As the on-premise begins its phased reopenings across the nation following Covid-19 lockdowns, restaurant and bar operators are busy mapping their forward strategies. The emerging landscape will be significantly changed, both in terms of the drinking and dining environments as well as the number of venues that can remain viable.
Southern Glazer’s Wine & Spirits (SGWS) is the U.S. market’s top wine and spirits wholesaler, with annual sales of $19 billion and a footprint covering 44 states and Washington, D.C. At the outset of the Covid-19 crisis, SGWS moved quickly to establish an executive-level task force to coordinate continuity plans and monitor developments, while also forming an on-premise group to work with the company’s restaurant and bar accounts throughout the long months of the crisis.
As part of its on-premise focus, SGWS has long been at the forefront in the area of education and training. In 2015, it launched the Southern Glazer’s Wine & Spirits Academy in Las Vegas, and more recently became lead sponsor of the Chaplin School of Hospitality and Tourism Management at Florida International University in Miami. The new centerpiece of its education efforts is SGWS Wynwood—a 17,000-square-foot hospitality and education center named for the Miami art and cultural district where it’s located—that opened earlier this year. While the opportunity to begin utilizing this resource was put on hold by Covid-19, SGWS Wynwood is poised to become a valuable tool going forward. Looking further ahead, SGWS is now planning a project in New York City; it will reconfigure its midtown Manhattan office from the current meeting and conference space into a venue more suitable for hospitality education.
SGWS has had its finger on the pulse of this sector throughout the crisis, and has been utilizing its scale and reach to work closely with its on-premise customers across the country, with an eye toward helping to restore an industry that’s arguably been hardest-hit by Covid-19. Market Watch executive editor David Fleming recently caught up with SGWS CEO Wayne Chaplin for an update on progress.
MW: What’s the overall mood in the on-premise about reopening? Is there any sense of optimism or anticipation, or is it way too early for that?
Chaplin: I would characterize the mood as a combination of anxiety and cautious optimism. The unknowns are many in this environment. What will the customer count be? How will we be impacted by limited capacity rules? How many seatings can we manage per evening, and what will be the impact of having no bar seating? Added to the uncertainty are the tragic and heartbreaking events that have unfolded across the country as part of the civic unrest over what happened to George Floyd in Minneapolis. Despite those challenges, our sales teams are working with the on-premise to ramp up their businesses as quickly as possible. The categories we represent are a terrific profit center. We’re providing accounts with creative ideas in the new environment—brand features, wine and food pairings, and digital cocktail lists, to name a few.
MW: As this process unfolds, has SGWS been reorienting some of its resources back toward the on-premise?
Chaplin: We’ve maintained an on-premise task force since the pandemic’s inception to service the accounts that remained active in the marketplace. Our teams have been focused on helping accounts shore up their to-go businesses. We’re currently planning for many markets to fully reopen in the on-premise July 1, and our sales teams are being applied to active accounts as they open.
MW: What skills does SGWS bring to the table in terms of helping the on-premise get restarted?
Chaplin: The 25%-50% capacity restraints bring new challenges, and we’re working to assist customers in the new environment—consulting on SKU and inventory management, drinks menus, and wine by-the-glass offerings. We’re also promoting Proof Commerce, our online ordering platform at Sgproof.com, as well as our dedicated customer service solution, CS 360, for ease of use in the ordering process. Early on in the pandemic, we established an online Covid-19 information hub for customers at Sgwscustomercare.com. That site has links to financial relief and industry resources, as well as articles that share tips and strategies to help on-premise customers operate now and through the post-pandemic recovery phase.
MW: What are the main stumbling blocks you’ve seen?
Chaplin: The overarching issue is the financial burden caused by the pandemic. The strain that on-premise accounts have endured over the past three to four months is unprecedented. Now, with the capacity constraints and other restrictions during reopening, those financial pressures persist. Our goal is to be there for our customers and assist in any solutions that provide relief so they can build back to business continuity. In addition to helping them overcome all the operational and reopening challenges, we’ve established initiatives to provide restaurants with much-needed financial relief through our South Beach and New York City wine and food festivals. We’ve set up initiatives including the South Beach Wine and Food Festival & Florida International University Chaplin School Hospitality Relief Fund, which has raised more than $1.6 million for grants to restaurants and bars in South Florida, and the New York Wine and Food Festival at Home program, a campaign to support the National Restaurant Association Educational Foundation (NRAEF) Restaurant Employee Relief Fund.
MW: We’ve seen many upscale wine and whisk(e)y-oriented venues sell off their stock during the crisis. Has that provided any opportunities in terms of the need to restock? What’s the restocking situation in general?
Chaplin: Restocking—no matter the price point, category, or brand—will be a slow build in the on-premise. Costs are rising as operators adapt to the new expense of doing business in a post-Covid-19 environment. Additional costs related to cleaning, safety, and other things are providing new challenges, and that’s impacting purchases across all items in the on-premise.
MW: Any noteworthy trend changes in the off-premise since the earliest days of the crisis, or are they pretty much the same?
Chaplin: The off-premise has been an anomaly since mid-March in many of our markets. It began with pantry loading in the early days of the pandemic. We had forecast that trend would level off a bit, but the most recent Nielsen numbers show continued strong consumer pull. We received another boost in sales during the Cinco de Mayo period, as consumers brought their celebrations into their homes absent the ability to visit their favorite on-premise outlets. Overall, nationally advertised brands with strong consumer bases have fared very well in the off-premise over the past three months, driving much of the incremental volume. We’ve experienced double-digit growth across many categories since the pandemic’s inception—with vodka, Cabernet Sauvignon, Bourbon, and Tequila all outperforming other categories and showing torrid growth.