In life hope and fear is what keeps us going. There has never been so much written about when this crisis is over, which one day it will be, things will not be the same. The Press and TV want drama and speculation, not normality, it is their business to promote uncertainty and fear. However, we are creatures of habit, when this is over we will go back to what we did before. If anything there will be a positive outcome to all this because we have more time to think about and revaluate our priorities in life.
I write about the world of wine and the press has been full of ‘everything will change’. It won’t. The wine business has a fairly simple structure in terms of route to market. The winery makes wines, it is sold directly to major retail chains and to distributors, both national and international, who distribute to shops and restaurants. However, now we are in a perfect storm, which will be followed by a recession. Many hotels, restaurants, bars and distributors will disappear, in a sector known for a high rate of business failures, the impact of this recession will be hard and it will take a long time to recover.
This situation is very worrying for the whole wine industry. Less sales means less cash in the business, money tied up in keeping unsold stock and there is a new vintage just six months away. If there is too much wine around come the vintage, the price of grapes will fall due to lack of demand. For wineries and distributors whose business was focussed on the restaurant sector it is brutally tough. Depending on the amount of cash or terms of credit individual wineries have will result in some not making it until out of this crisis.
However, in most international markets sales of wine in supermarkets and online had enjoyed dramatic increase in sales during the last month. But at the same time many smaller local retailers are struggling, even though many are open, consumers don’t go out. It is encouraging to see that innovative local stores have started home delivery services, which is a great way of establishing a direct relationship with customers in their neighbourhoods.
I become very frustrated when I read in articles that ‘the key for wineries is to always think about what your consumer wants’. If winery teams were not doing that before the crisis, what were they doing? Thousands of wineries around the world have been much more active on social media to communicate consumers through webinars, chats etc. This is a very positive development because for too long the wine trade has survived on the customer’s ignorance about wine. As a result of this crisis this trend will continue to raise the level of knowledge about wine which in the long term will pay dividends for the industry and consumers.
The weaknesses in any wine business are being exposed during these months of restrictions. I speak and consult for winery on a regular basis. To make effective changes it is important to have a solid base and a vision of where you want to go. Therefore it has never been more import to plan for future while maintaining focus and being patient. The wine companies who will come out of this period strong are either those with the most resources or those who innovate, invest in wine education and diversify in a balanced way.