“What’s going to happen to demand? People are still going to drink”
The good news? Rob McMillan of Silicon Valley Bank, perhaps the foremost financial analyst in the wine business, says wine can survive the coronavirus pandemic. The bad news? It’s not going to be a lot of fun during the duration.
The highlights of our conversation:
• Expect to see weaker wineries fail, as well as some grape growers who don’t have producers to buy their grapes. In this, there probably won’t be bankruptcies or foreclosures as much as there will distress sales. There are always people wiling to buy wineries, says McMillan, even in a recession, and prime vineyard prices probably won’t decline all that much.
• Wine prices were expected to fall before the pandemic hit the U.S., and the stay at home orders and layoffs will only hasten the process. In this, though, since there are too many grapes, expect to see better quality grapes going into cheap wine. One rumor? That a major $3 producer snapped up Napa Valley cabernet sauvignon at bargain prices.
• Look for more producers to try to sell their wines at mass retailers and supermarkets. The loss of tasting room business needs to be made up somehow, and retail wine sales haven’t slumped as much as some thought.
Click here to download or stream the podcast, which is about 18 minutes long and takes up 11 megabytes. The sound quality is very good; it’s my first podcast with Zoom.