2020 wildfires cost US wine sector $3.7bn
The wildfires that swept across California last year have hit the US wine sector hard with losses estimated to be in the region of $3.7bn, and the reperussions likely to be felt by wineries well into 2023.
This is according to Jon Moramarco of market researchers bw166, who based his estimate on direct fire damage, rejected grapes and lost sales that he expects won’t peak for another two years. He predicts that the coming year will be challenging, but a recovery is in sight and will gain momentum in the second half of the year.
“Hope is something to relish, but it’s not a strategy,” he said, speaking at the North Bay Business Journal’s online Wine Industry Conference earlier this week, adding that the Covid pandemic will probably have longer term repercussions than previous crises.
Key markets such as San Francisco, New York and Las Vegas will give an early indication as to how consumers return to travel and the on-premise sector, he said, with the total number of on-premise outlets in the US possibly declining by 25%. “It is real tough to say how they come back and where they come back,” he said.
Online commerce and direct to consumer shipments will continue, with e-commerce now accounting for around 10% of all US grocery shopping.
Wells Fargo senior economist Sarah House concurred with Maramarco’s views, and said she believed that while the next couple of months would be difficult for the industry, this could well be followed by a strong second half. And if Covid could be brought under control by the spring, that should help the bounce back being, with the economy approaching pre-pandemic levels by the end of the year.
“The virus is in control of the economy,” she said, adding that consumers certainly have the disposable income to fuel a recovery based on rocketing savings rates – it has been estimated that there are currently around $1.5 trillion in excess savings.