In Sonoma Valley, home to 60,000 acres of grapes and 400 wineries, the pandemic has disrupted an 150-year-old supply chain.
Grape growers that once focused on selling to high-end wineries are lowering their prices and supplying cheaper brands. Wineries that can no longer count on tourist visits are replacing in-person events with online campaigns. Restaurants that boasted of expansive wine lists now tout their to-go cups.
The industry is “doing whatever [it] can over the last five months to really look at and examine their business model to figure out how they can sustain themselves,” said Maureen Cottingham, executive director of the Sonoma Valley Vintners and Growers Alliance. “Of course, there are some businesses that will not be able to sustain themselves, and unfortunately that will close.”
It’s the biggest challenge to Sonoma Valley since three wildfires in 2017 destroyed thousands of acres in the region, and comes as devastating fires are once again raging across California. To recover this time, the industry says it must adopt the types of changes it has long resisted. Here are the stories of four companies along a single supply chain in Sonoma Valley.
Even before the pandemic started, Ned Hill, the owner of La Prenda Vineyards Management, was worried. The demand for the grapes he grows on more than 1,000 acres in Northern California terrain has been sluggish for years. He was tightening the company’s financial belt when the pandemic hit and upended his plans.
“We knew immediately that the supply chain was broken,” Hill said.
Hill decided it was time to change his business model. For years, he had sold largely to established high-end wineries even as the industry moved increasingly toward offering cheaper wine options. But now Hill sees no choice. It’s not feasible, he says, to sell only to high-end brands.
La Prenda Vineyards also jumped into a new business: Instead of just providing grapes in bulk, Hill also offered them crushed, making it easier for wineries to process them. That addition could be his “saving grace,” Hill says.
Before the pandemic, Ron Goss was planning a major expansion for his winemaking business, Sonoma Valley Custom Wine. He had just purchased new equipment and a new warehouse, doubling the footprint . The company already made wine for 30 to 35 wineries but hoped to reach a bigger audience, he said.
“Expanding during a pandemic isn’t always probably the smartest thing to do,” Goss said.
Like many in the industry, Goss panicked as the coronavirus spread and the economy began to shut down. But customers didn’t dry up as expected. Instead, cheaper wine brands were growing, he said. Online wine sales are up 4.7 percent so far this year, according to research firm Nielsen, with “value brands,” priced between $11 to $24.99 a bottle, seeing the biggest increase.
The pandemic is forcing industry changes that were resisted after other disasters, including when wildfires caused billions in damages in recent years, he says.
For years, Lloyd Davis, owner of Corner 103, has relied on Sonoma Valley tourist foot traffic to support his wine tasting room. The pandemic, he says, forced him online.
He launched a new website and began selling directly to members of his wine club. He has held dozens of virtual wine tastings.
That campaign “saved” him, Davis said. Revenue in his tasting room has fallen 49 percent compared with last year, but his online revenue has grown 200 percent.
Davis, a former banker, was introduced to Sonoma Valley through a bad investment. He had tried to turn around a struggling winery but failed. But during repeated trips to the region, Davis says he fell in love with the region and opened Corner 103, one of the few Black-owned wineries in the region, in 2015.
“My goal in opening up Corner was to help my guests understand that they are a wine expert,” he says.
The company received a boost as social unrest spread throughout the country in late May, sparking campaigns encouraging people to buy from Black-owned companies. Customers posted “virtual hugs” on his new website and a few said they specifically came to the tasting room in a show of support, he said.
Less than 1 percent of U.S. wineries are Black-owned or have Black winemakers, according to the Association of African American Vintners.
Starting even a small winery from scratch can cost $5 million to $12 million, Davis says, and is nearly impossible, particularly for minorities.
Sondra Bernstein, owner of the girl & the fig, has seen her businesses collapse before. There was the bed-and-breakfast that didn’t go as planned. The deli that was destroyed by a drunk driver. An Italian restaurant closed after the property owner sold the land.But keeping her restaurant open during a pandemic may be her biggest business challenge.
The restaurant’s extensive wine list, including a $455 2016 Sine Qua Non Ratsel, has long been a central part of its attraction. Customers spent $30,000 on wine in the week before the girl & the fig was initially forced to close in March, and Bernstein says she had purchased more than $100,000 in wine a few weeks before then to bolster her inventory.
The restaurant reopened in April, but only for online orders. In May, Bernstein briefly operated a food truck but says she has since sold it. The restaurant began offering outdoor service in June and is now selling some of its house wine online for the first time — at a 20 percent discount.That has helped keep the restaurant afloat, but, Bernstein says, a harsh reality is coming. The tourist season typically ends next month and she has nearly exhausted a $1 million Paycheck Protection Program loan that she used to rehire most of her 100 full-time employees. Soon, the girl & the fig could be forced to lay off employees again, she said.
Sonoma Valley’s wine community says it is hopeful that tourists will return next year and revive demand for the high-end brands it is best known for. But, in the meantime, the industry is scrambling to survive with the help of lower-cost wine and online sales.