Driving Growth Amid Inflation, Staffing Woes and Changing Trends

To say the last three years has been a mixed bag for wine-producing businesses is an understatement. 

In 2020, businesses rethought the way they interacted with the public as COVID-19 wrought havoc on the United States, bringing with it illness, shutdowns and modified operations. But on the plus side, people were captive audiences at home, checking their emails, participating in virtual celebrations, and having wine shipped to their homes.

The next couple years — 2021 and 2022 — were characterized by a growing return to normalcy on the COVID-19 front, with people eager to return to restaurants, wineries, tasting rooms and other places where wine is sold and consumed. 

Those years also brought supply chain issues, inflation and staffing shortages from people who occupied lower-paying positions simply dropping out of the workforce.

Experts who spoke to Vintner Magazine aren’t throwing in the towel, though.

Navigating 2022’s Supply Chain Woes

The newest pejorative “S-word” in business doesn’t have just four letters. It has several.

“The biggest factor has been supply chain issues and the costs associated with them,” Willamette Valley Vineyards CEO Jim Bernau said. “Glass, in particular. We had to find new suppliers, and those suppliers were far more expensive. Tariff policies made it even worse.”

The Turner, Oregon-based winery set itself up for a brighter tomorrow, choosing to pay higher short-term costs to avoid pigeonholing itself into a longer, potentially more expensive contract over the long term.

“We would have been locked into those costs for years,” Bernau said. “We were careful about making sure we didn’t make long-term commitments to those suppliers. It was costly to make short-term purchasing agreements, but we’re already starting to see prices come down. So that was a positive, good move. Our CFO John Terry did a great job managing that.”

Adapting to Changing Purchasing Habits

In Texas, Spicewood Vineyards found itself working through continuing challenges brought on by growth that owner Ron Yates said was actually a result of the pandemic.

“One of our biggest adjustments was keeping up with the surge of new customers from the end of 2020 and most of 2021,” Yates said. “We experienced a lot of growth during that time from Texans who didn’t want to or couldn’t travel out of state as much during the COVID shutdowns. 

“Maintaining our level of customer service with the influx of newer customers has been a challenge.”

Yates said Spicewood Vineyards has experienced both an increase in wine club members as well, and a resulting increase in production numbers. But after struggling to ramp up and grow more fruit to accommodate growing demand, Yates said he foresees a slowdown coming in terms of purchasing habits.

“We have already seen purchasing habits greatly slow down in comparison to the last 18 months,” he said. “I foresee lots of competition for fewer dollars.”

Now Trending

One winery in Sonoma County is doing its part to be good stewards of the environment and be a good actor in the wine business scene.

Balletto Vineyards accomplished a goal in 2022: It became 100% solar powered. 

“This power extends to cover the entire winery, tasting room, event center and vineyard housing,” owner John Balletto said. “One of the few estate wineries in the appellation, we remain a family-owned and operated winery.” 

In the first nine months after installation, the building’s solar has reduced 625,000 lbs of carbon dioxide emissions and generated more than 400 total megawatts of electricity. At peak production, the system can generate up to two megawatts of electricity a day, enough to power more than 1,000 homes. Excess energy generated during the winery’s slower season is transferred back to the power grid and used throughout the system.

The Ballettos have added four electric vehicle charging stations in the tasting room parking lot, and are expanding the patio for tastings. 

Driving Growth in 2023

Ryan Bogle said Bogle Family Wine Company’s largest growth driver in 2022 was the continued growth of its Juggernaut line, which continued to gain new accounts both off and on-premise.

“We expect Juggernaut to continue to drive growth in 2023, and with the release of our new Juggernaut Sonoma Coast Chardonnay, we expect to gain many new points of distribution for the entire Juggernaut line,” Bogle said.

Gervasi Vineyard General Manager Scott Swaldo also said his Canton, Ohio wine resort was set to deliver what its customers want now and in the future.

“People want convenience and they want shipping, and we are building an underground wine cave and a warehouse,” Swaldo said. “The warehouse side will help us be more efficient with shipping DTC. This is growth potential driven by what people want. People want to be on their iPad or phone and order stuff, and have it shipped to their house.”

Be the first to comment

Leave a Reply

Your email address will not be published.