The world continues to change rapidly in the battle against COVID-19. It seems we are now moving into the next phase, in which there were will be a gradual easing of Stay in Place (SIP) or shutdown restrictions while balancing the health and well-being of all. Here in California we do not know what impact this will have on the state’s bulk wine and grape markets moving forward, but in this month’s report we attempt to provide an incisive update on what effects COVID-19 has already had on our marketplace.
It is a strange situation in which what would normally be a good news story – a surge in off-premise wine sales (which continued throughout April) – is of course greatly tempered by a dramatic sales slump in the on-premise channel, which has been greatly affected by SIP restrictions. Jon Moramarco, editor of the GombergFredrikson Report, in a Wine Institute release, estimated that the sales drops on an annualized basis in 2020 in the on-premise (-$2.54 billion), Direct to Consumer (-$323 million) and tasting room (-$3 billion) channels would more than offset a $1.33 billion boost in off-premise sales. The smaller wineries, with less reach in the nationwide off-premise channel, will potentially suffer the most.
We’re still in the opening rounds of a rapidly unfolding situation but over the past month we have indeed seen a few more wineries, previously relatively balanced, have bulk wine available to sell. It is likely some of this new availability is premium brands with an on-premise focus that now do not have a home, or at least their owners are adjusting their sales projections downward given the circumstances.
The ramp-up in activity on the bulk market that we noted last month, provoked by the off-premise sales surge, continued into mid-April before stabilizing a little. We are still putting the call out for samples: If you have wine for sale, get in touch and we will determine how to collect your samples or get them delivered
Activity on the grape market remains limited and mainly focused on the Central Valley, with some larger buyers talking to specific growers. Grape buyers are tentative as the visibility looking ahead is highly limited: a close eye is being kept on the sales trends in the off-premise and how long before the on-premise is up and running again. There is the possibility that –should a trend towards the valueend wines in the off-premise continue while the on-premise staggers along longterm – the grape market could bifurcate with increased demand for value grapes and less demand for high-priced grapes. Got grapes to sell? Get them listed with us by contacting Molly at +1 415 630 2416 or molly@ciatti.com.
Read on for more on the bulk wine and grape markets and an update on vineyard conditions. We are here to help you navigate the twists and turns of the market, drawing on decades of expertise, so don’t hesitate to get in touch. In the meantime, stay safe