As Wine Sales Boom, Distribution Channels Scramble to Keep Pace

Wine shipment box
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The novel coronavirus pandemic has boosted retail wine and spirits sales dramatically, but it’s a bittersweet benefit for the companies that get those wines to market. While business is booming for certain segments of the distribution system, others may soon be bankrupt.

Importers, distributors and wholesalers have seen their businesses shift rapidly from a mix of off- and on-premise customers to a much higher percentage of off-premise accounts, as bars and restaurants have either closed or pivoted to takeout.

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Cristina Mariani-May, CEO of New York-based importer Banfi Vintners, says Banfi’s mix is usually about 60% stores to 40% restaurants. “In mid-March, it started shifting dramatically. Now it’s about 84 to 16 and we’re imagining the on-premise portion may go down to virtually zero.”

Overall, Banfi’s business is up by about 3% in volume and sales of core products like Banfi Chianti are growing. Natura, Banfi’s organic, value-priced line of wines imported from Chile, are up by more than 100%. “My interpretation is that people are going to the brands they trust, and the organic sector is doing well because now during the coronavirus crisis people are more health conscious than ever,” Mariani-May says.

Wine & Spirits Wholesalers of America (WSWA) spokesperson Michael Bilello predicts off-premise alcohol retail sales will level off now that the “initial stockpiling” phase is over.

“There isn’t enough at-home consumption for the industry to make up the loss in business from on-premise,” he says, “so April numbers and beyond will be bleak until restaurants, bars and hotels come back to life with a confident public.”

Additionally, many on-premise accounts entered the crisis era with outstanding balances already owed to their wholesalers from previous deliveries.

“With payments delayed for an unknown period of time due to this crisis, it has all the potential for major current and future financial losses,” says Bilello. “In some cases, restaurants and bars may be forced to go out of business and never pay these debts.”

Delivery and contact-less pickup is increasingly popular. The country’s largest wine distributor, Miami-based Southern Glazer’s Wine & Spirits, touted delivery services via Drizly and a new business-to-business ecommerce platform, Proof, in an April 6 press release.

Republic National Distributing Company, America’s second largest wine distributor, is working on a new website and other marketing solutions for companies seeking to grow direct-to-consumer sales.

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The supply chain is doing a good job of keeping stores stocked, says Michael Abbate, manager of Blanchards Wine & Spirits in Jamaica Plains, Boston. The smaller wholesaler companies have been most affected, he says, but even bigger wholesalers have showed some cutbacks, laying off merchandisers who would normally come to his store to organize shelves.

One of Abbate’s roommates lost his job in a Boston restaurant as the owner chained the doors shut. “For me it’s bittersweet,” says Abbate. “I am happy that the store is seeing success, but also it’s coming out of real human costs.”

Employee concerns were foremost for Gregory Balogh, CEO of Maisons Marques & Domaines. The importer and producer began preparations for its staff to work mostly from home in early March. On March 16, it closed its Oakland office to the public and its Manhattan office totally.

“I saw in the eyes of the people that there was a lot of fear, so I took some decisions to keep them safe,” says Balogh. Essential employees at the 8,000-square-foot Oakland office were separated into four-hour shifts, and restricted to no more than two people at a time per floor.

Certain distributors are turning profits and keeping their employees busy, Balogh says, while others are having a tougher time. “You see it in the payments, you see it in the emails asking you for extra terms,” he says.

Maisons Marques & Domaines has put a pause on hiring, but at press time has not laid off any employees, Balogh says.

“We’re trying to ride out the storm,” says Balogh. “We’re talking a lot within the executive tier about how to help going forward and what to do when the restaurants reopen.”

Published on April 13, 2020
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