Global Wine Tourism during COVID-19

Version	Summary	Created by	Modification	Content Size	Created at	Operation
1		Gergely Szolnoki	--	1371	2022-05-01 15:19:20	\|
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This entry is adapted from the peer-reviewed paper 10.3390/su14084688

To compensate for loss of business during the COVID-19 crisis, wineries in the tourism industry had to apply new strategies. The year 2020 will be remembered as a year of disruption, when the outbreak and spread of the SARS-CoV-2 virus (COVID-19), along with the global efforts to contain it, caused ruptures—politically, economically, socially, and technologically. The lucrative tourism sector was severely affected as travel restrictions and lockdowns were enforced around the world, reducing it in terms of visitor numbers to 1990 levels. Wine tourism is an important component of national tourism for many wine-producing countries, comprising leisure, culinary, experiential, historical, and cultural visits, which were heavily impacted by this disruption. From the perspective of winery owners, visitors to their cellar door and tasting facilities have become an increasingly important revenue stream. Therefore, the suffering endured was acute, as wineries engaged in wine tourism had to quickly adapt their business model and strategies to fit the rapidly changing trading environment in order to stay viable. Many were forced to rethink their marketing approach, reimagining their tourism offerings. Some owners, however, saw the disruption as an opportunity to reset the tourism industry, to implement a more innovative and sustainable foundation. For this reason, it is of great importance to investigate the reaction of winery operators on the market changes.

COVID-19 wine tourism strategies

1. The Effect of COVID-19 on Global Wine Tourism

Since March 2020, as the COVID-19 pandemic spread exponentially across the globe, many international and interstate borders were closed, and restrictions placed on local movement. Initially, wineries were closed to visitors, but then they gradually re-opened with strict COVID-safety measures.

There were three operational factors that allowed wineries to welcome visitors back onsite, that also had the potential to benefit the business: the implementation of a reservation system able to capture customer data; the hosting of socially distanced, seated tastings with customised service; and dedicated time allocations, which facilitated an authentic, personal experience with the winery’s staff. Reservations and customised service can markedly improve a winery’s efficiency and revenue since both staffing and customer requirements can be planned, the data and feedback gathered can be strategically used in a customer relationship management system (CRM) for targeted marketing strategies, and visitor satisfaction and loyalty are enhanced due to the personalised attention, leading to a higher spend per customer ^[1].

The experience economy theory says that “every company competes with every other company in the world for the time, attention, and money of potential customers. What every company needs to do, then, is create an experience that first gains potential customers’ attention, then gets them to spend time experiencing their offerings and finally causes them to spend their money by buying those offerings” ^[2]. As Filopoulos ^[3] states, “the attention, time, and money that the guest spends in the winery and its region, and the impact of the experience are the key [performance] indicators”, rather than merely the volume and value of wine sold, as these other factors are deemed to have a longer-lasting effect than a single financial transaction.

Trends regarding the conduct of wine tourism during the pandemic highlight the importance of collaboration, domestic visitors, open air wine experiences and digital innovations. The most common marketing strategies, as noted in research conducted by Garibaldi ^[4] were (in order): increasing online sales, home delivery, virtual wine tastings, gift cards, and wine club memberships. This was confirmed by Loose and Nelgen ^[5], who found that the main strategies of wineries were the intensification of online communication, a focus on DTC (direct-to-consumer) sales, creating new sales channels, implementing a home delivery service, a reduction in costs and use of public aid. A quantitative survey conducted by Ridoff ^[6] saw revenue decrease due to the loss of gastronomy, export, and tourism channels, despite the increase in online and DTC sales.

To gain customers’ trust, authentic messaging with a personalised touch was identified as a powerful tool in times of uncertainty, to make customers feel valued and part of the business. Collaboration with other local businesses and consumers was also deemed important to nurture enduring supportive relationships ^[4].

One of the strongest impacts of the crisis is the acceleration of digitalisation ^[7]. With the absence or reduction of physical visitors, wineries became heavily reliant on digital technology, using the internet for online sales, advertising campaigns, and virtual events. Data became the new currency to target, segment, communicate with, and sell to customers. As Carmer et al. ^[8] stated in their study, the change of wine courses for sensory perception training from face-to-face to fully online presented many challenges. However, as the best practice results show, suitable solutions could be found. Shifting to virtual settings can positively impact companies, not only by increasing employee job satisfaction due to saving time and an increase in work flexibility, but also by saving travel costs and contributing to the reduction of greenhouse emissions ^[9].

2. Resilience and Adaptation Strategy

Innovation and adaptation to the changing marketplace allowed wineries to remain competitive and viable. Such a strategy is integral to building resilience in order to manage disruption and sustain the business ^[10]. This has recently been explored in relation to wine tourism ^[11]. The unprecedented, sudden, and intense challenge presented by the COVID-19 crisis meant that businesses had to act quickly. This was even more critical when wineries faced other forms of disruption, not only to visitation and sales, but also to harvest operations, as happened in Australia and New Zealand. Those wineries who had already built a resilient business strategy were able to move faster ^[12], confirming the necessity and benefit of crisis planning for a wine business.

Disruption can also be seen as an opportunity for businesses to define, test, and try alternative operating models and redesign new ways to move forward ^[13]. The proliferation of virtual wine events and e-commerce was a result of this pivot to new sales avenues. Initially, many wineries developed these offerings as a substitute for physical visits, then as restrictions on travel eased and a limited number of visitors could return to the wineries, they were treated as supplementary to cellar door sales ^[14]. The potential of this new hybrid model of wine tourism is vast and can create a resilient foundation for a sustainable business, while simultaneously embracing the needs of tourists and ensuring business continuity ^[15]. Thach ^[16] further expounds the benefits for wineries: “Not only are [virtual events] useful in times of crisis … they are also a means of attracting the next generation of wine consumers, who have already integrated online experiences into their lives. Taking the time now to invest in some of the components of an online wine tourism system—linked to wine ecommerce—is a powerful first step towards creating a resilient business that can be successful during both times of crisis and calm”.

According to Dahles and Susilowati ^[17], economic recessions, such as those caused by COVID-19, pose major challenges to local tourism. They investigated how local tourist businesses in a developing country respond to crises and the resources these businesses employ to build resilience. Other researchers(i.e., ^[18]^[19]^[20]) also emphasised the importance of building resilience in the tourism sector, as a whole. Gilinsky et al. ^[21] investigated the impact of strategic resilience after a natural disaster in Napa and Sonoma counries by using content analysis. Key results of their survey identified four main conceptual constructs: realizing a need, building stakeholder support, securing resources and capabilities, and exemplifying best practices. Another study published by Dressler and Paunovic ^[22] dealt with innovative business models in the German wine industry. Researchers defined seven different strategies in total, with different focuses on the three pillars of sustainability. Tahar et al. ^[23] analysed the role of Destination Management Organizations in the coordination of collective and coherent wine tourism strategies and found that these organizations are of great importance.

Taking the definition by Putra ^[24], adaptation strategy can be defined as a pattern of behaviour or actions being planned by humans to meet the minimum necessary requirements to solve the problems faced. Applying the findings by Lazarus and Folkman ^[25], in the case of adaptation strategies during the COVID-19 pandemic, the specific discussion revolves around problem-focused coping, where producers take action to solve problems or seek information that is useful for problem-solving.

References

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Pine, B.J.; Gilmore, J.H. The experience economy: Past, present and future. In Handbook on the Experience Economy; Edward Elgar Publishing: Cheltenham, UK, 2015; pp. 21–43.
Filopoulos, S. Sustainable Business Models of Wine Tourism to Promote Responsible Consumption. In Sustainable and Innovative Wine Tourism. Success Models from All Around the World; López, R.C., Szolnoki, G., Eds.; Cajamar Caja Rural: Valencia, Spain, 2021; pp. 47–62.
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Gergely Szolnoki

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Maximilian Tafel

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Update Date: 05 May 2022

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1. The Effect of COVID-19 on Global Wine Tourism

2. Resilience and Adaptation Strategy

References