COVID-19 isn’t giving Ontario wineries time to breathe

Restaurants are closed. Tourists are staying home. In the face of the pandemic, winemakers in the Niagara Region must adapt to survive
By Justin Chandler - Published on May 21, 2020
The province’s wine and grape industry generates more than $4 billion annually. (iStock/ihoe)

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On paper, Jakub Lipinski manages operations at Big Head Wines, a family-run winery in Niagara-on-the-Lake, in the heart of Ontario’s wine country. But, during the COVID-19 pandemic, he’s taken on a new role: delivery driver. In April alone, Lipinski drove 10,500 kilometres, dropping off libations to customers as Big Head adapts to doing business in a province under a state of emergency. “We've had to restructure our entire profit-loss scheme,” he explains. 

Lipinski’s situation is one example of the dramatic changes Ontario wineries have made to stay open during the COVID-19 pandemic. According to the Wine Marketers Association of Ontario, which represents 180 wineries accredited by the Vintners Quality Alliance (a provincial-standards body), the province’s wine and grape industry generates more than $4 billion annually; winery tourism alone generates $850 million per year. But, with physical-distancing measures keeping people at home — and preventing tours and tastings at wineries — and slowing business at restaurants carrying Ontario wine, vintners have fewer sales options. As a result, Big Head and others have had to quickly rethink how they market and sell wine. And now, more than two months since the pandemic was declared, some say the way they do business may have to change permanently. 

As is the case with many other wineries, onsite tourism and sales were integral to Big Head, making up 80 per cent of its pre-pandemic business. However, with its tasting room closed and sales to restaurants down about 70 per cent, the winery quickly expanded the online store it launched this past September. Building up the online-delivery side of the business “quite literally overnight” was not easy, Lipinski says, but Big Head implemented next-day delivery within the Golden Horseshoe on March 17. To meet demand, he, his parents (his dad is the winemaker), and his sister took to the roads. “Good thing I have an electric vehicle. Makes you feel a little bit better about driving so much,” says Lipinski, who catches up on his managerial duties while his car charges. The pivot led to difficult decisions: Big Head laid off 10 of its 19-person staff. “It was the worst, most difficult thing we've had to do since we started the business in 2013,” he says. “We're trying to adapt to the current situation and eventually the new normal.”

In the Niagara community of Jordan, winery Pearl Morissette has benefitted from a decision it made two years ago to stop hosting onsite tastings and focus on other parts of the business. “We haven't relied on traffic on the actual property,” says Milton Mednick, the winery’s general manager. “And we've been really focused on the online shop and driving direct sales with deliveries to people's homes through our email newsletter.” He says, though, that Pearl Morissette, which does not sell to the LCBO, relied on licensees (bars and restaurants) for about 40 per cent of its sales pre-pandemic. Another 15 per cent of the business depended on export markets for sales abroad, and about a quarter went to online sales.

Outside of direct-to-consumer sales, Ontario’s wineries and breweries have been able to sell their products more widely thanks to Alcohol and Gaming Commission of Ontario changes that allow restaurants and bars to sell alcohol alongside food takeout and delivery orders until the end of the year.

The March changes also allowed grocery stores to extend the hours in which they sell booze. Mednick says that, following the changes, Pearl Morissette saw a spike in licensee sales, which he also attributes to adjustments in how the winery prices its offerings for retailers. A further change at the start of May has allowed licensed restaurants and bars to sell alcohol at lower prices.

Pearl Morissette, like Big Head, has shifted its focus to direct-to-consumer sales. It delivers wines, marks down certain products, and sells the produce from its greenhouse that would previously have supplied its onsite restaurant. However, the changes have brought challenges. Personal orders can be more complicated to fulfil than restaurant orders, Mednick says, as people can mix and match bottles, while restaurants typically buy cases of just one kind. The winery’s shift has also meant a renewed focus on social media: it hosts regular virtual wine tastings in which participants join a call, drink wine, and have discussions. “There's no doubt that people are looking for some joy in their lives and something to do,” Mednick says. “And so it's really about targeting that and trying to do your best to accommodate what people are after right now.”

Erin Mitchell, vice-president of marketing at winery Megalomaniac in Vineland, says that, while the pandemic has brought difficulties, it has also given her winery a new opportunity to connect with its community. With some help from its business partners and a neighbouring winery, which assisted with packaging, Megalomaniac launched new red and white wines called Much Obliged in honour of front-line health-care workers. “The day we closed our tasting-room door was a bit of a sad day for everybody at Megalomaniac,” she says. “And now we really feel that we've been able to turn this time into something really positive.” So far, her winery has donated 720 bottles to 30 Ontario hospitals and long-term-care homes. Megalomaniac is also selling bottles online; a portion of sales go to Food Banks Canada. Mitchell says that $10,000 has been raised since late April.

Wine delivery is something several winemakers say might remain in place once the pandemic ends. “No one knows what the new world will look like,” Mednick says. “But there's no doubt people are certainly getting comfortable with the value of convenience and the value of staying in their homes.” Mitchell says she doesn’t think consumers were fully aware of online wine sales pre-pandemic. “A lot of people, I think, had an idea that maybe online wine ordering wasn't available. And I think the whole pandemic has opened up that option and opportunity for people to order goods online that normally they wouldn't have delivered to their home,” she says. “Hopefully, now that they've tried it, it's something that they'll continue to do when the pandemic is over.”

Lipinski agrees that delivery will likely play more of a role post-physical distancing: “We don't plan on changing completely back from where we are right now.”

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