US wine industry could lose $6 billion as a result of the coronavirus

Smaller wineries will suffer a greater revenue loss, according to new analysis.|

The U.S. wine industry could lose up to $6 billion over the next year as a result of the coronavirus pandemic, according to an analysis released Thursday.

The revenue losses, for the 12-month period starting in March, are expected for a sector with more than 10,000 wineries and 8,000 wine grape growers as a result of COVID-19, said Jon Moramarco, managing partner of bw166, a wine consulting firm.

The economic pain will be acute for wineries across the North Coast and California, which produces 85% of the nation’s wines.

The stay-at-home public health emergency orders that have been enacted across the country will hurt smaller wineries much more because they don’t have the leverage to get their vintages placed on supermarket shelves like the large wine companies. Retail wine sales have experienced a large increase because consumers are stocking up at home, while sales at restaurants and tasting rooms have plummeted because of closures.

Roughly 97% of all U.S. wineries produce less than 50,000 ?cases a year and they are estimated to experience annual revenue losses between 36% and 66%, Moramarco said. Smaller wineries will be most affected as projected losses will increase as winery production decreases. Wineries producing 1,000 to 5,000 cases could experience revenue loss of 47.5% and wineries producing fewer than 1,000 cases may lose 66% of their revenue.

“Despite recent news of consumers increasing wine purchases from grocery stores and other outlets, the impact of on-premises and tasting room closures plus projected declines in direct-to-consumer sales will offset any short-term sales gains when taking into account all sales channels,” Moramarco said in a statement.

The sales plunge will have an effect on wine grape sales going into the 2020 fall harvest, especially for those vintners who don’t have contracts to sell their grapes to wineries. That will result in an excess supply of wine grapes with those sales projected to decline nationwide about 25%, to a $1.4 billion loss for the annualized period, Moramarco said

You can reach Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

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