Meeting the Challenges of the COVID-19 Impact On-Premise

July 9, 2020 § Leave a comment

July 9, 2020

Winemetrics is revising its focus to deal with the post COVID-19 on-premise market. Below are our findings based on current and past research as well as anecdotal observations based on 35 years of personal on-premise sales and marketing experience. (Also, Winemetrics is based in Fairfield County, CT, part of Metro NYC, which experienced the greatest impact of COVID-19. Having been first and most severely affected, this region is rebounding before many other parts of the country which have yet to see peak infections and deaths).

  1. The State of the COVID-19 Pandemic
    1. As of 6/30/2020, over 10 million people worldwide have been infected with COVID-19, 2.6 million in the US alone, resulting over 500,000 deaths globally of which 127,000 were residents of  our country.

https://www.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

  1. Social distancing will have to remain in effect for months to come to prevent a resurgence in new infections. In places that don’t follow the recommended protocols, there will be a second wave of infections. Based on the Spanish Flu epidemic of 1918, the second wave could produce more fatalities than the first.
  2. Given Trump’s decision to hold rallies in states where COVID-19 infections are increasing, a second wave is almost inevitable.

https://www.washingtonpost.com/nation/2020/06/10/coronavirus-update-us/

  1. Even without mass rallies, it appears that the increasingly lax behavior of people in all states will not necessarily create a 2nd wave but extend the first wave.

https://www.npr.org/sections/health-shots/2020/06/12/876224115/coronavirus-second-wave-nope-were-still-stuck-in-the-first-one?utm_source=pocket-newtab

https://www.pressdemocrat.com/news/11040335-181/age-of-coronavirus-cases-dropping

 

  1. On-Premise Trends Likely to Remain in Place post COVID-19
    1. Consumer confidence lowest since 2008 so the discretionary spending required to boost restaurant revenues is unlikely to transpire in the near future.
      https://news.gallup.com/poll/312596/economic-confidence-scarce-economy-reopens.aspx
    2. Even with many states moving into Phase 2 of re-opening, overall desire to patronize dine-in locations is historically low, over half of consumers arenot comfortable going to a restaurant.
      https://wineindustryinsight.com/?p=110340
    3. Even before the COVID-19 pandemic impacted the U.S. economy, in late 2019, numerous national and regional chains were planning restaurant closures due to stagnant revenues and competitive pressure.

https://www.investing.com/magazine/last-call-restaurant-chains-closing-locations-by-2020/

  1. Industry experts believe over ¾ of independent restaurants may not reopen without financing from the Federal government.
    https://www.fsrmagazine.com/finance/report-85-percent-independent-restaurants-could-close-without-direct-aid?utm_source=fs_insider&utm_medium=email&utm_campaign=20200611
  2. Alcohol sales for delivery will continue as a part of licensed restaurant services throughout most of the country.

Over 40 states permit take-out purchases of wine, a trend that will invariably continue into the foreseeable  future as it provides vital revenue for the restaurant industry which is currently reeling from bankruptcies and foreclosures.
https://www.foleyfoodandwinesociety.com/Magazine/News-and-Articles/New-Alcohol-To-Go-Rules-in-All-50-States?linkNum=3

 

Alcohol sales may well help the restaurant and alcoholic beverage industry survive the pandemic. According to the National Restaurant Association, 56 percent of  adult consumers ( over the age of 21) said they would be likely to order alcoholic beverages if they were offered as part of a food delivery order from a restaurant.

https://www.fsrmagazine.com/expert-takes/alcohol-sales-help-restaurants-stay-afloat-during-pandemic

 

On-Premise Transformation Post COVID-19

  • Nearly all aspects of on-site beverage service will change.
    https://www.forbes.com/sites/thomaspellechia/2020/06/09/post-pandemic-restaurants-will-have-to-change-their-ways/#215078d75a45
  • The mandate for disposable menus will effectively limit beverage list sizes. A one-sheet format of food menu items on one side and beverage items on the other will be widely adopted. Such a format is currently used in many successful chains including Hillstone/Houston’s.
  • The encyclopedic hard copy wine list (wine book) will be retired and replaced with a link or QR code on the food/wine menu. The iPad list may suffer a similar fate as neither can be easily sterilized for rapid reuse by diners.
  • Interaction between restaurant personnel will be reduced or restricted based on the diners’ wishes. Host/Hostesses, servers, wine stewards, bussers may no longer approach tables during the ‘dining event’. Instead diners may be directed to a table, order via smart phones and receive their food on a covered cart by a face-masked server/busser. Diners will access and distribute their orders from the cart which will be equipped with both heating and cooling elements to deliver products at their optimum temperatures.
  • Traditional wine by-the-glass (BTG) and tableside bottle service will most likely be curtailed. The prospect of a wine dispensed into a glass at the ‘bar’ and then transported by hand through the restaurant to a diner may entail unnecessary risk. Single serving (187 ml) and half bottles (375 ml) with Stelvin (screw cap) closures will become preferable to wine BTG. However, wine BTG may actually accelerate if restaurants offer self-serve BTG dispensing activated by a credit card (systems of this sort are already being used to sell beer on-premise).
  • The’ localvore’ movement will continue to accelerate. Diners, especially those in urban/suburban markets, will tend to support locally owned restaurants and beverage suppliers in the aftermath of COVID-19. This may impact sales at national chains and products of larger wine companies.
  • There will be enhanced ‘pursuit of value’ as many consumers will have experienced a decline of income and assets post COVID-19. Higher priced wines may suffer steep declines on-premise if not effectively marketed and/or venues reducing their markups.
  • Restaurants will have to be more effective in managing the online customer experience. Loyalty programs will be vital to a restaurants success. A thorough analysis of the challenges and benefits of this new paradigm is provided in the link below.
  • On-premise programming will not be as effective due to the loss of on-premise salespeople at the distributor level. Most distributors have reduced (in many cases severely) the number of on-premise sales reps on their payroll. It remains to be seen if and when these number return to pre-COVID-19 levels.
    https://www.fsrmagazine.com/consumer-trends/post-coronavirus-changed-restaurant-customer-new-expectations?utm_source=fs_insider&utm_medium=email&utm_campaign=20200617

 

  1. How Wine Suppliers Can Prepare for Post COVID-19 Conditions
    • Make recommendations based on more limited wine selections and lower prices
    • Offer analysis of pre-COVID-19 wine offerings and how they can be modified for the new demand profile.
    • Expand product lines to offer screw cap closures and smaller (375 ml, 187 ml) sizes.
    • Increase offerings of draft wines, including special cuvees that can be offered on a seasonal basis at discounted pricing. These can expand brand awareness without undermining price positioning of the brand.
    • On-premise programming will not be as effective due to the loss of on-premise salespeople at the distributor level. Most distributors have reduced (in many cases severely) the number of on-premise sales reps on their payroll. It remains to be seen if and when these numbers return to pre-COVID-19 levels.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

What’s this?

You are currently reading Meeting the Challenges of the COVID-19 Impact On-Premise at Wine Lists USA.

meta

%d bloggers like this: