Sunday, October 10, 2021

2021 will be the BEST YEAR EVER for a lot of Wineries!

 

SVB Wine Conditions Survey

Problems are Opportunities Waiting for Solutions


This is the last week to participate in the Annual SVB Winery Conditions Survey. It will close Friday, October 15th.

There is no information like this available anywhere in the wine business. We take on this initiative annually at a substantial cost, but we give it all away to the industry. This data is used by Associations to apply for grants, by academia for research and in V&E classrooms, as a benchmarking tool for all wineries, and as part of the research we do to prepare the Annual SVB Wine Report. That said, it's impossible for me to provide the information without you dedicating the 15 minutes needed to complete the survey. 

There are always interesting surprises along the way, and this year is no exception. 

As I prepare to begin the writing on the SVB State of the Wine Industry Report, I am aware of many headwinds such as supply-chain problems, fires, smoke, the unprecedented drought, low soil moisture that will be a larger part of 2022, short supply of labor, rising input costs, water rationing, issues with property insurance, dealing with mandated vaccination policies, travel restrictions, and what will likely be declining overall volume sales for the total wine category this year. 

Many doors may be closed right now, but there is always opportunity if you know which door to open. The wind is at our backs from several directions such as a very strong recovery economy, the reopening of tasting rooms and restaurants, a buoyant M&A environment, the easing of COVID restrictions, improving travel and tourism, better National employment statistics, 2021 GDP growth in the 6%+ range, and a stock market that has more than 50 record closes so far this year. 

Consumers have wanted to travel this year and they have money to spend. And with international travel largely closed, stay-cations and domestic tourism have seen a positive bounce, benefitting wine country.

How are wineries faring with this combination of unique challenges and opportunities? Much better than you might think! More than half of the industry reports that this will be one of their better years or even their best year in history (headline slide from the current survey). That said, I know there are some regions and business models doing very well, while at the same time some that are lagging a recovery.

Where are the Opportunities?


That's an important question, right along with a forecast of the depth of any potholes ahead. To get at that information, we need to tear apart the top-level survey, then dig down and sort the data by production size, location, length of time in business, and many other variables to help us with that roadmap. We try and present that in the SVB Annual State of the Industry Report.

This survey is a partnership between the industry and Silicon Valley Bank. We spend hundreds of thousands of dollars producing the survey, charts, and information for respondents -  then the annual report. We give it all away for free but we can't do that without your help. 

We need enough responses to have a 95% confidence rating in the top-level results, but with one week to go, we don't have enough responses to do that.


The Survey:


If you own or operate a winery, I ask you to please contribute your information to the data set so our industry can get better information and guidance. 

We can't produce free information like this without you doing your part!

Please note that for the first time, we will only be sending charts and the complete data set to those who fully participate in the survey. We will no longer release charts from the survey that are discussed in the videocast to the general public.  

If you want the information that is derived from the survey, you will need to spend 15 minutes answering the survey.

The survey will be open from September 27 through October 15. It takes about 15 minutes for most to complete, but to prepare, we’ve included [this PDF] as a guide. 


Thank you for supporting this annual initiative that will help us all get a clearer picture of our current state and what lies in front of us.

Participation Metrics

In past surveys, we've been able to exceed 1,000 wineries participating which is roughly 10% of the US Wine Industry. As of this moment on Sunday, October 10th, we are only at 392 responses. Based on the number of wineries in a region from the American Winery Guide, only the Lodi AVA has exceeded 10% participation. 

We could really use your region's help for this final week, and your individual help not only in participating but in promoting the survey to your colleagues in the wine industry.

Again - shooting for 10% participation, here is the chart of current participation rates:


Thursday, October 7, 2021

Where Does Your AVA Stand Among its Peers?

 


How are we doing on the SVB Annual Winery Survey?

I get the question all the time at survey time. Let me update you.

With two weeks down and essentially one week left until the 2021 SVB Wine Conditions survey closes, we have 300 respondents. 

We need a minimum of 450 responses to provide statistically meaningful data but are hoping we have a more normal response above 600 wineries respond. That would require doubling where we sit today.

Each region with 20 responses or more will get its own regional benchmarks. There are only 5 that hit that mark now. Several AVAs who have been significant participants in the past include Lodi, Paso, Foothills, Texas, and New York, but all AVAs have a ways to go to get to historical participation rates, so please make this short exercise a priority!!


The Survey:

If you own or operate a winery, I ask you to please contribute your information to the data set so our industry can get better information and guidance. 

We can't produce free information like this without you doing your part!

Please note that for the first time, we will only be sending charts and the complete data set to those who fully participate in the survey. We will no longer release charts from the survey that are discussed in the videocast to the general public.  If you want the information that is derived from the survey, you will need to spend 15 minutes answering the survey.

The survey will be open until October 15. It takes about 15 minutes for most to complete, but to prepare, we’ve included [this PDF] listing of the questions. 


Thank you for participating in the survey, and for helping the wine industry get a clearer picture of our current state and what lies in front of us.

Monday, October 4, 2021

SVB Survey Early Results: Water Worries

 


Water Concern


The Annual SVB Winery Conditions Survey has been open for one week and will close on October 15th. We currently have about 200 of the 1,000 responses we will need for thorough analysis. You can get us closer to 1,000 responses by participating this year.


Even with low initial participation, there is some preliminary information coming into focus. 

Water is clearly a worry with 42% of responders expressing concern they may have a serious problem in 2022, while 51% are on edge but believe they should be fine (headline slide). That leaves only about 7% feeling confident about water supply going into next year which tells us for these responders - water is a real concern.

It will be interesting to test this in the spring when rain totals come into focus because from all I've read, we will need a flood year with heavy snowpack to see improving reservoir levels and soil moisture content in the western states. And what are the chances of having an abnormally wet year? The answer is in the word 'abnormal.'

So if the chances are high that 2022 will be a serious year for water concerns, what are people planning on doing about the problem?

Hope is not a strategy



At this stage in the survey, there are broad solutions to the problem expressed with employing new technology (16%) leading the list of options (nearby chart). Interestingly, a similar percentage of respondents (15%) plan on doing nothing. Hope is good, but as I say often, 'hope is not a strategy.' 

That said, about 85% are planning on making some changes to address water concerns.

In a related finding, no matter what the mitigation strategy is, what is clear from the answers thus far is there is an expectation among many that we will have lower yields -  managed or natural, should we continue with drought in the western states. 

Of course, the regional impact of those results could also play into grape purchase plans and supply levels, depending on the location of those responding. Virginia is not Oregon, and Oregon isn't Sonoma when it comes to water. 

We will go deeper into that question both in the survey and in the annual report based on region - if we get sufficient responses to drill down below top-level findings. We will need to have significantly higher responses from all major regions if we are to produce these results.


The Survey:

If you own or operate a winery, I ask you to please contribute your information to the data set so our industry can get better information and guidance. 

We can't produce free information like this without you doing your part!

Please note that for the first time, we will only be sending charts and the complete data set to those who fully participate in the survey. We will no longer release charts from the survey that are discussed in the videocast to the general public.  If you want the information that is derived from the survey, you will need to spend 15 minutes answering the survey.

The survey will be open from September 27 through October 15. It takes about 15 minutes for most to complete, but to prepare, we’ve included [this PDF] as a guide. 


Thank you for participating in the survey, and for helping the wine industry get a clearer picture of our current state and what lies in front of us.

Saturday, September 25, 2021

The 2021 State of the Industry Survey is Open

 


When the clock hit 12:01 on December 31st, 2020, we were all saying the same thing: GOOD RIDDANCE TO 2020!

Highly effective vaccines were on the way, and we were ready to move on from this pandemic, move on from the smoke, the fires, closed tasting rooms, closed restaurants, masking, social distancing, restricted travel, sheltering... we were just done with all of it and wanted to put 2020 behind us!

There has never been a year like 2020. We outlined that retrospective near the back of the 2021 State of the Industry Report released in January of this year. It's worth a read if you want to remember the unfolding timeline of events.

In that report, while acknowledging I was out of my pay grade, I made an educated guess that we might see the vaccines take hold, and find herd immunity right about now and move on from the pandemic. Well, that's not the way things turned out. I should stick to my day job.

Monday, July 5, 2021

Wine Demand is Turning Negative, Defying Good News


Photo by Mohau Mannathoko

I don't like it but...

it's true. I might have missed on a prediction that I made. 

Starting in January of this year, I began predicting that overall wine demand would grow through and into at least 2022. As the days passed, the better-than-expected situation with COVID vaccinations became clearer, so I held firm to my forecast and underscored it further in a March blog post. There were so many positives to support my faith in our industry's 2021 opportunity, how could I not be optimistic? 

The Wind's At Our Back

We are sitting with the highest GDP in decades. Fiscal and monetary stimulus from the government is being delivered in trainloads. Restaurant and tasting room sales are being added back to the calculus. Internet sales are at records. Frustrated and cooped-up consumers with exploding personal savings are desperate to spend it on experiences like travel and tourism. The jobs numbers are increasingly positive. And, the stock market is at record highs producing even more discretionary income. 

Sunday, June 6, 2021

The 2021 DTC Videocast Brings Clarity to a Changed Consumer


The Report

Fifteen hundred people signed up to watch the 2021 Silicon Valley Bank Annual Direct to Consumer Videocast held on May 25th, where we released the newly formatted and constructed benchmarks and metrics from the March 2021 DTC survey. 

I'd say the broadcast went well, outside of my worst nightmare coming true when my internet died in the opening and I had to switch wireless connections. No matter. I survived one more Zoom surprise. 

Wednesday, May 19, 2021

The Annual SVB Direct to Consumer Webcast is Tuesday May 25th

 


    How do you sell wine in a Pandemic?

That was the question asked in middle-March 2020 as the industry, country, and world awoke to discover that we were living in circumstances that seemed more like a second-rate Hollywood movie. 

Now, more than a year into the COVID Pandemic, we have answered many of those early questions, and we’ve discovered a few things about ourselves along the way, about our ability to adapt, create, and even thrive in some cases during a period I would describe as the most difficult business conditions since Prohibition.