Posted: May 05, 2020
As part of our series entitled Solutions for the Wine Industry in times of Crisis, our strategic partner, Wine Line Radio, interviewed well-known wine journalist David Furer of David Furer Consults.
This second segment of Mr. Furer's interview reveals how the retail industry is adjusting as best it can through what appears to be a marketplace experiencing enormous pressure. Part I may be read here.
David Furer: It is understandable for small operators to be ill-prepared for this sort of thing. Their resources are limited as is their investment capital to get people on board to help them out. There have been reports however of websites crashing for big-name operators who are unable to handle their increased traffic and demand by consumers who are asking, "where can I get my famous name merlot, or sparkling wine?"
The National Association of wine retailers, a group that looks after the interests of small retailers around the US, conducted a survey of their membership and determined recently that traffic has increased for about 65% of the respondents. How much it has; the respondents are not saying. However, 25% of the wine retailers are reporting that the increase is significant. If this sort of trend continues and the ordering habits continue, it is going to force retailers to put more time and resources to developing their Internet presence and their responses to it.
The explosion in online traffic is a verifiable concern. E-commerce comes into direct opposition with the human need for socialization. There's a need for socialization, that is embedded in humans at various levels, which conflicts with our risk avoidance; (our need to avoid getting injured). This is a very nuanced, complicated sort of thing that can't be easily measured. This is more for sociologists to consider. But how this can affect the alcohol beverage industry is going to be very, very complicated. Yes, when this all goes down and things relax, people will be returning to the bars and the pubs, whatever that may look like. At that point we are probably looking at a drop off on the retail sales. But how that happens in the long run into whatever constitutes the new normal remains, anybody's guess. Crises don't last forever; things change in time.
The National Wine Retailer Association’s report reveals that half of the respondents are experiencing moderate or significant delays in delivery, working with common carriers like FedEx or UPS.
During this sudden ramp-up, these shipping companies are having to deal with more than just alcoholic beverages. People are much more concerned about food than they are alcohol at this point. The indicators reveal that these companies will have to increase their capacity if this trend continues. But right now there is a huge spike in deliveries. While this spike is going to come down at some point, we will be living in a new normal. FedEx, UPS, and the USPS will have to change what they're doing. Change their logistics; change their hiring practices to compensate for this hiking interest in on-line purchasing.
I think the last thing I want to touch upon, is that in the future, the alcohol beverage industry, which is notoriously slow in making small changes, especially the wine category, even more so than the spirits and beer category. But changes have already come into place. We've been saying for a long time incrementally, there's been a huge trajectory increase in things with, you know, for example, a couple of days ago Kentucky opened up its direct shipping laws. Kentucky of all states. A state which is typically slow to respond, a very conservative state, but they've made the big change. Several States have relaxed restrictions upon distilleries.
I was researching a piece for a distiller magazine/Distilling.com on the responses of these craft distilleries to the need for 70% plus alcohol for use in hand sanitizing fluids. There's been a remarkable and noble response by craft distillers all around the US to meeting the needs of their communities, and first responders, people in nursing homes, and such. These craft distillers aren't necessarily rich folks. A lot of them are doing it with no profit involved. They are working their asses off to do so, and so the responses that are being implemented by these hardworking distillers, as well as wineries trying to help out the communities is that it's putting pressure on their governments to relax these laws. They are acting as responsible good citizens here. They ask that lawmakers please not make it difficult for us to do their work. I think there's going to be a long term responsiveness on behalf of local government. I think we are going to see a relaxation of restrictive government alcohol laws.
Comment from Robert Scott of Wine Line Radio: I notice that here in Florida that they relaxed those situations for retail restaurants
who are now able to sell takeout cocktails and wine by the bottle. So, you know they've kind of made it easier for the consumer to be able to get the product they want.
Looking ahead, people in the wine trade and wine consumers should keep an open mind. There are going to be changes to be sure. How those changes will map themselves out is still a guess and the people who remain flexible and willing to adapt to change; hire people in the short-term; keep people employed; keep the economy rolling; keep showing their business in the best light under these tough circumstances will most likely persevere. These same business owners will use the trends that are spiking now as an indicator to judiciously move to what they're going to do in the long term to build their business or to build your cellar if you are a consumer and to respond in a calm, relaxed and proactive form.
About David Furer
Interviewed by Robert Scott at Wine Line Radio
Text By Luis Torres at Go-Wine.com May 5, 2020
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