How the coronavirus is affecting the wine market

With new epidemics of Coronavirus Spreading across the country, the restaurant and hospitality industry has been hit hard. More and more people are staying at home to dine and cook, while the wine retail industry can benefit, restaurants and breweries are clearly not having it easy.

As the current state of the virus evolves rapidly and consumers continue to take new precautions, it has become difficult to keep tabs on the health of the wine market. So I recently met Rob McMillan, Executive Vice President and Founder of the Silicon Valley Bank Wine Division, to talk about the most recent developments.

All responses have been edited and condensed for clarity.

Liza B. Zimmerman (LBZ): How is the coronavirus affecting the wine market as a whole so far?

Rob McMillan (RM): We need to start the conversation by acknowledging that people appreciate wine in good times and in stressful times. Wine is not recession proof, but it is recession resistant. Likewise, it may not be virus proof, but it will prove to be virus resistant from an economic standpoint. There is no way we will see widespread abstinence from the virus. However, we will see lost sales at canceled events where drinking opportunities are normal and expected.

Restaurants see fewer diners, and hotels are experiencing a decline in bookings and cancellations. Given the size of these industries, this is where we will see the greatest impact on sales. Canceled conventions, concerts, cruises, air flights and sporting events will also reduce service opportunities and consumption, as will the impact of a decrease in the number of attendees at public events that are not rescheduled.

On the other hand, current evidence suggests that grocery stores experience increased sales because consumers eat more often at home. Despite the other bad news, I expect to see an increase in home wine consumption, an increase in same-day food and alcohol delivery, and higher levels of online wine sales by consumers. retailers and small wineries that promote their options online.

LBZ: Is the decline in wine consumption in China still one of the main concerns?

RM: No.

LBZ: How has wine consumption been affected in the United States? What trends do you see on the radar in the coming weeks?

Currently the stock market and consumers react to the news out of fear. As we learn more about the virus from the healthcare community, fear of the unknown will evolve into fear of the known. At this point, we’ll see a new news cycle that should produce more normalized behavior, and we’ll have a better understanding of the impact of places and occasions to drink as we head into spring and summer.

LBZ: Can you comment on the low rates of trips and visits to wineries, as well as what is happening with empty restaurants and hotels?

Tourism and vacations are still on their normal winter habits with a decrease in attendance at wineries and a decrease in hotel occupancy rates. There is no information currently available that can show trends from year to year to determine the extent to which we are seeing non-model visits.

But based on the reduction in air travel and hotel cancellations, as well as an increase in sales and marketing activities by the hotel and restaurant industry trying to attract customers, we should all get on board. expect a negative impact in the short term. The real impact will be as we head into summer, but given that flu season and summer are not normally aligned, hopefully the wine industry will see normalized conditions and perhaps improved with consumers who are currently planning international travel by making decisions to stay in the US

LBZ: Do consumers abstain most of the time in order to stay healthy and be alert to potential virus-related issues?

RM: I don’t think we’ll see forbearance as a consequence of the virus threat. While a sick person can change their drinking pattern, it will not have any measurable impact on consumption with this virus outbreak.

LBZ: How do you think those who still eat in restaurants order differently?

RM: I don’t know if people who eat in restaurants order differently.

LBZ: Are consumers saving money with cheaper wines or are they splurging because they are not affected?

RM: People will not change the price they are willing to spend on wine.

LBZ: How could smart restaurants and retailers sell more wine during this time?

RM: Retailers should take this opportunity to focus on their online options, consider offering coupons for new consumers and discounts to existing club members for online orders.

LBZ: What are the long-term ramifications if this virus continues to grow?

RM: It’s not something I would like to speculate on. My belief is the end of the flu season; we will see the end of attention to this virus.

LBZ: Will people start to be wary of wines made in high inflection regions like Italy, or will they not want to dine in Asian restaurants in New York because of concerns?

RM: You never know what the misfits might do, but overall I don’t expect that to happen.

LBZ: What could the US government do to allay the concerns?

RM: Not my region. I have lots of ideas, but I am not running for office.