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Coronavirus, 2018 record crop to cut California wine grape grower revenue $832M: report

California winegrape growers could suffer at least $437 million in lost sales from this year’s grape harvest due to coronavirus-related economic disruptions, according to a new report by a top industry analyst.

The surge in sales of wine at retailers of beverage alcohol for off-premises consumption in the weeks following the mid-March lockdown will not offset lost wine sales via on-premise channels and direct from wineries to consumers through wine clubs and tasting rooms, according to analysis released June 26 by Jon Moramarco, managing partner of advisory firm BW 166 and editor of the Gomberg-Fredrikson Report. Off-premises vendors include supermarkets, liquor stores, club stores and wineries; on-premise includes restaurants, hotels and stadiums.

The volume of California wine sales over the 12 months from March of this year to February 2021 is expected to decline by 9.21 million cases from the same period a year ago. That could result in $437 million less sales revenue for growers, according to the report.

That assumes restaurant sales and tasting-room visitors will gradually increase after reopening in the North Coast this month, yet consumers will buy more wine at retail. For those 12 months, Moramarco foresees off-premises wine sales to grow 10% from a year before, restaurant and tasting-room sales each to be off 60% and winery club sales to be down 10%.

The projected hit to growers from the virus would be on top of $395 million in reduced sales revenue expected to occur as a result of excess wine inventory following the record winegrape crop in 2018 and slowing consumer demand for wine. Together with the virus-related situation, growers’ losses from March 2020 to February 2021 could total $832 million.

“Moramarco’s analysis makes clear what many California growers already know: Growers will experience significant economic hardship following this year’s grape harvest,” said California Association of Winegrape Growers President John Aguirre, in the announcement about the report. “California growers are accustomed to cyclical markets, but the COVID-19 pandemic threatens to turn a down year into a financial catastrophe for many of them.”

Santa Barbara County grower and association Chairman Mike Testa said he’s seeing unprecedented uncertainty in the marketplace.

“Growers are struggling to find a home for their fruit, vineyard acres are being pulled out and our winery customers are experiencing extraordinary challenges. For many growers, getting paid this year is no sure thing,” Testa said in the statement.

He called on Congress to include money for wine grape growers in the next round of coronavirus economic relief.

Read the report:

COVID-19 Econ Impct on CA Grape Growers June 8 2020.pdf

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