Normal vs. Reality

With the ongoing debate about when and if the Wine Industry will return to
normal and put this Pandemic behind us—I offer the following opinion, “Not in
my lifetime!”

My BLOG is focused on Wine Industry-related activities, but I believe what I am
about to offer applies to a potential future in general. Let me elaborate and use
Webster’s definition of two distinctly but what I think are related concepts to
wrestle with at this moment.

Start with the meaning of the word “Normal.” Webster defines normal in several
ways, but the following description best fits our situation. Normal: serving to
establish a standard.

Now I move to the word “Reality.” Webster defines it this way. Reality: real
things, facts, or events taken as a whole; state-of-affairs.

Many decisions affecting folks’ careers in the wine business were made in the
past year, hoping, and praying this would be a short-lived situation, and then all
would be normal: (there is that word again). I do not believe it is accurate to use
the term “new normal.” I am not sure we even know what the new standard is
going to be at this point. The wine industry would be best served if we
approached the future with a sober understanding of our Reality.

While the leaders in our country would be more honest if they asked us to
understand this, | am sure the leaders in the wine industry are still in the dark
about where this all ends up. | know that the restaurant and hospitality segment
of our business has taken a beating, and it will be a very long period before they
regain their footing. You can bet what they will offer and how we respond will
look a lot different from what it did before COVID. For instance, with so many
wine consumers buying more wine online during this time, are they going to go
back into a restaurant and order wine marked up 300%. Yes, they want the
atmosphere, dining experience, and interaction with their friends and family as
before but, pay high prices for wine? Unfortunately, this points up how slim the
margins are for the independent restaurateur and how difficult it is to succeed.
My intention is not to knock the restaurant community; in fact, some of the best
friends I have made in the wine business have been top chefs throughout the
country and I have deep respect for them. Also, my career prospered in the past
because of my focus on that segment of the business. All I am doing is raising
what is most likely the Reality.

However, let us turn our attention to the real issue that the producer faces in the
future. Simply stated–the broken Distribution system for alcoholic beverages in
the country. The large Liquor Distributors: (yea, I know they all have wine
divisions; they have MS on staff and all the trappings of looking to care about fine
wine) will dominate the Retail segment (large national grocers, regional grocery
chains, and club stores) that has kept the business going during the past 12
months. The E-commerce space has significantly expanded, as you all know when
you see your inbox flooded with offers from organizations you have never done
business with. Just like wholesale distribution consolidated, E-commerce will
ultimately be dominated by a limited number of platforms, making it that much
more difficult to be included unless you are large enough to pay to play or just
willing to swing big discount deals to meet their margin demands.

I do not profess to know all the answers to the questions I raise. I know that Folks
have been looking for the comfort of normal in any number of decisions or
actions they have taken during this Pandemic. My advice is, if you are a wine
producer or wine importer, do you know what your go forward plan is, or do you
even have a new plan to execute? If you are waiting for all to return to Normal,
Good Luck!

Fred Reno is an author and wine industry executive with over 40 years’ experience in building wine brands and
providing forward looking strategic advice to wine producers both in the U.S. and Internationally. You can reach him at fredr@finewineconfidential.com or view him at www.thomasjeffersonwine.com

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