When you mention wine production in the United States, places like California’s Napa Valley and Sonoma County are likely some of the first places that come to mind. Wineries and vineyards are big business in California and the industry’s economic impact extends far beyond the state border. California produces more wine than any other state in the country and the Los Angeles Times reports that grape growing, wine production, and tourism at California vineyards generate $57.6 billion for the state and $114.1 billion to the U.S. economy as a whole. The industry also creates 325,000 jobs within the state and 768,000 jobs throughout the country.
California is also home to many excellent craft breweries. According to the San Francisco Chronicle, there are approximately 1,040 craft breweries in the state, generating $3.3 billion of sales in 2018. Unfortunately, all these excellent breweries and wineries are facing substantial losses because of mandated shutdowns during the coronavirus pandemic.
Coronavirus Impacts on Breweries & Wineries
Even though many wineries were able to generate some revenue from online sales and wine club subscriptions during California’s mandated shutdowns, the closure of tasting rooms and the cancellation of tours meant a significant loss for many businesses in the wine industry. A survey by the National Association of American Wineries found that the average winery cancelled four special events and saw a 75% decrease in March 2020 because of COVID-19. That survey also found that wineries spent an average of $776 for things like extra cleaning services and hand sanitizers that were not part of their usual business expenses.
Despite some early reports showing an overall increase in alcohol sales nationwide during mandated shutdowns — and with retail beer sales seeing a strong year-over-year increase in March 2020 — craft breweries faced some unique challenges. For many craft breweries, retail sales at locations like grocery stores and liquor stores, which were allowed to remain open, only account for a small percentage of their overall sales and an increase in those sales don’t necessarily offset lost sales through other means. Very often, the bulk of their sales come from people visiting their taprooms and from sales to bars and restaurants, both of which were significantly impacted by the shutdowns. And while many wineries had the option for online sales, restrictions on packaging for beer sold online meant it wasn’t a practical solution for many breweries.
Even once taprooms and tasting rooms are allowed to reopen, it could be a while before they’re able to operate at their pre-pandemic levels. They will likely need to operate at a limited capacity and since many breweries are located in places that bring in business from people attending nearby events, it’s not clear when they can expect those events to resume. Many vineyards and wineries also count on business from tourists, but it could take time before people start to feel comfortable with the idea of traveling again.
Help for Brewery & Winery Owners
With how much time and energy business owners put into building their businesses from the ground up, it’s only natural that they would do everything possible to protect it from unforeseeable events that could jeopardize their operations. A day-long power outage could easily result in many lost sales and a longer closure over something like building damage from a fire, flood, or a natural disaster could easily turn into major losses.
To prepare for these types of temporary closures, many owners of breweries and wineries have business insurance policies that include business interruption and civil authority coverage. These types of insurance coverage are specifically intended to cover monetary losses related to temporary business closures, such as lost revenue, employee wages, and rent/mortgage payments. Unfortunately, with so many businesses forced to shut down because of the coronavirus pandemic, insurance carriers are eager to deny as many of these insurance claims as possible.
If you’re getting ready to make a business interruption insurance claim or have already made a claim and been denied, working with a lawyer can give you the best chance of getting the help you need. The Wallace Firm is currently helping California business owners with their business interruption insurance claims. Since we’re handling these cases on a contingency basis, there’s no need to worry about any up-front fees or payments — you only pay if we successfully help you get the insurance benefits you need. Contact us today to get started.