ADVERTISING: Advertorial — GEORGE BALLING: Getting creative
The state by state restrictions from the coronavirus have been disruptive to most any business. The most significant dislocation though, is in the travel and tourism industry, and wine country-based businesses and winery tasting rooms are certainly taking some of the biggest hits. As restrictions start to lift and businesses reopen, wineries are still experiencing some of the most significant regulatory increases.
Even though they are being allowed to reopen in some cases, the number of folks they can serve is very limited. For wineries, this direct-to-consumer business is a huge part of their revenue, and more importantly, profits. When a winery sells a bottle direct to a customer in their tasting room, it is the most profitable bottle. They sell with no cut needed for either a distributor or retailer. This sales segment is so profitable that some wineries decide to forego distribution all together.
Add in that, many wineries can not get their new releases in the bottle at all, due to shuttered bottling lines — you start to get a sense of the impacts facing wineries right now. Taken all together, you know it is time for wineries to get creative! These are, at the end of the day, for-profit institutions and even the most well-funded can’t go on for long without sales outlets.
In a bit of a twist, those wineries that have established distribution markets in addition to their own tasting rooms are in a better spot than those with only direct-to-consumer business plans. Throughout the lock down period, consumers are still buying and drinking wine; some might argue more than during normal times.
For wineries that do distribute, they are seeing some solid demand for their wines. For those that already have a network of distributors, they are forcing more wine through the channel to meet that demand. It is also a good time for consumers, as we are seeing some wineries distributing wines they normally hold back for “winery only” programs. For some hard-to-find “cult” and highly allocated items, we are even seeing larger allocations than normal at the retail level as wineries work to move product any way possible. Frequently these hard to find allocated items go to restaurants first, since they are closed, though most restaurants simply are not buying.
For wineries that don’t have established relationships with distributors and the legal framework in place to distribute, they are left with the daunting task of quickly building this sales and logistical infrastructure. Not an easy proposition to be sure.
We have also seen an uptick in wineries doing virtual tastings with potential customers. While we are seeing our distributor sales people more regularly now, there was a time just a couple of weeks ago when none of them were bringing bottles around to sample. Very few bottles make it on to our shop shelves without us first trying them. It is the best way to ensure the quality of what we offer our wine club members and regular customers. To fill that void, wineries send out sample bottles and they then hold a tasting via video conference hosted by the winemaker to get the inside story on their latest releases.
With restaurants closed across the country we have also seen wineries partnering with restaurants to work their wines into the “to-go” programs of the best restaurants to sell a packaged dinner party, including wine, in yet another creative innovation to keep the wine moving through the retail system.
We have yet to see drastic price cuts to sell more wine at the wholesale level. While this is probably the least creative way for wineries to sell more wine, we do expect to see that in the coming months. For now, we predict that the supply chain interruptions we have discussed previously are restricting overall supply significantly enough that a big over-supply has not developed. But it may come to that the longer the restaurant restrictions continue in the more densely populated urban centers.
For now, though, wine consumers here in North Idaho can look forward to at the least having access to some really cool wines they might not normally see from their favorite producers and a more frequently changing lineup of wines as supply chain challenges persist.
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George Balling is co-owner with his wife, Mary Lancaster, of the dinner party, a wine and gift shop in Coeur d’Alene by Costco. The dinner party has won the award for best wine shop in North Idaho twice, including for 2018. George is also published in several other publications around the country.
After working in wineries in California and judging many wine competitions, he moved to Coeur d’Alene with Mary more than 10 years ago to open the shop. You can also follow us on Facebook at facebook.com/#!/dinnerpartyshop.