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Carboy Winery's Denver wine bar and tasting room. Photo courtesy of Carboy Winery

How Hard Hit Are Colorado Wineries Amidst COVID-19 Closures?

Like Centennial State craft breweries, local wine makers are facing decreased revenue and relying on direct-to-consumer sales more than ever.

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After working as professional sommeliers in Denver restaurants for more than 15 years, Jayme Henderson and Steve Steese realized a long-held dream in 2017. They bought a vineyard in the tiny western Colorado hamlet of Hotchkiss, and started a winery called the Storm Cellar. As somms, they knew about local wine and understood that plenty of Centennial State producers were doing excellent work. But something was missing. “There was a disconnect,” says Henderson. “During farm-to-dinner events, for example, we wouldn’t see any Colorado wines.”

When the couple opened the Storm Cellar, they took a different path, focusing on restaurant accounts rather than liquor store sales or opening a tasting room. After all, Steese and Henderson wanted to make those key connections between restaurant menus, guests, and Colorado wineries. Their approach was paying off, too, with accounts at restaurants all across Denver. Then, on March 17, Governor Jared Polis shut down all in-person dining and drinking statewide to combat the COVID-19 virus in Colorado—and the bottom fell out of Henderson and Steese’s world. “We had been pouring all of our money into the company,” says Henderson. “Now, not only does the revenue [to our winery] stop, but none of the restaurants can pay their bills. We have thousands of dollars of outstanding bills.”

The novel virus’ impact on breweries and distilleries across the state is visible right now, and easy to understand: Neighborhood taprooms and tasting rooms are closed to on-site drinking and dining, with only some of those establishments offering bottles, cans, growlers, and crowlers for pick up or delivery. But just as the virus has upended those businesses, it is also significantly impacting local wineries. Restaurant accounts are mostly kaput. Wineries that developed strong direct-to-consumer channels are now focused on that side of the business. Those that didn’t, like the Storm Cellar, are forced to pivot—quickly.

Takeout business from winery tasting rooms helps, especially in urban areas. “But there isn’t much of that going on in, for example, Paonia,” say Doug Caskey, the executive director of the Colorado Wine Industry Development Board. Caskey did not have figures at hand, but he projected that the sale of Colorado wine has suffered since the middle of March.

Sales at Carboy Winery, with locations in Denver, Littleton, and Breckenridge, have dipped dramatically. Carboy gets most of its grapes from Western Slope vineyards, makes its own wine, and sells it on tap and in bottles at its locations, which also are full-service restaurants. “We had to let go a good amount of our core staff,” says Jason Snopkoski, who runs wine operations for Carboy. “Welcoming people in our doors is what we do. The fact that we can’t host people and show them a good time has had a huge impact. You have to wonder, ‘How can we survive?’”

It’s not just the loss of sales at its restaurants that has knocked the wind out of Carboy. The winery’s wholesale business, which supplies other area restaurants, often through kegs, was “booming” says Kevin Webber, a partner in the business. Then, the shutdowns. Specifically, restaurants’ patios, which add about 25 percent more seats to each establishment, are now closed, just as Coloradans begin flirting with drinking rosé and whites en masse again, after the winter’s emphasis on reds. If the closures persist into the summer, those wines might miss their optimal season.

Meanwhile, now is prime season to bottle all of the white wines from last year’s vintage, which sat in tanks and barrels after fermentation. Given the many uncertainties surrounding the virus, Carboy winemakers aren’t sure what to produce this year. If sales of white wine plummets, Carboy will have a big stock of whites that will still be sitting around next season. So, should Carboy commit to buying fewer white grapes from Western Slope vineyards this year?  “Will we be sitting on wines and not be able to sell them? How many restaurants will not see it out of the back end of this, and no longer be our customers?” asks Snopkoski. “Every day, you just don’t know. Should we make more wine? Less wine?”

That said, not all of the news has been bad for Carboy. The winery’s direct-to-consumer wine club was robust prior to the shutdowns and people continue buying the wines through those channels. Trader Joe’s on Colorado Boulevard in Denver also recently placed an order, as the grocer couldn’t get the wines it normally carries from Italy and France, and asked if Carboy could fill the gap. “There is an opportunity to recapture consumer dollars that might otherwise have gone out of the country,” says Webber.

Now it’s time, he says, to seal the deal with Coloradans about the value and quality of local wines, introducing more drinkers to the state’s best vintages. After all, the terroir and elevation of our state’s wine regions create unique, interesting wines. Webber and other local makers also hope to educate consumers about why local bottles often cost a bit more than those from other places, like South Africa, Spain, and California. In a nutshell, it’s because Colorado wineries are not owned by big corporations. They are small businesses.

“We are our own marketing team. We are the bookkeepers.  We are distribution. We drive our own wine trucks,” says Steese of the Storm Cellar. “The vineyard never shuts down. April and May are the busiest time, with pruning and getting the vineyard set. We just filled out a 75-page application for a Small Business Administration loan and then found we had to do it all over again. And now, as we look for more online sales, we are spending much more time doing marketing and social media rather than being in the vineyard.”

The winery was planning to open a tasting room, but given how remote its location is—Hotchkiss (population 5,331) lies between Telluride and Grand Junction—a tasting room probably won’t make a big difference. “It’s derailing,” says Henderson. “You go through the grieving process. There are days you are in disbelief, immobilized, in tears. And then you pick yourself back up and brainstorm. We are constantly thinking about the next thing.”

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