should only be shipped either in refrigerated trucks or held until the temperatures cool down. Sadly, neither UPS, nor FedEx, have trucks on the road that are refrigerated locally, putting wines of all prices at risk if shipped during the summer months to most of the USA once they reach the buyers hometown.
For those traveling, only Alaska Airlines lets wine ship for free from wine regions, so unless you’re up in first class on another airline, and you check wine under your checked baggage limit domestically, you pretty much will have to pay the freight when you fly to get your wine finds home. And even then, if you’re changing planes you run the risk of the wines sitting on the tarmac unless you’re flying overnight coast to coast and the weather is cool when your boxes are making that connection.
So just as the pandemic brought forth new opportunities in selling to consumers, the rise in shipped wine will also bring with it new business opportunities for those with grit, determination and imagination to figure a better way for wine to be shipped year round.
That’s why Victoria and I have started wineTOURia, our wine industry transformation agency, that’s all about reducing the distance between producer and buyer. We see the future and are setting out to be part of that change from the inside out and the outside in. It’s been many a year since my winemaker pal Doug Margerum of Margerum Wine Company once called me “the ultimate wine insider.”
Well now it’s time for me to be just that, so along with Victoria with her sommelier skills and wine knowledge, we’re going bring the same magic my tech focused agency efforts have brought over the past 19 years (54 exits, $5.5 billion in returns to investors, founders and employees) to the world that matters the most to me.