What strategies for survival in the wine world?

Ok, so we haven’t a clue how long this thing (they call it Covid 19, but that is far too « techno » for me, so I prefer « the plague, again ») will last. And it may be quite a long time. What is certain is that it has created widespread commercial, logistic and social havoc and these things will all have lasting repercussions. So I feel a little bit frivolous, superficial and irrelevant to continue, week after week, to just write about the wines that I like (or dislike), when I know full well  that all wine producers, intermediaries and retailers are not only having a very hard time, but that many of them may well not even survive this period.

Before going any further, are we doing the right thing to keep on chatting miserably about the wines we have tasted and liked? At times I am not so sure, but what else can one do? The show must go on as they say in another business.

Just look at the facts. Practically all restaurants, hotels and bars around the world are closed or have been for the past couple of months. And, in many countries, including that in which I live, France, that will remain the case for at least another month and maybe longer. And, when they do re-open, they will not be able to take in half as many clients as previously, assuming that they have survived financially until then. Wine shops here were also totally or partially closed for many weeks, only supermarkets and internet or direct sales remained open as a channel for getting wines from producers to consumers. As for exports, they have virtually ground to a halt, and this situation has been compounded by the impossibly irrational behaviour of a man who claims to be the President of the United States of America and who can think no further than his hoped-for re-election next November by a bunch of rednecks who have never crossed their state boundaries. When I re-read (as I do with considerable relish at this moment) the late Hunter Thompson on the subject of Nixon and that era, I wonder what the hell would he (could he?) have written about Donald the Duckfuck (and what a great cover this would have been!)

Add to this very shabby picture China and that repressive regime, the craziness in the UK that has caused the Brexit, and a general « save ourselves and fuck the rest-of-you attitude » all around the world and you end up with a major commercial catastrophe that is going to cause a lot of grief, and not just in the little world of wine.

But, since my professional life is limited to that little world, I took it upon myself to pick up my phone to ask a few producers how they were doing and what strategies they might have put in place to deal with this very difficult situation that is in no way any fault of theirs. I did not ask any « natural wine » fanatics as they may well have said that this pandemic was an act of God (read « Nature ») and that « nature » was taking its revenge. Ask the bats about that perhaps? No, seriously! I talked to several good and sensible producers in different parts of France and Europe.

First off, they have all (the ones to whom I talked) lost between 50 and 80% of their usual sales over the 2 month period of mid-March to mid-May, and which happens to be a big period in normal times. Some may have lost more, especially those who have placed all their eggs in the drink-as-soon-as-it’s-made rosé basket, but I did not talk with any of those.

One important logistic factor that is often ignored is storage capacity. After all, the wine market upon which all of us wine pros depend would not exist if there were not efficient logistics at all stages, and this includes not only transport but also storage. Those who will survive already have or are creating additional storage capacity to stock the wines that they have not been able to ship out. Of course, these wines should also have the capacity to age for the additional period necessary, which should be the case for just about anything worth drinking, no? And those who don’t? Distillation? The drain? What else can they do to make way for this year’s crop in their winery? And even those who can stock both financially and logistically, are going to have to seriously boost their sales overs the coming year or so.

Secondly, those who have a private customer base have worked on this by inciting customers with special promotional offers, such as mixed cases and/or enhancing their communication with stuff on various forms of social media: videos of what they are doing in the vineyard or cellar, etc, etc. This way of creating a form of proximity with the outside world for those confined in cities has had its results, within the limits of the customers base held by each producer, which are that a small family, even confined, cannot order that much wine at a time and is also probably being careful with expenditure anyway.

Those who do not have a considerable private customer base are in even more trouble as most other channels are either closed down or are living off existing stocks so that anyone who passes an order gets (and deserves) a big virtual handshake and top-quality follow-up. Some of those who do have also been active trying things like grouped orders (friends and neighbours), « try our range » deals, and so on to boost revenue. I have seen this in France but also in the US where the excellent producer Au Bon Climat, who for some reason has me on their mailing list, has been very creatively active.

On the export front, although things are very quiet, some countries (the people to whom I spoke mentioned Japan, Taiwan, Belgium, and the UK, but also Canada in some provinces, where there are importers selling directly to consumers, such as The Wine Society, or Naked Wines in England) have placed orders during the shut-down.

Another key question is the tricky (and loaded) one of pricing. In other words, should one drop one’s prices to kick-start the ordering process? All the good producers to who I spoke said a big NO to that, as they know just how hard it is to regain previous price levels once you have dropped them. But, to hold that line, you have to have sufficient resources, which includes storage capacities.

The hardest hit are those who are largely dependent on export markets and the French restaurant channels and it is not easy at this stage to say when things will improve on those two fronts. I did not speak to producers who sell a lot to supermarkets and perhaps these have suffered less, but I wouldn’t bet on that since those channels are also in the doldrums in terms of wine sales. Going once a week to my local supermarkets to buy food during confinement, I saw nobody cruising along the considerable range of wines on display on any of my visits!

Can we conclude much from this? Of course not: it is far too early to draw any conclusions, but it does seem clear that wine producers, like many of us, are in for a rocky ride in the near future. So, we just keep on truckin’, I suppose, and hope for the best (and thanks to the Grateful Dead). Or do other things as well.

Hey ho!

David Cobbold

10 réflexions sur “What strategies for survival in the wine world?

  1. georgestruc

    Oui, David, hélas, de nombreux domaines ne seront pas armés pour vaincre ce passage difficile ; ce mot est d’ailleurs bien faible : dramatique serait plus adapté. Un chemin encombré de ronces et de pierres tranchantes. Les cours de nombreux vins vont chuter (c’est déjà fait sur les régionaux) le prix des vignes va faiblir, ce qui fera l’affaire de grosses structures qui vont les racheter à un prix devenu attractif…une aubaine pour elles. Beaucoup de choses vont se produire pendant le mois de Juin, qui deviendra une période test pour le marché. Ne perdons pas espoir. Les conversations de ces derniers jours avec des producteurs du Rhône donnent des résultats mitigés : difficultés surmontables, mais à condition que le marché reparte et que les restaurateurs, cavistes, bar à vins, gites, chambres d’hôtes, puissent enfin accueillir des clients. Mais lesquels, si les frontières restent fermées ?

    J'aime

  2. David Cobbold

    C’est très juste Georges. Nous nous trouvons en accord une deuxième fois dans la même semaine ! Mais qui ne serait pas d’accord avec ce triste constat ?

    J'aime

  3. J’ai les mêmes inquiétudes que toi David et je me demande chaque semaine, s’il est pertinent, correct, judicieux de continuer à parler des vins que l’on aime, comme si rien ne se passait autour de nous, comme si nous igniorions les graves difficultés économiques que traverse le monde du vin?
    Merci pour cet excellent papier et j’aimerais trouver une marche à suivre ?
    Amitiés
    MLB

    J'aime

    1. C’est essentiel, primordial de parler du vin, ça donne envie à nos lecteur d’en acheter, d’en consommer. La communication sur le vin va être le principe actif de la relance du secteur. Malheureusement, nombre de structures supprime ce poste au sein de leur entreprise quand les choses vont mal, alors qu’il faudrait le renforcer.
      Marco

      J'aime

  4. David Cobbold

    En substance, « the show must go on ». Oui, mais je pense que parler des stratégies de survie peut aussi aider (un peu) ceux qui en manquent..

    J'aime

    1. Bien sûr David, cette épidémie, comme souvent dans ce genre de crise, a renforcé le business de certains et a fait péricliter nombre d’autres. Nous, nous pouvons aider en parlant de ceux qui en ont besoin. En croisant les doigts pour un retour rapide à la normale.
      Marco

      J'aime

  5. Catherine Spode

    In the UK, companies such as Lovebrewing, who sell wine and beer making kits and equipment, are selling out and having to close early to get the orders off. The wine kits are, of course, made from concentrated juice, Chardonnay and Merlot among others — which have, of course, been bought earlier from vineyards. It remains to see whether the home wine making trend will continue once us Londoners return to work. Walking through Islington, I also see evidence of substantial deliveries of actual wine, with the empty cases left outside. The fact is, the Brits don’t do without wine, come what may. As my cousin Sylvain would say, C’est fou ce qu’ils peuvent descendre comme champagne, ces anglais. Courage! Nous sommes la! Nous buvons! Catherine

    J'aime

  6. Joseph LE NIR

    Concernant les ventes de producteurs tournés vers les GMS, deux échos de caves coopératives que je connais de près, situées dans des bassins de production différents indiquent une perte de CA de l’ordre de 40 %.
    De plus les ventes se sont orientées sur les gammes basiques: les BIB, les MDD. Les stratégies de montée en gamme seront à reprendre à un niveau plus bas, et plus tard…
    Néanmoins leurs dégats sont limités en comparaison avec ceux que connaissent les producteurs orientés vers le CHR

    J'aime

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