Small- to mid-sized wineries used to have a fighting chance of getting shelf space in wine shops across the nation, alongside larger players in the industry. It was not unusual to find a Willamette Valley Pinot Noir bottle in 2,000 cases at a New Jersey wine shop. But thanks to a rise in American wineries (between 2009 to 2021, the number has increased by almost 75% from just over 6,300 wineries to over 11,000) and a declining number of distributors (as of 2021, there were only 900 in the U.S. Additionally, wine is being purchased in stores by fewer customers.
The model for small wineries’ success has been changing for at least a decade. These changes have been accelerated by the ongoing pandemic and how it has changed how the world creates, travels and purchases. It set a disturbing pattern that made it a permanent economic reality.
A WineAmerica survey was released in June 2021. This was before the Delta variant surge caused a halt to business again. The median visitor loss was 93.3%. The average (mean loss) was 64.8%. Wholesale sales fell by 9%. Nearly 52% of wineries that were surveyed stopped production.
There were also some signs of hope. On average, direct-to-consumer sales rose 66%. This increase was a big deal: U.S. wineries delivered more than $3.7B worth of wine to consumers last fiscal year, according to a DTC Shipping Report by Sovos ShipCompliant and Wines and Vines.
One bright spot is the discovery of new ways to initiate sales. This is just one-way family wineries can survive and grow in an ever-changing marketplace. These are some ways wineries are finding new ways to stay ahead of the curve and grow.
Investing in Infrastructure
According to Justin McManis (a fifth-generation farmer, winemaker, and operations chief at McManis Family Vineyards Ripon, California), the old business maxim that “you have to spend money in order to make money” rings true with infrastructure.
Justin’s parents, Jamie and Ron, founded the vineyard in 1990. They wanted to bottle some sustainably grown (Lodi Rules-certified grapes) grapes they had cultivated for other producers at a “reasonable cost.” McManis has grown from producing just a few thousand cases per year to making more than 450,000 annually by investing in the infrastructure for high-quality winemaking.
In 1998, Ron and Jamie designed and built a state-of-the-art winery to “control the quality from grape to bottle,” says Justin. The biggest investment was made in 2015 when an in-house bottling plant was introduced.
Justin says that quality control is an important part of winemaking. Having our line in-house allowed us not only to control our inventory better but also allowed us to monitor the quality of every step from the point it reaches the customer. He says that even though the investment was substantial, it was worth a few years back. Our family has succeeded by investing in technology and ensuring that we have the best equipment. The line significantly reduced McManis’ greenhouse gas emissions. We don’t transport our wine often, which aligns with our values.
Page Knudsen Cowles, Knudsen Vineyards is proud to say that the company has grown over 50 years of operation by first focusing on quality production and then on people meeting them where they are. Knudsen has focused the infrastructure investment on the vineyard’s hospitality area. Cal and Julie Knudsen in 1971 founded it. There were only 30 acres of vines.
“We have been a long-term partner with Argyle and other wineries for many decades. Knudsen Cowles is a second-generation steward for her family’s vineyards and winery, as well as her siblings Cal, Colin and David. “Currently, we produce 2,000 cases per year. But we hope to grow to 5,000.” We are very invested in the community and see our relationship with the community growing through our hospitality space.