硅谷银行-2021年葡萄酒行业状况报告英文-20211-61

StateoftheUSWineIndustry2021Written

by

Rob

McMillan,

EVP

and

FounderSilicon

Valley

Bank

Wine

DivisionContents1

Introduction32

2020predictionsinreview6

Whatwegotright7

WhatwegotpartiallyrightWhatwegotwrong773

2021USwinebusinesspredictions

andobservations

Top-levelforecasts89

SupplyDemandPriceSeventailwinds10101010

Sevenheadwinds114

Saleschannels12

Weretotalwinesalesupordownin2020?Off-premisesalesandchangesOn-premisesalesandchangesDirect-to-consumersales12141619

Digitalsalesandinvestment235

Harvestandgrapeandwinesupply27

Movingfromacuteoversupplytobalanceinmonths28

Findingbalancethroughshiftingchannels

29

FindingbalanceinunorthodoxwaysFormats,varietalsandpackaging30326

Demographicsandmarketing

Consumptionpatterns:Millennials

vs.boomers35367

Cumulativenegativehealthmessaging

41

Neo-prohibition,theoriginal

42

Neo-prohibition,thesequel

438

Theyearinreview45

Surpriseandshock:Thefirst90daysofthepandemic46

Whatisnormalduringasummerpandemic?Thefourseasons—winter,spring,summerandfireAbnormaleconomicimpactsofthisrecession49

51529

Conclusion

5557STATE

OF

THE

US

WINE

INDUSTRY

20212

10

Endnotes

CONTENTS|1|2|3|4|5|6|7|8|9|101STATE

OF

THE

US

WINE

INDUSTRY

20213

Introduction

“Itisnotthemountainwe

conquerbutourselves.”

SirEdmundHillary,c.1954

2020willgodownastheyearinwhichwe

answeredtheheretoforerhetoricalquestion,

whatelsecangowrong?Itwasalongyear

ofsuccessive“didn’tseethatcoming”issues

thathadstarkimpactsonUSretailsales,

consumerbehavior,technology,theeconomy

andthewinebusiness,nottomentionon

humanlives,whichmakesspeakingabout

businessatallseemtrivial.1Thatsaid,life

includesbusiness,andwehavetokeepliving.CONTENTS|1

INTRODUCTION|2|3|4|5|6|7|8|9|10Despitetheunimaginablechallenges2020posed,wecanalsoadmiretheyearforthewaythatthewineindustry—knownforitsglacialadaptationtochange—tookontheobstaclesofaworldwidepandemichead-onandfoundnewapproachestosell.Thoseadjustmentsallowedaboutathirdofwineriestohavebettersalesthantheirprioryear,2

whilelargerproducersimprovedtheirabilitiestogetwineintobottles,trucksandgrocerystoresbeforesellouts.Thelessonslearnedwillshapestrategyforthenextdecade.Lookingback,itmaybehardtorecallthatatthebeginningof2020,despiteagoodeconomy,thewineindustryintheUShadsomesignificantcracksshowing.Itwasinapositionofacuteoversupply,somethingthatshouldtakeyearstoclear.Salesgrowthwasnearzeroforthefirsttimesince1993andnegativeinthefirsttwomonthsoftheyear.Discountinginoff-premisechannelswasprevalent;on-premisesalesweredeclining;andsmallwinerysalesgrowthwaspositivebutdroppingintothemiddlesingledigitswhilelargerwineriesweredemonstratingflatsalesgrowthatbest.Growerreturnsandbulkwinepriceswerefallingasfruitwaslefthangingineveryregioninthewesternstates.Thatwasthelandscapeatthestartof2020,buttogetherthepandemicandtheWestCoastfireschangedthesituationinwaysnobodycouldhavedreamed.BeginninginMarch2020,COVID-19restrictionsledtooneofthemostrapiddeclinesofemploymentinUShistory.Whilealleconomicdislocationshavedisproportionateimpacts,thisrecessionparticularlyhurtthoseserviceindustriesthatrequirethecloseproximityofemployeesandcustomers,includingallleisure,hospitalityandtourismbusinessesand,ofcourse,smallerfamily-ownedwineries.Italsoaffectedlower-wageearnersmorethanhigher-incomeearners.Sincewineisabeveragethattendstoattracthigher-incomeconsumers,thenetresultwassurprisingstrengthinthegrocerychannelforhigher-pricedwines,andatthesametime,wesawrenewedinterestinsalesoflower-pricedwinefromshopperslookingforvalue.Analystsdifferonthefinalindustrysalesgrowthratefor2020.ThesourcedatawerehardertogetandsynthesizeduetoCOVID-relatedworkdisruptions.Butwebelievetotalgrowthinwinevolumewasabout1percent,plusorminusabout1percentdependingonDecemberdata.That’sanimprovementovertheprioryear.Inthesamewaythispandemic-fueledrecessionhitsomeindustrysectorsharderthanothers,italsohadadisproportionateimpactonbusinessmodels.Premiumandluxuryproducersthatwereunabletosellinclosedrestaurantsandtastingroomsweresentscrambling,whilelargeproducersthatownedtheoff-premisechannelwithlargepartnerwholesalershadtheenviableproblemofbeingcaughtshortofproducttosellassalesreroutedthroughgroceryanddrugstores.Astheyearadvanced,withallthelayoffsandhealthrestrictionsimpactingourlives,manyofusbegantothinkthatthingscouldn’tgetworse—thatwe’dpaidourdues,grudginglyadaptedtohealthrestrictionsweexpectedtobeshort-termandwouldsoonseethepictureimprove,especiallyasrestrictedreopeningsbeganacrossthecounty.ButthatcautiousoptimismchangedontheWestCoastonAugust16,whenadrylightningstormfromadeterioratingtropicalstormoffBajaCaliforniapushedthroughCentralCaliforniaintoSouthernOregon,sparkinghundredsoffires.3

Overthefollowing30days,thosefiresruinedhundredsofthousandsoftonsofgrapesinCaliforniaandOregon,allbutensuringthattheworldwidepandemic,asworld-alteringasithadbeen,wouldnotbethedefiningattributeofthevintage.TheGlassFire4inNapaamonthlateraddedtotheregionalpain,creatinganothersmokeeventfortheNorthCoast,depressingtourismandruiningorsignificantlydamagingcloseto30wineriesinNapa,alongwithsubstantialquantitiesofthebestcabernetsauvignongrownintheworld.Asweconsiderthepossibilitiesandplanningrequiredfortheyearahead,westoptoconsiderourtop-leveladvicefromtheAnnual

State

of

the

Wine

Industry

Report

2020:“Thewinnersoftomorrowwillbethewineriesthat…criticallyevaluatetheirorganization’scapacitytoreact,developsolutionsandexecutequickly,thenevaluatetheirsuccessorfailuretocontinuouslyimprove.Thosecompanieswilltakesalesfromthosethatcontinuetoruntheirbusinessesthewaytheyhaveforthepast25yearsandstickwithstrategiesthathavealwaysworkedbefore.Thewinnerstomorrowwillbeintrepidandwillingtotrynewapproachesthatchangethestatusquo.”Obviously,weweren’ttalkingaboutwineriesreactingtothepandemic,sincethatwasn’tanissuewhenthereportwasreleasedandwhilewehaveadecenttrackrecord,wedidn’tseethatonecoming.Themessagefromlastyearstillprovedaccurateandonlyacceleratedtheobviousneedforchange.Formanywineries,thepandemicwasthefinalstrawthatforcedaction—andforthosethatadapted,theirrewardwasoftenbetteryear-over-yearresultsattheexpenseofanotherwinecompany.•

Intheweeksfollowingtheshelter-in-placeorders,the

averagefamilywinerysawitsinternetsalesrisefrom

lessthan1percentofitssalestomorethan10percent

oftotalsales.STATE

OF

THE

US

WINE

INDUSTRY

20214CONTENTS|1

INTRODUCTION|2|3|4|5|6|7|8|9|10••Wineriesthatmadetheefforttocollectandmaintaingoodcustomerlists,includingcellnumbers,startedcallingforbusiness.Phonesales,whichdidn’tevenregisterasasaleschannelin2019,becameameaningfulsourceofrevenueformanywineriesthattrieditin2020.Digitalvideosalesstrategiesalsoflourishedandhavereplacedaportionofthein-personexperience.Wineriesdiscoveredhowtotaketheexperienceontheroad,5foreverbreakingthelong-heldbeliefthatawineryexperiencecouldonlytakeplaceatthewinery.Whileallattentionduring2020wasrightlyrivetedonpersonalandbusinesssurvivalwitheveryoneinreactionmode,long-standingindustryissueswerestillpresentbelowthesurface.Theseincludedawell-financedandcoordinatedanti-alcoholmovement;disengaged,health-mindedyoungconsumers;unevolvedmarketing;andalackofinvestmentindigitalsales,allofwhichwillseverelyimpactthewinebusinesslongafterthispandemicendsunlesswepayattention.Thoseissueshavebeendrivingthedisappointingsalesgrowthmetricsoverthepastsixyears.WithboomersacceleratingtheirretirementduetoCOVID-19,6theneedtoattractyoungconsumersismorepressingthanever.Thesuccessesofthepast25yearscan’tberepeatedwithoutevolvingtheindustrymessageandwithoutanindustrymarketingorganizationcoordinatingthatmessageandprovidingacounterargumentforanti-alcoholclaims.Tosay2020wasadifficultyearisanunderstatement.Whilebruised,mostofusarebackatourcraftwithhopefulanticipationaswemovetowardaCOVID-freeworld.WhileIcansaywithconfidencethat2021willbebetter,Icanalsosaythat“normal,”whenwegetthere,willbedifferentfromwhatweleft.Therearenewissuesthatneedtobeplannedfor.

To

say

2020

was

a

difficult

year

isan

understatement.

While

bruised,

most

of

us

are

back

at

our

craft

with

hopeful

anticipation

as

we

move

toward

a

COVID-free

world.

While

I

can

say

with

confidence

that

2021

will

be

better,

I

can

also

say

that

“normal,”

when

we

get

there,

will

be

different

from

what

we

left.

There

are

new

issues

that

need

to

be

planned

for.STATE

OF

THE

US

WINE

INDUSTRY

20215Webelievethisreportwillinformyourteam’sthinkingaboutthenicheyouoccupywithinthewinebusiness,helpyouanticipatepotential2021scenariosthatwillrequireplanningandguideyoutowardjoiningothersuccessfulwineriesthathaveadaptedtochangedmarketconditionsandnewopportunities.Wehopeitwillinspireyoutogetcreativeaboutpossibilitieswithyourstrategicplanning,andthatengaginginthatprocessmayhelpyouimproveyourchancesofsuccessintheyearahead.

CONTENTS|1

INTRODUCTION|2|3|4|5|6|7|8|9|102020predictionsinreview2STATE

OF

THE

US

WINE

INDUSTRY

20216

Wehavebeenextensivelyresearching

thewinebusinesssince1991andmaking

publicforecastsfor20years.Someyears

weproperlycharacterizeamarketchange.

Inotheryears,ourfindingsmightbeoffin

timingorevenwrong.Theeventsof2020

introducedmorechaosthananyonecould

havepredicted,butwewillonceagain

reviewtheforecastsmadelastyear,just

tokeepscore.CONTENTS|1|2

2020

PREDICTIONS

IN

REVIEW|3|4|5|6|7|8|9|10Whatwegotpartiallyright•Wesaidbottlepriceincreaseswouldberarein2020.Thetrendofincreasingpricehadclearlywanedacrossthebusiness,andwiththeacuteexcess,discountingwastheonlynormalwaytoremoveexcessvolume.Weneverconsideredthatsmokeandfirecoulddestroysupply.Itturnedoutthatfamilywineriessellingdirecttoconsumerhadtodiscountaftershelter-in-placeorders,butbottlepricesforlargerproductionwinerieswithaccesstogrocerystoresfirmedandroseasconsumersfloodedtheoff-premisechannel.Whatwegotwrong•

Wepredictedasalesvaluegrowthrangebetween

3percentand7percentforthepremiumwinesegment

andbetweenminus2percentand0percentfortotal

winesales.8Thetotalforecastwasclose,buttheguess

onthesmallerpremiumwinesegmentwasmaterially

high.Salesgrowthinthatsegmentwilllikelycomein

betweenminus5andminus10percent.•Withtheacutesupplyexcessatthebeginningof2020,wethoughtwewouldseegoodsalesvolumegrowth.Sadly,thatpredictiondidn’tpanout,andifDecember2020issoft,volumegrowthforstillandsparklingwinewillcomeincloseto0percent.••Withlongsupplyandflat-to-lowersalesgrowthatthestartof2020,weofferedapredictionthatgrapepriceswouldtakeyearstostabilizeandwoulddosoatlowerlevelsthanthoseofthepriorseveralyears.Asdiscussedlaterinthisreport,theensuingunpredictableeventsof2020broughtcurrentgrapesupplyintobalance,andgrapepricingactuallyimprovedmodestlyinsteadoflingeringatlowlevels.Thatsaid,thereisstilltoomuchplantedacreageontheWestCoast,andgrapepricingisbelowthatofprioryears.Wenotedthatpremiumizationwasnearingitsapexasatrend.However,shelter-in-placeordersdroveupthesaleofhigher-pricedwinesingrocerystores.Thesamecan’tbesaidfordirectpricinginsmallerpremiumwinerieswherediscountingwascommon.Ourleadstatementlastyearwas:“Our2020forecastismadewiththeexpectationthattheUSeconomywillremainsteady,withoutarecession.”InJanuary,wewerefocusedonarecordbullmarketamidtheuncertaintiesoftradewarsinChinaandtheEUandaloomingUSpresidentialelection.Weobviouslydidhavearecessionin2020,albeitfromanunpredictableangle.Thatdetractedfromournormallyprescientperformance,asyou’llsee.Whatwegotright••Wepredictedthatthe2019Californiacrushwouldbe3.95milliontons.Harvestfrom2019cameinat3.9milliontons.7Giventhenumberofunharvestedgrapesfromthe2019season,evengettingwithin50,000tonswasclosetoamiraclewithsomuchacreagebeinguncontracted.Weledthechorus,startingin2019andextendingintoearly2020,thatthegrapesupplyinCaliforniawasacutelylong.•Wenotedthatweweretransitioningtoaperiodoflow-to-negativesalesgrowthasanindustry.Thatstatementcontinuestobeaccurate,thoughsomewhatobscuredbystrongoff-premisesales.

We

predicted

that

the

2019

California

crush

would

be

3.95

million

tons.

Harvest

from

2019

came

in

at

3.9

million

tons.

Given

the

number

of

unharvestedgrapes

from

the

2019

season,

even

getting

within

50,000

tons

was

close

to

a

miracle

with

so

much

acreage

being

uncontracted.STATE

OF

THE

US

WINE

INDUSTRY

20217CONTENTS|1|2

2020

PREDICTIONS

IN

REVIEW|3|4|5|6|7|8|9|102021USwinebusinesspredictionsandobservations3STATE

OF

THE

US

WINE

INDUSTRY

20218

“Chaoswasthelawofnature;

orderwasthedreamofman.”

HenryAdams,1907CONTENTS|1|2|3

2021

US

WINE

BUSINESS

PREDICTIONS

AND

OBSERVATIONS|4|5|6|7|8|9|10money,smallcompanies(suchaslocalrestaurantsandwineries)havenotbeensofortunate.Asecondroundoffiscalstimuluswasheldupbypartypoliticsin2020andonlypassedattheendoftheyear,buthopefullythatwillhelptobridgetheeconomythroughwhatarelikelytobedifficultconditionsinthespring.Top-levelforecasts•

Our2021forecastismadewiththeexpectationthatthe

USeconomywillcontinuetorecoverasvaccinesand

therapeuticsgaintraction.•

Thepandemicexperiencewillhaveownersthinking

moreaboutthestrategyoffocusingsalesinto

narrowchannels.•

Theexperienceofrepeatedfiresandsmokedamage

willpromptownerstoconsidertheneedtodiversify

supplysourcing.•

Thehighlevelofliquidityinthemarketslookingfora

returnwillattractnewinvestorswhoexpectimproving

industryconditionsandwarmerM&Aactivity(which

cooledduring2020).•

Forthesakeofscenarioplanninginhospitality

businesses,wearepredictingwe’llhavea25percent

reopeningbyApril15,a50percentreopeningby

June15,a75percentreopeningbyAugust15andfull

reopeningbyOctober15.•

TherewillbeareversaloftheCOVID-inducedchannel

shiftingaswereopen.

o

Overallwinesaleswillbesluggishuntilbusiness

restrictionsarelifted,butwinesaleswillgather

momentumthroughtheyear.

ooooRestaurantswillcomeoutofthisdamagedandwillneednewinvestment.Winesalesthroughtherestaurantchannelswillnotrecovertopre-COVIDlevelsin2021and,morelikely,formanyyears.Winerieswithdirect-to-consumermodelswillfocusonCOVID-erastrategiesinthefronthalfoftheyearbutfinish2021withstrongsales.Retailerswithexistingonlinesalesstrategieswillhaveastrongyear.Ashospitality,cruiselines,airportandairlines,concerts,sportsandthelikerebuild,therewillbestrongdemandfromconsumersandabounceforoverallsalesin2021thatmaynotbesustainablepast2022.Wethinktheconsumerwillcelebratein2021andmakeupformanypostponedlifeevents.2020wasayearofreacting,but2021willbeayearoftwophases:continuingtoexecuteinaCOVID-restrictedmodeduringthefirstpartoftheyear,thenmovingawayfromemergencyresponsesoncethewidedistributionofavaccinesignalsamoveintoapost-COVIDworld.Thetimingisstillanunknownasofthedateofthiswriting,butthereisaconsensusformingthatvaccineswillbewidelyavailablearoundearlysummer.Whatthatwillmeanandhowthewineindustrywillnavigatethereturnofnormallifearecriticalpartsof2021planning.Thepost-COVIDworldwon’tbethesameoneweleftinearly2020.Therewillbemanypermanentchangeswewillneedtoconsider,suchastheshifttoworkingfromhome,theincreasingrelocationofconsumerstothesuburbsandtheaccelerationofconsumeronlinesales,whichwilltakesalesawayfromotherchannels.Eventhebest-runwineriesin2019won’tfindthesamelevelofsuccessin2021unlesstheyevolvedin2020andcontinuetodosoin2021.Ataveryhighlevel,thechannelshiftingthattookplacein2020,particularlyinoff-premisegrocery,willunwindwithmanynuancesthatwillbediscussedmorefullylaterinthereport.Restaurantsaleswillreturnin2021whenrestrictionsareloosened,withlocalsleadingthewayinthetouristtownsofWineCountry;however,wewon’tseeareturntopre-COVIDon-premiseconditionsforyears—ifever.Inthelongerterm,thepermanentclosuresofrestaurantswillresultinreducedsellingopportunitieson-premise.Restaurantswillalsoincrementallymoveawayfromfull-serviceseatedmodelstonewrevenue-generatingstrategies,particularlyhomedeliveryandcurbsideto-gomodels,neitherofwhichfavorsalcoholsales.Theexpectationformanyrestaurantsisthattheirwineinventorieswillbeminimizedandstreamlinedintosmallerofferings.Obviously,thelargestvariableintimingforareturntonormalbusinessconditionsisafullyimmunizedpopulation.Makingafirmpredictioniswelloutsideourabilitiesasindustryanalysts,butbecausethetimingofvaccinationsdoesimpactplanningandbudgeting,wemustmakeaneducatedguess.Gettingagreenlightforunrestrictedbusinessopeningsbeforethesummerof2021seemsoverlyoptimisticasofthiswriting.Manyunknownsremain,includingtheFDA’sdegreeofrigor,theproductionofsufficientdoses,solvingforcountlesslogisticsquestionssurroundingdistribution,unanticipatedsideeffectsthatmightslowtheprogram,thephysicaltimeneededtovaccinateanentirepopulationtwiceandamaterialanti-vaccinationmovement.9,10,11WhilelargepubliccompanieshavehadaneasiertimeweatheringthepandemicthankstotheirabilitytoraiseSTATE

OF

THE

US

WINE

INDUSTRY

20219CONTENTS|1|2|3

2021

US

WINE

BUSINESS

PREDICTIONS

AND

OBSERVATIONS|4|5|6|7|8|9|10•

Overallpricingshouldholdinbothoff-andon-premise

sales,aswellasinthedirect-to-consumerchannels,as

demandforalcoholandspecialoccasionsgoesthrough

aspurtoftemporarygrowth.SeventailwindsDespitethesetbacksof2020,therewereunderlyingtrendsthatprovedpositiveforthebusinessandwillhavelastingimpact:1.

Shelter-in-placeorders,thework-from-hometrend

andrestaurantclosurescreatedthenecessityfor

familymealsathome.Winewasaddedbacktothe

familydinnertable,andconsumersadaptedtoonline

shoppingandat-homedelivery.2.

Familieswhowereabletoworkfromhomesawsome

expensesavingsthatpositionthemforanexpected

pushinspendinginapost-COVIDera.3.

Withallcompetingentertainmentvenuesclosed,

outdoorwinetastingfoundnewconvertsthroughthe

summerof2020.Thereareindicationsthatyounger

consumerswereslightlymoreintrepidthanolder

consumersinmakingwineryvisits.Whileguestcounts

werelower,theaverageticketfromwineryguestswas

higherthispastyear.4.

Wineprovedagainthatitisrecession-resistant.

Whilemanystockeduponeverydaywinesatthe

supermarket,consumersalsorapidlyswitchedto

onlineoptions,eitherbecausetheirselectionsweren’t

availableingrocerystoresorbecausedoorstep

deliverywasviewedassafer.Manyconsumerswill

continueonlinewinebuyinginapost-COVIDworld.5.

Digitalwinetastingstookflightduringtheyear

alongsidethepopularityofZoomvideoconferencing.6.

Phonesalesfoundnewsuccesswhentastingrooms

hadtolimitvisitorsorshutdownentirely.7.

Oncethereisclearsuccesswithdefeatingthevirus,

consumerswillactonpent-updemandtocelebrate

ingroups,whichwilllikelyboostalcoholconsumption

in2021.Supply•

When2020totalsarecalculated,weareguessingthat

Californiawillhavecrushed3.3milliontons,which

wouldbethesmallestharvestsince2011.ThePacific

NorthwestharvestsinbothOregonandWashingtonwill

alsocomeinsmallerthannormal.•••SupplyintheWestislargelybalancedgoinginto2021,butoverallgrowthratesinsaleswillstillbemodest,andsomeacresofvineswillstillneedtoberemovedinCaliforniaandWashingtoninparticularinordertosustainthebalance.Grapeandbulkpriceswillstabilizeatlowerlevelsthanwe’veseeninthepastfiveyears.Buyerswillremaincautiousonprice.Californiavineyardpricesinpremiumregionswillremainlowerthantheirpriorhighpoints,flatteninginthebestareasandsofteninginsecondaryregions.Demand•

Retiringbabyboomersseemtohavealongtailand

fortunatelyaren’tquicktoruntopasture.Theycontinue

tobuywineatallpricepoints,buttheirbuyingseems

tobemoderating,bothonpriceandvolume,asthey

age.Onlinesaleswillbeagrowthchannelforthe

boomerathome.•

Therotationtoyoungerconsumersisnotaneventrade

onaneconomicbasis,buttheunder-40cohortsare

wherewewillfindgrowthinthenextdecade.Inthe

nextfiveyears,27.9millionAmericanswillcrossnormal

retirementageat66,while30.3millionwillcrossage

40.Thatistoomuchbuyingpowertoignore.•

Millennialsaren’tengagingwineashoped.Theylack

financialcapacity,havingbeenslowtogetintotheir

careersafterthefinancialcrisisthatstartedin2007.

Theyhaveacurrentpreferenceforpremiumspiritsand

craftbeers,whichhaveabettervalueperserving.Price•

Premiumization,amovetohigher-pricedwine,

isnearinganapexbutwillcontinuein2021as

deferredcelebrationsandreducedsupplystallthe

expectedchange.STATE

OF

THE

US

WINE

INDUSTRY

202110CONTENTS|1|2|3

2021

US

WINE

BUSINESS

PREDICTIONS

AND

OBSERVATIONS|4|5|6|7|8|9|10

seetherecentefforttochangetheUSDADietary

Guidelines,12,13whichwouldhavereducedthe

recommendednumberofdailydrinksformen,andthe

renewedpushtoaddcancerwarningstolabels.14,15,16

Thereiscurrentlynowineindustryorganization

willingtoprovidescientificbalanceforthepressand

lawmakersbydirectingattentiontothemountainsof

scientificresearchthatpointtolowermortalityrates

frommoderatewineconsumption.174.

Thewineindustryismadeupofanexceptionally

fragmentedproducerlandscapewithoutanindustry

marketingorganizationtounifytheindustry’svoice,

providedataorproperlyleverageandsupportcurrent

consumermarketingtrends.5.

While2020broughtsupplyintotemporarybalancein

mostregions,therearestilltoomanyacresplanted

and/orinsufficientgrowthindemandtomaintain

healthygrapepricing.Iftotalvolumedemandremains

flatordecreases,thatwillrecommendadditional

removals.Alargeharvestisstillanunwelcomeevent.6.

Theneedtoinvestinsaleschannelsotherthanthe

tastingroomhasneverbeenmoreapparent,and

yettherearefewgoodexamplesofwineriesthat

havesucceededwithdata-drivenapproachesand

internetsales.7.

Thelaborsupplyislimited,andthepriceforlabor

isincreasing.SevenheadwindsBusinesssurvivalandpersonalsafetywereoftenthefocusof2020.Butotherissues,someofwhichwerediscussedlastyearintheAnnual

State

of

the

Wine

Industry

Report2020,stillneedtobeaddressedforwineriestofindsustainablelong-termsuccess:1.

Channelshiftingtooff-premisegroceryreceiveda

largevolumeofpresscoverageduring2020.Itwasa

spectaculardatapoint,butwhentheUSreopens,off-

premisesaleswillunwindandconsumerswillfindother

channelstosatisfytheirdemand.Thegrocerychannel

islikelytoseenegativesalesgrowth,whiledirect-to-

consumer,onlineandrestaurantsaleswillshowpositive

growthrates.2.

Thechallengeofrecruitingyounger,health-con