Napa Valley sparkling wine maker Schramsberg reopens for tasting, hopes coronavirus shutdown marketing eventually recoups lost sales
Schramsberg Vineyards in Calistoga reopened its tasting room Friday after being closed since mid-March amid public health orders to slow the coronavirus pandemic. But the business has a big hole revenue-wise to climb out of, according to owner Hugh Davies.
“The 25% of the year's revenue that was expected to come out of the tasting room is a big fat zero,” he said. “And there's no way to really put that back into the other quarters, unless we were to see more people. But our use permits are such that we can't really, and we're really not even set up to see more people. If magically people came and decided they wanted to increase their spending, we would appreciate it, but you can't count on that.”
Schramsberg makes roughly 85,000 cases annually of the eponymous sparkling wine plus the table-wine brands J Schram, Mirabelle, J. Davies Estate Davies Vineyards. The average retail price is $40 a bottle, with selections ranging from $20 up to $200 a bottle.
Of the production, 20% by volume was sold directly to consumers before the pandemic, with 80% going to wholesale. Of the latter, one-third was bound for restaurants, and 47% was going to off-premises retail such as wine shops and stores.
While there has been a surge in off-premises wholesale volume, the big hit has come from the closure of restaurant dining rooms nearly nationwide to stop the virus.
Of the direct sales, much of that was from tasting room fees and sales plus club sales to 46 states where shipping to consumers is allowed.
“The part that has grown the most for probably many of us is our direct outreach to our existing customer base,” Davies said. “And fortunately, it seems like they're responding to most of our efforts to do more business.”
Visitor center staff was redirected to this effort. The winery has leveraged its large portfolio, with 30 labels of sparkling wine labels plus lesser-known red wines to present new things to consumers. Partly that's been done via live streaming video on YouTube and Facebook each Friday with a tasting of wines shipped earlier in the week, which get about 1,000 views each. There have also been virtual tasting sessions by videoconference with groups of consumers, restaurant buyers, retailers and media, aided by national sales agent Wilson Daniels.
“So it's not like you're selling a lot of wines - probably more marketing,” Davies said.
These temporary ideas may not completely counterbalance the loss of sales in the closed restaurants and tasting room, but they may pay off in the future.
“If we can keep some of these other interesting things working - the increased internet business that we're doing, the increase in virtual experiences that we're doing - then maybe a couple years from now we'll be better, we'll be stronger,” Davies said.
He's hoping that the fourth quarter of this year will be good for sales in all channels, because that's where 40% of the winery's annual volume is. He worries a second wave of the virus could bring a repeat of the big hits to fourth-quarter sales like those after the terrorist attacks of Sept. 11, 2001, and the financial crash of October 2008.
