U.S. wine industry could lose nearly $6B due to COVID-19, analysis reveals

Recent analysis from bw166 and the Wine Institute finds the U.S. wine industry could face a $6 billion loss due to the coronavirus pandemic. Jordan Winery Owner John Jordan joins Yahoo Finance’s Zack Guzman to discuss, as Jordan winery gears up to reopen in California Wine Country.

Video Transcript

ZACK GUZMAN: Let's dig deeper into the way that businesses are navigating reopening, of course, as more states do allow businesses to return to normal. An interesting loophole being taken by a California winery out here to get things back when you think about the hit to wine tastings, a pretty significant chunk of revenue for smaller wineries out there. And now one in Sonoma, the Jordan Winery, is going to be moving forward with plans to bring people back with an interesting loophole take on giving people tours of its grounds as opposed to its tasting room, which other people are not allowed to open right now.

Joining us for more on that is the owner of Jordan Winery, John Jordan. Mr. Jordan, appreciate you taking the time to chat with us. An interesting little workaround here you've got on your hands with by selling these tours. For two people, it costs $220. What made you go along with this, and really, what options did you have on the table?

JOHN JORDAN: Well, first of all, when people think of wine country, Sonoma County, they think of tasting rooms. But the fact of the matter is is that Sonoma County is a very diverse place, and those of us that live here try to spend as much time outside as possible.

We're fortunate to sit on 1,200 acres on the property here, and we periodically offered special hikes and packages over the last few years. So we thought, why not bring that back?

Now how can we do this legally when tasting rooms are closed? is simply because we're not doing it in a tasting room. Parks and trails are open for the public to exercise, and we just decided to open up our trails for people to come and visit for a fee. And on their way out, they get a bottle of cabernet, chardonnay, and a picnic basket that they get to take with them. All of this is fully compliant with county ordinances and state law, and we're just leveraging our great outdoors to be able to deliver a fun experience and send people home with somebody tasty things to enjoy.

ZACK GUZMAN: It's a pretty genius workaround when you think about it, but I think people overlook kind of the impact to wine. We've been highlighting the way that people have been purchasing more in stores, but that would overlook the hit to tastings and visitations to wineries like yours. Overall, there are numbers out there are saying that the revenue losses would be about 36% to 66% projected for most wineries. So how important are getting these revenue streams back in for not just your winery but also the other wineries in wine country out there in California?

JOHN JORDAN: Well, visitation for us is a much smaller portion of our overall business due to our size. But for many wineries, as you rightly point out, it's devastating. It's an existential issue.

But looking at this locally, it's not just the wineries. It's the wineries and the wine region that attracts visitors to Sonoma County, but the damage and the economic risk is far broader. It's the restaurants. It's the shops. It's the bed and breakfasts, the bars, the hotels, and all of the little businesses and vendors that support the food-and-wine tourism industry, which is, along with making wine, you know, is our economy. That's what we really are. We make wine, and we do hospitality. That's what we do in Sonoma County. And you take the hospitality away. There's a lot more jobs there than there really is in the wine industry.

ZACK GUZMAN: Yeah, and I guess on net, it would be tough to tease out. As you say, it kind of very much depends on how big of a winery you are. You guys, being a little bit bigger, as you said, your tasting room or your tastings might not matter as much.

But when you try and look at the business that you're dealing with here, what has been kind of the net effects of the coronavirus slowdown? Clearly, I suppose, if you're trying to find loopholes here, it must be seeking to get at least some sort of return to normalcy.

JOHN JORDAN: It is. We've noticed a couple of interesting phenomena. With restaurants being shut down around the country, we have-- we've replaced that focus with one on stores, grocery stores, wine shops, liquor stores, and so forth where people buy wine to take home. It's called off premise in our industry. And that's been pretty successful.

One amazing thing-- and you've seen this across-- in other industries as well-- is the enormous quantity of things that are purchased online now. Our online business has really exploded through our website. Our culture and who we are-- we like to entertain people. Our hospitality operation is a big part of how we tell our story, and a big part of the passion that we have for not only our industry but for our area, and we love to share that. And we're looking forward to getting that open, hopefully, in a wholesale basis pretty soon.

But for smaller wineries, yeah, being able to-- having visitorship shut down is going to-- may shake out the industry, may end up being a-- result in some fatalities or consolidations.

ZACK GUZMAN: Yeah. I mean, at a time when, you know, there's a lot of stress out there, it's always nice to get out, especially in Alexander Valley, one of the-- one of the best spots, in my opinion, out there. But I appreciate you taking the time to chat with us and give us those updates. John Jordan, the owner of Jordan Winery, appreciate you taking the time.

JOHN JORDAN: My pleasure. Thanks for having me.