Why Am I so Optimistic about 2021

Opportunity Knocks

Ebullience! That's a word we haven't heard much in the past year. But I predict that's only the start. You might soon also hear such rare terms as buoyancy, vivacity, and euphoria bandied about. Count me in the camp that is exuberant for the opportunity presented to us in 2021 - 2022. I can't wait to work again in a group practicing social nearness sans masks as in the headline picture... but my vision has a nicer desk. Why so cheerful you ask?

I covered some of the information in this post when we announced the opening of the SVB 2021 Direct to Consumer survey. 

Annual 2021 DtC Survey: Extended to Friday 3-26

There is so much anticipation in the air for an end to the horror show we've all lived the past year. Today wineries are getting ready to reopen to normal service levels, hopefully before Memorial Day! That's a legitimate hope with the increased pace of vaccine availability and improved COVID metrics.

Speaking of metrics, Silicon Valley Bank annually runs the industry's Direct to Consumer Survey this time of year. We typically get about 1,000 responses before cleaning the final results to between seven to eight hundred useful responses. 

The current survey has been open 2 weeks and is scheduled to close this coming Friday, March 19th. As of this writing on Sunday the 14th, we have 136 responses with 5 days remaining (Top slide.) 

One hundred thirty six responses is a long way from one thousand and could threaten our ability to produce meaningful information. As you can see, there are many AVA's who've yet to have a single participant this year. This is really unpresented but considering how 2020 went, probably to be expected.

    Balancing Your Day Isn't Easy

With all the activity needed to gear up wineries, execute on strategies to handle the reopening, hire back employees, and still deal with all the regulatory and real inconveniences from COVID, there is little time to do much else. 

But while we need to handle obvious tasks today, we still need information to plan. This is an opportunity to learn from a once-in-a-lifetime sales environment in 2020. The information we could get from the unprecedented conditions last year will be lost forever unless we can get the industry's participation rate up in this survey.

    The Survey Is Open But ...

The 2021 DtC survey is now open and is scheduled to close March 19th. We may extend the survey for another week if we can make progress this week toward the 1,000 respondent goal.

The survey has between 24 to 34 questions, depending on your business model. It should take you between fifteen to twenty minutes to complete and even less if you are a little prepared. If you would like to see the questions in advance, you can download and print them here.

In May, all participants who complete the survey will receive high-level analysis, benchmarks and the complete sanitized respondent data, anonymized of all personal and business identifying information. Nobody else gets this data. It can't be purchased. At the end of May, we will broadcast a two-part videocast to the industry and go over the new findings with other industry experts. 

All this effort is done on a gratis basis by Silicon Valley Bank to help the industry make decisions, but it's a partnership with you: If we don't get survey responses, we can't produce this industry resource. So please make this a personal goal. The choice you make to participate or not will have an impact both on your understanding and the industry as a whole.

Please promote this post in your favorite social media platform, or even better - please forward [this link] to your winery colleagues and ask them to participate. It takes everyone's effort to make this outreach a success.

If you would like your AVA to participate, we will also send the AVAs free Regional Benchmarks for their own use, presuming we have a statistically significant sample size of at least 20 respondents.

Discover 2021 Consumer Trends by Participating in the Annual Direct to Consumer Survey

    Let's Never have Another Year like 2020

I opened the 2021 SVB State of the Industry Report with this line: "2020 will go down as the year in which we answered the heretofore rhetorical question, what else can go wrong? 

We are all glad 2020 is over. We are all grateful vaccinations are signaling an end to what we've endured this past year, and almost uniformly across America, there is renewed optimism that 2021 will be better as we move into spring.

    The Year Ahead Brings Hopeful Signs

As I laid out in a recent blog post, I believe overall wine sales will have a little renaissance in 2021 as the vaccines are rolled out, restaurants and travel reopen, and consumers kick up their heels after being locked down.

That type of recovery isn't what you normally see in a recession, but in this case, not only are consumers ready to get out of the house, they also have the money saved to pay for it as noted in the nearby chart. Not only to locked-down tourists have the capacity (savings), but they have the willingness. Many surveys suggest traveling for pleasure and connecting with family is exactly what those consumers plan to do once they feel safe again.

    Connecting with New Customers

So the opportunity is there at the macro level for improved wine sales in 2021. Drinking occasions will increase in 2021. Restaurants will gradually reopen along with increased air travel, sporting events, concerts, and the opportunity for family gatherings. 

Tasting rooms will also gradually reopen and provide renewed opportunity for those selling at the winery or in urban tasting rooms. Still, that is no guarantee your winery will participate in the improved market conditions.

Everyone at this point has to realize that on the margin, the consumer you are going to face going forward has evolved. They are changed. That means doing what you did in 2019 might connect you with those customers who haven't changed. It might bring back customers who know you, but what about those who don't know you and are wine interested?

To me, the most important question you can answer this year solves for the post-pandemic changed consumer. What tactics are you going to employ to attract the consumer who is now working from home, has more time without a commute, who wants to have more meals at home, in many cases has moved to suburbs, has a new appreciation for online shopping, and as restrictions wane has many entertainment options? 

Of course some consumer behaviors will partially revert, but you would be in the minority if you believe consumers will completely return to their old ways. If that's true, why would you think you will be successful returning to your old methods of selling and marketing? 

Your tasting room is just one option for improved sales in 2021 but defining new strategies is crucial for success this year and in the next decade. Sure, you could put balloons on your mailbox and hope, but as I often say, hope is not a strategy.

      The 2021 Direct to Consumer Survey is Open!

We need to start our process of 2021 change by understanding what happened in wineries across the country last year. How did we change? What worked and didn't. 

We already know that about a third of wineries had a better 2020 compared to 2019, while two-thirds did not. We know that some wineries had tremendous success with online, phone, club, and Zoom sales, but we all need more data and an understanding of magnitude, winery location, and case size to help guide our own strategy. Where will you get that information? There is one place and it costs you nothing but a little of your time.

This time of year, I get my hands dirty by surveying U.S. wineries and digging into the direct-to-consumer segment to produce benchmarks so the industry can make informed decisions. The 2021 DtC survey is now open and will close March 19th. I hope you will join the other 800 - 1,200 U.S. wineries and avail yourself of this opportunity.

In May, all respondents who complete the survey will receive high-level analysis, benchmarks and the complete sanitized respondent data, anonymized of all personal and business identifying information. Nobody else gets this data. It can't be purchased. At the end of May, we will broadcast a two-part videocast to the industry and go over the new findings with other industry experts. 

All this effort is done on a gratis basis to help the industry make decisions, but it's a partnership with you: If we don't get survey responses, we can't produce this industry resource. So please make this a personal goal this month. The choice you make to participate or not will have an impact both on your operation and the industry as a whole.

This year the survey has between 24 to 34 questions, depending on your business model. It should take you between fifteen to twenty minutes to complete and even less if you are a little prepared. If you would like to see the questions in advance, you can download and print them here.

Are you ready participate in the survey this year?

Please promote this post in your favorite social media platform, or even better - please forward [this link] to your winery colleagues and ask them to participate. It does take everyone's effort to make this outreach a success.

If you would like your AVA to participate, we will also send the AVAs free Regional Benchmarks for their own use, presuming we have a statistically significant sample size and an address to send the information.

Predicting Higher Demand for Wine in 2021.

    The Case to be Made for a Party 

At the end of Prohibition in the U.S. the consumption of wine as measured, slowly grew until war was declared in 1941 and rationing took over everyday lives. Whiskey distilleries were repurposed to produce grain alcohol for torpedo fuel, which interestingly created unintended consequences of new cocktails for sailors and higher rum consumption in the U.S. Fifteen percent of total beer production was allocated to servicemen and while wine wasn't rationed, prices of alcohol increased during the war making it difficult to afford a bottle of anything, so wine consumption fell. 

Imagine the exuberance at the end of 1945 when WWII came to an end, completing a fifteen-year period that spanned the 1929 Market Crash exacerbated by the Dust Bowl, leading to the Great Depression, food lines, increased poverty and homelessness, and high levels of unemployment. 

On August 15th, 1945 with Japan's surrender and acceptance of the terms of the Potsdam Declaration, there was hope those unhappy times would soon be behind the country. The sacrifice of the Greatest Generation had paid off and the men and women in the military would soon be coming home! Life would eventually return to an altered normal - but a much better one full of peace and hopefulness.

As the soldiers were brought home starting in 1945 with those in the European Theatre under Operation Magic Carpet, a rolling party broke out on the homefront. It is estimated that 1946 consumption of alcohol reached pre-prohibition levels of 2 liters per capita. Wine became a beverage of interest for many of the returning service members who had experienced European wine.

SVB Annual State of the Industry Report and Videocast is Wednesday. Sign up!

 

    We're All Glad that Year is Over

2020 will go down as the year in which we answered the heretofore rhetorical question - What else can go wrong? That is the opening line from the 2021 SVB State of the Industry Report that will come out Wednesday the 13th. 

Throughout 2020 many of us experienced the same run of emotions from disbelief, fear, acceptance, determination, and occasionally even a bit of joy through one of the most difficult times in history. As we went through the year, we would think to ourselves - this has to be the worst of it. It has to get better from here? 

We all fought through a series of events, increasing our vocabulary along the way: Coronavirus, COVID, S.I.P. Orders, social distancing, Zoom meetings, herd immunity, PPE, and pandemic - which I thought only happened in bad science fiction movies before last March.

    Will 2021 Be Better than 2020?

I can say with absolute confidence that 2021 will be better than 2020, but I can also say that “normal,” when we get there, will be different from what we left. But we have lives to live and businesses to run so let's get to it! 

Despite the headwinds and distractions, there are opportunities we need to consider and take advantage of and consumers who will be looking to buy your wine. 

We need information and the right tools to be able to plan. While we have to talk about the past for context, this coming Wednesday, I hope to give everyone the benefit of a look forward.

Start with the headline slide for a teaser. Despite the gloomy events of the past year, luxury wine sales held their own, particularly when you consider this performance in context with the last recession. The last recession featured trading down. This recession has given a breath of life to trading up again! Aren't you curious why?

The Annual SVB State of the Industry Report is Arriving January 13th. Sign up for the Webinar and Report!

 

This is the opening photo from the 20th Annual SVB State of the Industry Report where we begin with a reflection; not on our industry, but on how we each as individuals adapted and prevailed during the most unique business conditions in our lifetimes. 

It's important to celebrate this victory but now that vaccines are being given and we can see an end in sight, what's next? Will business conditions return to normal? 

If we answer that question truthfully, the answer is no. That means doing nothing and hoping for a good year will produce poor outcomes. Change is needed and will require all wine businesses to apply the learnings from 2020 and evolve to find the unique prescription for your individual winey's success.

Early Results / Last Chance: SVB Survey Closes Sunday Night

This year will be remembered as the year when we actually discovered the answer to the question: "What else can go wrong?" 

I can safely speak for humanity and say that nobody wants to repeat this year. There is so much we had no control over, and what we experienced wasn't always the result of our action or inaction. Still ... here we are; moving into 2021 with increasing and record numbers of  COVID cases in the US and more solutions needed for the pandemic and for our wine business. We clearly need to look for more solutions to our problems.

But I have no doubt we will survive and rebound as an industry - maybe even thrive if we make some adaptations that I will discuss again in the Annual State of the Industry Report. But all of that starts by understanding where we are. That is the beginning point. For me, understanding the business starts with the Annual Winery Conditions Survey. 

    Last Chance

The 2020 Wine Industry Survey will close Sunday night, and as of this moment we have almost 550 wineries responding versus our typical 800. For us to understand and get to the beginning point we need good tesponse rates. With weaker response rates, your 15 minutes investment in the survey has never been more critical. 

For you that have yet to respond, there is still time. We will leave the survey open until late Sunday night. Here is a link to the questions in PDF, QUESTIONS, and here is a link to the actual survey, SURVEY. 

If you are curious, here is what the regional participation looks like weighted by the number of wineries in the given region

(Click To Enlarge)

Special thanks to all the AVA's for participating and sending out encouragement to their constituents to participate. In particular, Washington, Oregon and Paso Robles each sent stand-alone emails from their Executive Directors in the past 36 hours and the numbers in those regions have come up. I've seen some movement from other areas particularly in San Luis Obispo, Napa, Sonoma, and Santa Barbara but don't always see what's happening in the background.

Thank you all for your efforts in this partnership without which, there can be no SVB State of the Industry Report - so thank you!!