The brief, lovely season with the last of the fall colors and the first shoots of green
Wine, health, and the fool's gold of "zero risk"

Did tasting room sales ever fall off that cliff? No, but tasting room traffic is still hard to analyze because of pandemic echoes.

Back in April, in response to alarming headlines showing tasting room traffic down 22% statewide, I wrote a blog suggesting people wait to get a little deeper into the year before making sweeping judgments about the health of the tasting room economy. After all, the first quarter of this year had some of the most tourist-unfriendly weather in our history. I summarized the conditions in that blog:

There weren't many days that weren't rainy, and even those days weren't conducive to relaxing outside. March saw 20 days with measurable rainfall and an average high temperature of 56.9°F. There was only one weekend day with highs above 60°F and no rain. Combine that with headlines in every major California newspaper about extratropical cyclonesatmospheric riverslevee breaches, and evacuation orders, and it's no surprise that people decided to hunker down at home rather than braving the highways in search of wine experiences. It's frankly a wonder our tasting room traffic held up as well as it did.

And tasting room traffic did normalize starting in April. The second quarter was still down a bit, but the last two quarters have been more or less flat with 2022, and two of the last three months have seen increased traffic:

Tasting Room Traffic by Month  2023

It's important to remember that when you're looking at year-over-year numbers your results can be skewed either by what happened this year or by what happened last year. I was reminded of that phenomenon recently as I pulled together my 2023 harvest recap. It showed that our red production this year was up 34%, while our white production was up 55%. That seems like a remarkably good year, especially for whites, right? Maybe not. Our overall yields were right at our long-term averages, while our whites were actually below average. The improvement looks so dramatic because last year's numbers were so low.

So, what happened with tasting room traffic in 2022? It was great the first half of the year. I remember sitting with our Tasting Room Manager John Morris and remarking that we'd never seen a run like the one that we saw between mid-2021 and mid-2022. Every month was setting records, our tastings were booking up weeks in advance, and we were starting to think that we'd unlocked a new reality post-pandemic, where people's increased work flexibility and their discovery of the importance of work-life balance meant that regular visits to wine country were going to continue indefinitely.

That conversation sounds silly now. What we were seeing was a longer-than-expected period of exuberance after lockdowns ended and vaccines offered the promise of reemergence without undue risk. People took the vacations that they'd delayed for a year or more. Fueled by their newfound savings thanks to a year of restricted activity and major infusions of government relief checks, people were able to spend more freely on their leisure activities. And yet many people weren't ready to jump on a plane or a cruise ship and head overseas. The net result was a perfect storm encouraging wine country tourism in a place like Paso Robles.

But that perfect storm didn't last. Inflation started to take a toll on consumers' buying power as pandemic relief funds were drawing to a close. Employers started to require that their workers come back into the office more often. At the same time, those with the means to do so went on their long-delayed international trips and cruises. So visits to places like Paso Robles were squeezed on both ends: the budget-conscious consumer was cutting back at the same time as the highest-end vacationers were gone overseas. The relative weakness of most other global economies and the strength of the US dollar meant that visiting California was an expensive proposition for international tourists, so we weren't able to make up the lost business there (not that Paso Robles is a major international destination anyway). 

By mid-2022, wineries were seeing fewer customers, and those who visited were arriving with less buying power. At the same time, online ordering was seeing continued declines toward pre-pandemic levels. These trends were obscured in stories about 2022 because the first half of the year was so good and low yields in 2021 meant that wineries like us didn't have any extra wine to sell anyway. But as the trends continued into 2023 and were exacerbated by the wettest, stormiest winter in three decades, people started to notice. Sales fell sharply, and as I said in my April blog: it's a wonder they weren't down more.

The way this has played out was previewed in the Instagram Live conversation I had with Rob McMillan back in May. Rob is head of the Silicon Valley Bank wine division and the publisher of the bank's annual "State of the Wine Industry" report. In our conversation (embedded below) he downplayed the worries about the beginning to 2023 as still a residual echo of the Covid pandemic. He shared that he thought it might be another year or two before we knew what the "new normal" was, and before year-over-year data was reliable again.

So what does it mean that the last five months have been more or less flat with 2022? It's less positive than you might think. I know that I don't feel a lot better about our results the last quarter (flat compared to a down period) than I did about the results in the first quarter (down from a great period). But I do think that we're nearing the end of the travel impacts of the post-pandemic world. Airline ticket prices have been trending down the last few months. Cruise lines are offering deals to try to fill up their cabins. In the short term, these offer more competition to a trip to California wine country. But in the long run, they're a sign that we're getting back to a more normal tourist environment.

This isn't to say that there aren't long-term threats to wine country tourism on the horizon. I'm keeping an eye on issues like the changing demographics of wine consumers, the high cost of wine country visits, and revised guidelines from the WHO promoting total abstinence from alcohol. But those will play out in future years.

Meanwhile, the year-over-year data is going to be wonky for at least another six months. Remember that when you see announcements about how tasting room traffic is up sharply in early 2024. That's not news; it's an echo of a data anomaly the previous year, which itself was at least in part one last ripple effect of the Covid pandemic.