State vintners may lose $437M due to COVID-19

According to an industry expert, winegrape growers across California stand to lose at least $437 million in sales from this year’s harvest due to COVID-19.

An analysis by Jon Moramarco, managing partner of bw166 and editor of the Gomberg-Fredrikson Report, says increased wine sales at grocery stores, liquor stores and wineries will not offset the loss in revenue from sales at restaurants, hotels or stadiums.

Moramarco’s report also predicts that the volume of California wine sales over the 12 months from March 2020 to February 2021 is expected to decline by 9.21 million cases from the same period in 2019-2020.

This new lost sales estimate is in addition to the $395 million in reduced sales expected as a result of excess wine inventory, following a large crop in 2018 and the slowing consumer demand for wine.

“Moramarco’s analysis makes clear what many California growers already know: growers will experience significant economic hardship following this year’s grape harvest,” California Association of Winegrape Growers President John Aguirre said in a media statement. “California growers are accustomed to cyclical markets, but the COVID-19 pandemic threatens to turn a down year into a financial catastrophe for many of them.”

Stuart Spencer, executive director of the Lodi Winegrape Commission, said revenue loss to specific growers depends on where and to whom grapes are sold.

“If they’re supplying a small to mid-sized winery, they’re probably cutting back on production because those wineries aren’t selling as much as they used to,” he said. “But if growers are supplying larger wineries that sell through grocery stores, those wineries are seeing an increase in sales, and growers will see an increase in demand for their grapes.”

Spencer said wineries in Lodi have been more directly impacted by the pandemic and revenue loss because the grape harvest doesn’t begin until the fall.

Currently, grape growers in the region aren’t having trouble selling grapes because there is still a demand for the crop from wineries, he sad.

The challenge later in the year, he said, will be if the region experiences another over-supply of wine like it did last year.

Wineries only recently began reopening in Lodi after permission from the state and county to do so, and Spencer said how the recovery for that industry goes remains to be seen.

As of last weekend, Stuart said about 20 of the Lodi appellation’s 80 wineries had reopened for business with health and safety guidelines from PHS and the CDC in place.

He said he wouldn’t be surprised if another 30 opened this weekend.