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December 2, 2024
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How Kosher Wine Survived 2020

There is no sugarcoating it. Last year was rough—the pandemic, the lockdowns, the resulting recession, and in some places civil unrest, rising crime and violence, and even a U.S.-EU trade war with tariffs that targeted parts of the drinks trade. There were also the devastating wildfires that hit the Pacific Northwest’s wine country especially hard. (See Gamliel Kronemer’s article on page 13 for more on this.) Fortunately for all of us, kosher wine survived.

In a sense, of course, kosher wine was always going to survive. As Rabbi Menachem Genack, CEO of the Orthodox Union kosher division, aptly put it: “The food industry, as a rule, is protected from deep recessions because people have to eat.”

That doesn’t mean, however, that there aren’t folks adversely affected when the economy abruptly tumbles. “The food service industry, like restaurants and caterers, has been very badly hurt,” Rabbi Genack noted. “Some companies will undoubtedly not survive.”

Of course, wine—like most agricultural products—is largely a multiyear, long-term endeavor, allowing for a certain resiliency to temporary shocks. As Rabbi Nachum Rabinowitz, senior rabbinic coordinator and wine expert for the Orthodox Union, put it: “The wine industry requires long-term planning, and projection—and some would say, given the uncertainties natural to agriculture, and the often fickle nature of consumer tastes, it’s more like guesswork or betting—but regardless it requires some longer-term thinking. So, while everything was disrupted in 2020, kosher wine production and sales did not stop.”

“Overall, the kosher wine market has indeed survived 2020,” agreed Gabriel Geller of Royal Wine Corp., the Herzog family-owned and -operated company that remains the country’s leading producer, importer and distributor of kosher wines and spirits, headquartered in Bayonne. “Of course, sales through ‘on-premise’ accounts—restaurants, caterers, Pesach programs and other catered social events—completely crashed.”

“On-premise” is the industry term for alcohol sales intended for consumption at or near the point of purchase, on the premises—such as bars, restaurants and catered events. This is contrasted with the off-premise trade, where alcohol is sold strictly for consumption off the premises of the establishment—such as liquor and wine stores; and drug, grocery or convenience stores where alcohol is permitted for sale in such establishments.

During the various lockdowns, the on-premise sector was essentially handicapped and shut down outright in most state and local jurisdictions, either by fiat, fear or by safety guideless that made the traditional customer experience more difficult and costly to maintain. Meanwhile, in the off-premise sector, wine and liquor stores were classified as “essential businesses” in many—though not all—jurisdictions, and so could remain open in lockdown. Likewise, some jurisdictions seemed on the verge of swinging back and forth on just how “essential” wine and liquor stores are, as local governments and politicians tried to keep pace with perceived public sentiment.

Adjusting quickly to market forces, explained Geller, much of the wine that would have gone to the on-premise sector was simply redirected to off-premise retail accounts, and, indeed, “overall, retail sales went up like crazy. Especially those brick-and-mortar retailers who have online sales, or those doing exclusively online sales.”

This basic pattern played out across the global wine landscape—not just in kosher wine. As analyst Rob McMillan, executive vice president of Silicon Valley Bank’s wine division, which publishes an influential annual wine-industry report, put it: “Wine is recession-proof and maybe somewhat pandemic-resistant as well. People do want their wine.” Noting that as on-premise wine consumption largely ended, McMillan added, “wine was added back to the family dinner table, and consumers adapted to online shopping and at-home delivery.”

So, while wine sales indeed continued throughout the pandemic, much of it took place through these different channels. Indeed, “wine retailers across the country have pivoted from in-store sales,” noted Washington Post wine critic Dave McIntyre, “to an improvised market plan of curbside pickup, local delivery, and online sales.”

This was certainly the experience, for example, of Mendy Mark of FillerUp Wines in Teaneck: “Right after Purim everything got shut down; and really the whole world, everything, changed.”

Although the Teaneck shop was permitted to remain open, the local lockdown meant that people stopped venturing into the store. Instead, the phone began ringing incessantly with folks panic-buying for Passover. As he recalled, “People were worried we might get closed before Pesach, so the orders started coming in almost immediately.” They began selling two to three cases per order, and the phones rang off the hook.

Thinking quickly, Mark called the owner and advised some quick changes. Within days FillerUp Wines managed to get a workable web presence up and running to facilitate online ordering, then quickly hired additional manpower for local deliveries and instituted contactless curbside pickup.

“It was tremendous,” recalled Mark, “We did great business between Purim and Pesach.” While normally “about 90% of our trade would be in-store purchases, and about 10% deliveries,” in 2020 they saw almost the exact opposite: “about 60% delivery, 30% (curbside) pickup, and 10% in-store.”

Even though the business was busy, Mark noted that customers were price-conscious, and mostly favored familiarity over novelty. “Nobody was buying the brands they’d never heard of,” he explained, “or new items that just came in.” Instead, what was flying out the door were well established or big brands “like Barkan, Dalton, Yarden and Herzog—names they knew, brands that were reliable, and also under $40.”

Losing out were smaller or newer brands, the sorts of wines that usually require a bit of effort, storytelling and substantive engagement with the customer, often aided by in-store tastings. Premium brands stagnated completely. Then “by mid-summer,” Mark noted, “folks finally began shifting back to something closer to what we were used to” in their consumer buying practices, including a return to sales of premium-priced wines.

Over the course of 2020, FillerUp Wines experienced a relative disappearance of their traditional slow periods. Because of the shift in consumer behavior, “things never really slowed down too greatly; we’ve had more people buying, and more regular customers.” Since social engagements are fewer and smaller, however, “our overall volume for the year is much lower than in a typical year, even though we remain busy, and our customer base is expanded,” said Mark.

These same basic global wine trends—buying wines from supermarkets, e-commerce retail, and the winery direct-to-consumer channels—also played out very clearly in Israel, the only country in which kosher wine dominates the wine market.

“On the ‘good news’ front,” noted Adam S. Montefiore, an Israeli wine industry consultant and prolific wine writer, “those wineries [in Israel] that have big brands, and already had good distribution in supermarkets, managed to sell well. Likewise, the really famous smaller wineries—like Flam and Castel—have their own customer base anyway for direct-to-consumer sales, and so were able to increase sales through that channel. Online wine sales have similarly greatly increased—lots of people who never used to order wine online started doing so.”

Alas, he said, “those [Israeli wineries] that did not already have supermarket distribution; did not already have a large direct-to-consumer customer base; and did not have an e-commerce platform have been more seriously challenged. Some are struggling a lot.”

Montefiore was quick to point out, however, that it’s hard to get a good, solid picture of this, as folks in the Israeli wine industry mask their hardship “with a certain degree of public bravado.” He said this was an industry-wide phenomenon in Israel.

“You talk to people who are obviously suffering—wineries, shops, really everyone except restaurants, and they’ll tell you, ‘Oh, we’re fine!’ Nobody will admit to any economic pain, even if they’ve been [negatively] affected. So it’s hard to find out the truth.”

As with most of the rest of the world, in Israel, too, “the on-premise sector suffered an absolute crash,” said Montefiore, “and this is obviously a tragedy for everyone in the hospitality industry, not just wine.”

Likewise, “the tourism industry has also crashed,” he noted, “as there has been no tourism.” He explained that “some wineries in Israel, especially some of the smaller ones, do a fair amount of their business through direct-to-consumer sales to tourists, both tourists from abroad and Israelis touring and visiting wineries—but this has completely crashed, too.”

How effectively and quickly the wineries and wine stores pivoted to new customer expectations is a significant factor in how well they survived 2020. “There have also been quite a few internet startups that are selling wines by the case, and showcasing boutique wineries, to try and fill that void,” Montefiore added.

Amidst all this disruption, however, there is some good news, said Montefiore: “Israelis have learned to drink at home, to have wine as part of their home routine—understanding that it’s OK to drink wine at home and share it with their family. That’s a big change. Probably the single most positive trend, and one that is likely to stay.”

The most consistent trend, whether in Israel, Europe or the United States, has been the comparative advantage in 2020 of those retailers especially focused on e-commerce. As Dovid Riven, president of Kosherwine.com, the largest kosher wine e-commerce retailer in the U.S., observed, “last year was a very busy year for us, but we were much better positioned than most to respond to the changes and challenges that came in 2020.”

As Riven explained, traditional wine stores that rely on foot traffic, neighborhood convenience, community density, handselling, in-store tastings and the like, were forced to adapt, and to worry about maintaining safety protocols for customer engagement. As a strictly online retailer, however, “we were spared those sorts of shocks and stresses.”

“We primarily sell to individual consumers,” Riven noted, “buying wine for home use—consumption, gift giving, collecting, whatever—and so were particularly well poised to adapt to increased demand for home consumption. We got really busy, and basically stayed busy throughout 2020.”

“When the lockdowns started in March, things began to heat up quickly,” said Riven. As Passover programs were being cancelled and there remained tremendous uncertainty about venturing out to stores “a lot of folks—including those who’d never ordered from us before—found us and began ordering wine for Passover. So basically, our busiest season, the run-up to Passover, was robust both because that’s always our most robust period, but then also because of the sudden growth of new customers—and also from apparently very thirsty existing customers.”

Riven’s Kosherwine.com team spent a lot of time planning and working through the logistics to ensure that their guaranteed “delivery before Passover” timeline would hold. Fortunately, he said, “we were able to make it all work and keep it all essentially on track.” The company’s reliability, with proactive customer engagement and clear communications, helped ensure smooth operations—allowing them to advance on several fronts that had been in the works. “We’ve experienced a lot of steady growth,” Riven said, “and, basically, things haven’t stopped; 2020 was essentially busy all year long—and now we’re looking and moving forward.”

While these overall patterns held firm across the kosher wine market, the actual demand for kosher wine was not uniform. “In the New York-New Jersey area, and in Florida, sales for local retailers of kosher wines are basically fine,” noted Geller of Herzog’s Royal Wine Corp., “but at the national level, and especially in California, local sales of kosher wines slowed down significantly.

“Take, for example, Barkan,” Geller explained, “which is, beside Baron Herzog and Bartenura, the No. 1 wine brand in our portfolio. Given Royal’s dominant market share, this also makes Barkan the No. 1 Israeli brand in the United States. But, Barkan sales suffered an awful lot in 2020.”

Geller said that Barkan is one of the brands picked up by nearly all the big wine retail chains across the country, such as Total Wine & More (with 210 outlets). “But for stores that only carry a few kosher brands, and also for those stores outside of the areas with a higher density of kosher consumers, sales suffered a lot,” Geller said. “The brand took a big hit.” Barkan is also a very popular brand for the on-premise sector, “so, again, a significant hit to sales.”

While some sectors of kosher wine stayed busy, even very busy, some sectors fared poorly. The on-premise sector suffered dramatically, as did those part of the off-premise sector that faced problems adapting. Further, as Geller explained, there is not exactly a one-to-one correspondence between these sectors, and sales in one area do not necessarily offset losses in another area. “Unfortunately, it is what it is.”

Kosher wine survived 2020, but most of what made last year difficult remains firmly in place as of this writing. How well kosher wine will do this year remains to be seen.

By Joshua E. London

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