It’s often said that economic forecasting is a pseudoscience – it relies too much on assumptions and hindsight. And, if economic forecasting is useless at the best of times, it’s utterly impossible in a pandemic.
That hasn’t stopped anybody trying. At the end of June, the Bank of England economist Andy Haldane suggested a global recovery would come “sooner and faster” than expected, leading to a so-called ‘V-shaped recovery’.
He could be right. The Wall Street Journal reports that the “global recovery is gradually pulling out of its stall as businesses reopen”. In another article, it says that China’s economy is recovering faster than expected.
Or he could be wrong. Last month, the International Monetary Fund predicted that the eurozone and UK economies could contract by more than 10 percent, while the US could shrink by 8 percent.
Everyone hopes that Haldane is right, and that the global economy will bounce back sometime soon. But the wine trade needs to consider the possibility that it’s the doom-laden prediction from the IMF that’s correct.
After all, there is no vaccine in sight, Airbus has slashed 15,000 jobs because it doesn’t expect air travel to return to its former levels for at least five years, and unemployment is at levels not seen since the Great Depression.
Wine producers are pretty lucky compared to their counterparts in fashion and filmmaking, as sales of wine soared during the lockdowns – it turns out that many consumers see wine as an essential good.
But that’s no consolation for producers who rely on the on-trade to sell their wines. Unfortunately, with new outbreaks of the virus appearing, and regions going back into lockdown, it may be a while before the on-trade returns to full capacity. And even when it does, consumers may be looking for cheaper wines than in the past.
For many wineries, the only way to make up for the lost sales is to move into direct-to-consumer selling, at least on the domestic market. This means, at a minimum, having a mobile-responsive sales website.
Luckily, there are a number of low-cost services and platforms around to make this relatively easy. A first port of call for smaller wineries should be Shopify, an ecommerce platform that lets anybody set up an online shop and start selling.
This is an investment that will pay off long after the pandemic is over, because the shift to online has accelerated so greatly, there is no way back. Consumers have learned that they can get anything they want delivered to their home and now expect to buy their favourite wine that way as well. When even the Champagne houses are opening online stores, it’s clear that wine selling has fundamentally changed.
Of course, wineries can’t just hang out a shingle and expect people to come and start buying. Customers have to know they’re there – so this is also the time to invest in marketing and social media. It seems counterintuitive to spend money in a crisis, but right now is actually the time.
Why it’s time to invest
There are a lot of top-notch professionals who are out of work at the moment, who’d love to work on a wine project for a reasonable fee. This situation won’t continue for long, as highly competent, professional people will be the first to be absorbed back into the job market as things improve. Right now is a historic opportunity to work with top experts – and one that may never come round again.
For the same reason, this is also the time to invest in high calibre sales training for staff. According to CSO Insights, companies that invest in sales skills training programs not only see their salespeople sell more, but they also bring in more new business – their sharp new skills mean they can see opportunities they once walked past.
Meininger’s columnist Robert Joseph also suggests that wineries think about partnering with complementary sectors, like tour operators, local restaurants or even bookstores, to create joint offerings and events that will increase the sales of both businesses.
Finally, one thing that wine businesses need to do is assess their financial position honestly. If things were sluggish even before the pandemic, the situation may never get better. If so, now might be time to consider selling the business rather than watch things go from bad to worse.
There are buyers out there. The big wine companies have been on an acquisition spree over the past decade, driven by historically low interest rates.
But to catch their attention, everything has to be in order, from tax filings to accounts to vintage reports and projections for potential future growth. Now is the time to get stuck into the paperwork and make everything neat and tidy. If the physical property can be spruced up with a paint job or minor repairs, get those done too.
Hopefully, of course, selling is a last resort.
And, also hopefully, a vaccine will be found, and the economy will recover.
But while economic forecasting can’t be relied on, there’s one insight that never fails: expect the best, prepare for the worst.