Some wineries say state guidelines should be clearer as they reopen tasting rooms to a new COVID reality that has undermined the elegance of the overall experience by forcing owners shift to plastic cups, face masks, and social distancing.
More and more states are starting to develop guidelines on how to reopen restaurants, bars and wineries, but reopening guidelines differ across the country. In California, public health department guidelines that are set to take effect this Friday allow counties to decide reopening protocols once meeting thresholds for reopening.
Steve Kautz is president of Ironstone Vineyards, located about two and a half hours east of San Francisco in the Sierra foothills. He had been closed since March 10. But two weeks ago, he could reopen at 25% capacity and serve food with his wine outside.
“It’s not going to be the overly warm, friendly experience that people are used to,” Kautz told Agri-Pulse.
He says all wine, either by the glass or in small flight tastings, must be served with food. Guests currently cannot enter the building, but this weekend, customers will be allowed to enter tasting rooms.
California Department of Public Health guidelines suggest all guidance should “be implemented only with county health officer approval following their review of local epidemiological data.” Reopening must be determined by cases per 100,000 population, rate of positive tests and local preparedness to support a health care surge, vulnerable populations, contact tracing and testing.
Kautz noted when he reopens his tasting room, he will likely have garbage cans close by so people can easily dispose of plastic cups; he does not want to be responsible for coronavirus contaminating a glass and one of his employees coming in contact with it.
He sees about 350,000 people walk through his doors during a normal year, but COVID-19 has caused him to lose a quarter of his customers over the last two months. His venue also hosts concerts, fireworks displays, and car shows throughout the year. Not being able to host those events could cause him to lose 75% of his foot traffic for the year, he said.
An April analysis from wine industry expert Jon Moramarco, managing partner at wine and spirits consulting firm bw166, predicts revenue losses for some 10,000 wineries and 8,000 winegrape operations across the nation could total $5.9 billion on an annualized basis in 2020.
He said even though the analysis was conducted in April and anticipated a longer shutdown, wineries will still lose billions of dollars this year.
The analysis noted 90% of all U.S. wineries produce less than 50,000 cases and are estimated to experience annual revenue losses of between 36% to 66%. Smaller wineries will see the biggest impacts.
But Moramarco noted individual wineries will see different impacts depending on their channels of distribution.
“It’s been devastating, I mean there is not much other way to describe it,” Clay Mauritson, president of Mauritson Wines, told Agri-Pulse. His winery in Healdsburg, Calif., produces 11,000 cases a year, with about 80% of sales going to restaurants.
“Sales essentially were cut off overnight and just came to an absolute screeching halt,” he said.
Mauritson said the biggest blow to his sales was having to close the tasting room. He said his tasting room sales alone represent 25% of gross revenue for the winery overall.
"We sell a much higher percentage of case volume through distribution, but it doesn't represent as large of a component of our overall profits margin or gross sales because the margins aren't there," he said.
Mauritson said the other devastating part of COVID-19 has been the inability to acquire new customers since wine country was closed. He said the new guidance for reopening will help, but thinks still having to serve food with wine makes no sense.
"A lot of the winery facilities just aren't equipped to handle food preparation or food service," he said. Mauritson said having to serve food makes his job more difficult at a time when his winery is already hurting.
According to Moramarco’s analysis, tasting room sales are estimated to decline by 80%, or $3 billion this year.
However, in Iowa, restaurants, bars, and wineries have been able to reopen at 50% capacity since May 28.
Kevin Boyle, owner of Covered Bridges Winery in Winterset, Iowa, told Agri-Pulse being able to reopen has been a blessing, but said COVID-19 will likely continue to affect his business the rest of the summer.
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“People do want to get out and about and back to their lives, but there are portions of people who are still going to shelter and avoid crowds,” Boyle said. “Even though our doors are back open, it’s not going to be business as usual for this year.”
He said 65% to 70% of his business is tasting room traffic; the rest of his profits come from wholesale accounts. Boyle produces roughly 5,000 to 8,000 gallons, or 20,000 to 30,000 bottles, of wine a year.
Boyle said he expects revenue for this year to be down 25% to 30% and does not expect the same number of customers he typically sees.
“At least there is a light, and we can limp this thing along,” he noted. “Until there is a vaccine, we are not going to see what we would consider normal.”
Moramarco agreed that for sales and incoming customers to return to normal, a COVID-19 vaccine is needed. He sees wineries increasing the use of contactless electronic payments moving forward but does not expect wineries to be at 100% capacity until mid-to-late next summer.
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