James Callahan offers wine tastings in an outside patio area at Rune Wine in Elgin. The Winery has had to adapt to meet the challenges of keeping the business afloat during the COVID crisis. Photo by Marion Vendituoli
It’s been a long and complicated trek from total closure to partial reopening for the Sonoita-Elgin wineries. Many of the local wineries were operating from three to six days a week and business was good until the first case of COVID-19 hit the County on March 20, 2020 and Governor Ducey shuttered tasting rooms.
Deep Sky Vineyard
“Not being able to open was painful from a financial perspective,” said Kim Asmundson, owner of Deep Sky. Distributor sales completely shut down and she struggled with managing current inventory as well as planning current year production.
“Given the uncertainty, it was hard to plan as the conditions and requirements kept changing,” she added.
Asmundson noted that online sales rose slightly during the period, but not enough to replace tasting room sales lost in the spring. When limited operations were permitted, she and her husband Phil moved tastings to the outside patios, limited the number of guests and tour busses, cancelled planned and private events, and implemented cleaning and mask protocols. These conditions are still in effect. Cost increases were unavoidable, including new outside heaters, fans, chairs, cleaning supplies, hand sanitizer and disposable products such as plastic glasses.
“We were very lucky to have our employees stay with us,” said Asmundson, adding that she was able to pay them during the shutdown after obtaining a loan from the Paycheck Protection Program (PPP) developed for small businesses of less than 20 employees to help keep their workforce employed during the COVID-19 crisis. On a good note, Asmundson added, “My expectation at the beginning of COVID was that it would last a at least a year, so I accepted the fact that we would have a reduction in customers with a corresponding decrease in revenue; however, there was one unexpected benefit of COVID. Since people couldn’t travel, they looked for someplace local to go, which was outside. Many people discovered the Elgin wineries for the first time, and I expect they’ll be back. We are now getting more new customers than ever before and considering expanding our facilities to accommodate more customers safely in the future.”
Rune Wines
“I think every person on this planet has at least in some way been affected by the pandemic,” reflected James Callahan, owner of Rune Wines and winemaker for Deep Sky and Autumn Sage. Rune’s wine sales were down 80 to 85% during the closure and Callahan said that losing that income was pretty rough. Additional revenue losses occurred because of having to limit the number of customers to meet social distancing requirements and costs associated with sanitation protocols.
“Supply chain challenges were equally difficult,” Callahan stated. “The pandemic seemed to bottleneck a lot of routine services that we rely on, not to mention the wildfires in California, Oregon, and Washington causing waves across the wine industry. Lastly, the tariffs on Chinese products hurt us as our bottles all come from China. There are no domestic producers, so these tariffs didn’t get us to look domestically at all—they just hindered us with an unnecessary tariff burden. We ended up finding some Chilean glass and leftover stock that wasn’t subject to tariffs.”
Callahan worked to develop strategies to overcome these difficulties. “We pushed our social media presence, created three-pack specials that could be shipped, and partnered with a local refrigerated shipping company to help execute our supply chain,” said Callahan. He also focused on tasting room remodeling.
After opening again, Rune experienced excellent sales in the tasting room and felt that Arizonans ventured out beyond the cities and into the fringe to find activities near home, creating a larger customer base.
“We have kept every employee employed and even taken on new employees during the pandemic,” explained Callahan, who added they utilized government funding programs for small businesses which not only gave necessary support in a time of need but allowed Rune to position itself for growth upon emergence from the pandemic.
“It has been a great learning experience from a business owners’ standpoint. The ability for us to pivot to online sales and make ends meet was challenging, but it has left us with more avenues to get our wines into people’s hands and brought more light to the local economy of Arizona, for which we are grateful,” Callahan said.