The year 2020 will be memorable for many reasons: social and political unrest, a global health crisis, multiple large fires, and an almost complete shutdown of travel and in-person socializing. These factors have had direct consequences for wine production and wine sales in the United States, exacerbated by tariffs on wine imports from France, Spain, and Germany and signs of continuing climate change, including warmer temperatures, violent storms, and flooding rainfall. 

Wine production and sales are a sizable economic factor in many countries — from western Europe to Australia, South Africa, and beyond — and this year, have struggled.

“The tariffs on European wines were expected to cost some $10 billion in lost revenue and 78,000 job losses, hitting the nation’s 47,000 wine retailers and more than 6,500 importers and distributors disproportionately hard,” Ben Aneff of Tribeca Wine Merchants in New York City told Reuters in January. While everyone in the distribution chain is absorbing some of the increased costs of the tariffs as well as the slowing of distribution at ports due to the pandemic, prices have increased and availability of certain products, like Champagne, has dropped.

Weather has been challenging in almost every global wine region. “It’s been a strange year for growing grapes,” says Emily Pelton of Veritas Vineyards in Charlottesville, Va. “We’ve had everything from frost to drought to cold to high heat.” In Bordeaux, the spring heralded violent storms, hail, and high temperatures. In Germany, it is warmer, leading to more consistent ripeness with Riesling, and a dearth of ice wine, which relies on heavy frost. In the western U.S., the warm winter was followed by record-setting heat waves most of the summer, with growing difficulties compounded by wildfires in northern California, Oregon, and Washington. 

“There is some evidence that the western U.S. is in the beginning stages of an extended mega-drought that could bring 20 years or so of extremely dry weather,” says Gregory V. Jones, director of the Evenstad Center for Wine Education at Linfield University in McMinnville, Oregon. The upside of the weather changes is that the warmer climates could allow growers to plant warm climate grapes in regions like Oregon, New Zealand, and Chile. Tearing out vines to replace grape types is a very expensive endeavor, however, and would result in an at least temporary loss of income to the grower.

The wildfires in Napa, Sonoma, and southern Oregon have left many American vintners unsure of their harvest. In Sonoma, a few wineries are trying a process called reverse osmosis to minimize any smoke taint. If successful, northern Napa, which bore the brunt of the fires, will attempt this process to stabilize wines. Some enterprising winemakers are using the grapes to make grappa.

The Covid-19 global pandemic, too, has left a mark on wine distribution, sales, and available labor for growing grapes and making wine. On the labor front, the good news is that among workers in Sonoma County, of which 20 percent are women, more moved into full time positions thanks to a labor shortage spurred largely by a lack of immigrant workers. The average hourly wage has also increased. Mechanical harvesting, however, is also increasing — though this method is hard on the vines, making them require more frequent replanting.

As for distribution of wines from the West Coast to North Carolina, the common model is that a distributor, such as Greensboro-based Country Vintner, will purchase a set number of cases from a variety of premium producers and consolidate their purchases at a California or Oregon warehouse in preparation for full tractor trailers to be sent to their local warehouses. Many of these wines are highly allocated, so only a few cases may be in the shipment. The fires hindered the small trucks from picking up at the wineries; the pandemic created a serious labor shortage of drivers and warehouse workers due to closed businesses. As a result, the product distribution was delayed by months, leading to financial disruption throughout the supply chain. There was also a trucker labor strike in California, which Lewis Edwards of Country Vintner says hindered their supply even more. 

Perhaps the most visible slowdown is in restaurant sales. Highly allocated wines are often slated for sale to restaurants. Fine dining establishments in North Carolina were closed or selling takeout food, nearly eliminating the demand for wine inventory. Wine sales are beginning to increase, slowly, in restaurants. The Fig Tree, for example, purchased a retail license, allowing the restaurant to sell retail wines. This trend may increase over time as an opportunity for distributors and restaurant owners to increase sales and profits. 

While restaurant sales are down, wine sales in the first nine months of 2020 were stable or increased. According to wine app Vivino, online wine sales in March 2020 were higher than Christmas 2019, and online wine sales were up as high as 140 percent in the first six months of 2020.  Popular comfort brands were the primary beneficiaries of the online sales, such as Kendall-Jackson and Kim Crawford. As consumers returned to on-premise purchases on restaurant patios, thought, data shows customers ordered more cocktails and spirits than wines by the glass. 

To try and draw in customers, retailers in Charlotte have gotten creative. Robert Balsley of Arthur’s Wine Shop in SouthPark offered six-packs of wine that showcased a region or grape for a set price that could be delivered or picked up. Foxcroft Wine Co., which has locations in Dilworth, SouthPark, and Waverly, has taken the opportunity to partner with some West Coast wine producers to private label premium wines exclusive to Foxcroft stores. These wines will help to provide a high quality product to the consumer with a stable profit margin for the business. General manager Shawn Paul sees a large surplus of wine in California and expects more consolidation in the industry. “Some iconic winemakers in California will select untainted [from smoke] grapes to produce a second label wine and sell it in smaller quantities,” he says. 

Another business trend that is impacting wine sales is age demographics. Baby Boomers are still the largest wine consuming generation, and they have the income and spending motivation to purchase premium wines. Millennials and Gen-X are more frugal, prefer imported wines, and are more likely to drink craft beer or spirits. Gen-Z is drinking less overall and is leading the charge on natural wines and lower alcohol wines from cooler growing regions.

“The upside of the demand for lower alcohol wines is the expansion of available product from England, Canada, New York State, and southern Chile, where the climate is cooler and the growing season shorter, yielding wines in the 10.5 – 12 percent alcohol range,” Country Vintner’s Edwards says. He has also observed that retail sales of premium wine increased the past six months, possibly because people were spending less overall and treating themselves to better quality wine. 

Rob McMillan, founder of the Silicon Valley Bank Wine Division, generates a yearly publication called State of The Wine Industry Report, which has been published each January for more than 25 years. In his most recent report, he also noted consumer shifts in alcoholic beverage preferences based on generational factors. “We are in the midst of a consumer reset,” he says, “which requires every winery to reimagine how they sell and market wine.”

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