What’s behind the slump in North Coast winery tasting room visits?
From April through June, visitor activity at Balletto Vineyards’ tasting room was unusually quiet — until the small west Sonoma County winery changed its reservation schedule from hourly to every 30 minutes.
“That helped,” said John Balletto, proprietor of the 30,000-case-a-year vintner.
Balletto isn’t the only North Coast winery seeing a slump in visits to tasting rooms, a key revenue source for local wineries.
After a stellar rebound for tasting rooms in 2021 after pandemic restrictions lifted, the average number of visits and revenue dropped leading into the summer of last year and remained flat through May of this year.
That’s according to tasting room data from North Coast-based Community Benchmark cited in the newly released wine industry direct-to-consumer market report by Silicon Valley Bank, now a division of First Citizens Bank after it was acquired earlier this year.
But on a regional basis, Napa Valley’s average monthly tasting room visits were up 22% last year, to 1,153 per location, from 2021 and slightly below pre-pandemic levels (1,372 in 2019 and 1,430 in 2018), according to SVB’s survey. Yet in Sonoma County, average visits were down 25%, to 699 per site, and well below the 2019 level of 1,098.
Among other major wine regions nationally, only Washington state had growth, albeit less than Napa’s, while Oregon and California’s Paso Robles area had declines like in Sonoma County.
The survey this year included 332 respondents, mostly from Napa Valley and Sonoma County wineries.
SVB wine division founder Rob McMillan said during an expert roundtable discussion on the report that the fall in tasting room visits in 2022 and so far this year is understandable, given the big growth in 2021 and deferred events such as weddings. With people caught up on life events delayed by the pandemic, travelers are now taking more trips abroad, according to federal airport traveler data this summer that surpasses that of the same time in 2019.
“I think next year it will revert to the norm,” McMillan said on the webcast. “I think 2024 will be a good year.”
That forecast parallels what Visit Napa Valley CEO Linsey Gallagher has said over the past 12 months, predicting a swing back in travel to the North Coast in the next few years.
Direct-to-consumer revenue has moved from half of premium winery income to 68% in the past decade, according to SVB. Of those direct sales, the largest shares — split at about one-quarter apiece — are the tasting room and the club, with e-commerce having the largest share of the remainder, at 7%.
Online sales of premium wine (over $20 a bottle) jumped from a 9% share of direct sales in 2019 to 16% in 2020, the first year of pandemic restrictions, but that share eased to 12% in 2021 and 10% in 2022 as tasting rooms reopened, the SVB report said.
With online sales returning to pre-pandemic levels and tasting room visits down, McMillan and experts he gathered for the roundtable talk recommended that vintners not retreat from digital marketing efforts to keep not only the tasting room revenue stream flowing but also bring in more club members.
“The (U.S. Small Business Administration) recommends for marketing that a business spend 6 to 8% of gross product,” said Susan DeMatei, founder of Wine Glass Marketing. “The wine industry spends 2%. We’re massively overspent by other places consumers have to go and spend money.”
The SVB report found that fewer wineries surveyed have accepted walk-ins at the tasting room since the beginning of the pandemic, dropping from 45% to 80% previously to about 10% to 15% last year. Napa County largely requires rural tasting rooms to operate by appointment, with few exceptions. But a growing number of vintners surveyed are offering both.
At Balletto winery, the tasting room staff take reservations for tastings but also accept drop-ins.
“We don’t turn anyone away,” John Balletto said. “We’re trying to do as much as we can to bring people to the wineries.”
The Russian River Valley winery in the past year has doubled the size of its patio to allow for overflow when there are more guests than inside seats.
But at boutique vintner Halleck Vineyard in the hills near Sebastopol, the tasting room has been reservation only throughout its 21 years , said proprietor Ross Halleck.
“We experimented with drop-ins, and it doesn’t work for us,” Halleck said.
The 2,500-case-a-year Russian River Valley pinot noir specialist offers two tastings daily on Fridays, Saturdays and Sundays, then spends the other days of the week on direct-to-trade sales to fine restaurants and deliveries to private clubs. Eighty percent of the wines, which cost $34 to $120 a bottle, are sold through the vintner’s own club.
