In this article, we go into detail on how the pandemic has negatively impacted the wine trade, and in particular wine education. In the last section, we offer a ray of hope: there are multiple grants available for wine schools.
We are very grateful to the individual who made this article possible. They generously shared their knowledge and research on this subject. In return, they asked us to transmit this information to all the wine schools in the US. We would love to thank them personally, but they requested to remain anonymous.
Please forward this article to everyone to everyone involved in wine education. Save our wine schools!
COVID-19 has Decimated the Wine Trade
This year has been brutal to the wine trade. According to the trade group Wine America, direct sales at wineries were down nearly 75%, and the wholesale market is down nearly 30%. The estimated loss for a single month (March 2020) was $40 million. The Wine Institute places the total losses for 2020 to be $5.94 billion.
The impact on winery employees and the local economies cannot be overstated. However, those losses are dwarfed by the effect of COVID-19 shutdowns on restaurants. The National Restaurant Association is anticipating $225 billion of lost revenue and over 5 million lost jobs. As of 11/2020, in-restaurant dining is at 50% of where it was in previous years.
The Effect on Wine Schools
Compared to wineries and restaurants, the wine education sector is tiny. The entire wine education economy is about $14 million, including winemaker certification at Universities and sommelier certifications at accredited wine schools. However, no sector in the wine trade has been more as impacted as independent wine schools.
In most parts of the country, wineries and restaurants could stave of losses by offering a rudimentary selection of products, whether it was outdoor dining or online wine sales. However, wine schools could not run classes in most parts of the country. In a small survey conducted in early December, the estimated revenue losses for independent wine schools are at a staggering 85%.
Wine School Winners and Losers
The wine schools that managed to stave off dramatic losses were those that offered online wine classes and virtual tastings. Those schools showed average revenue losses of 65%. Those that could take advantage of the CARES Act (March 2020) fared better, as well. On average, those that took advantage of the Paycheck Protection Program or the EIDL ADVANCE grants saw an average loss of 68%. Those schools that managed to do both saw the lowest losses, at an average of 58%.
Grants for Sommelier & Wine Schools in 2021
For those wine schools that have made it to 2021, there is hope. The COVID-19 Relief Bill (signed 12/27/2020) offers three major grants that will benefit our trade. We will update this section as needed, and as more information comes available. If you run a wine school and have a question, please put it in the comments below.
EIDL ADVANCE Grants
Somewhat confusingly, these grants are part of the Economic Injury Disaster Loan program. If your school has an economic loss of 30% or more in 2020, and you employ less than 301 employees, then you may qualify for a $10,000 grant.
Here’s the rub: this program is for brick-and-mortar facilities located in low-income communities. Before dismissing this program, you should look up your eligibility: we checked the locations of five wine schools and all were eligible for this grant.
To check yourself, just search online for the “New Market Tax Credit” database. if your address is listed as “NMTC Eligible” then you qualify. The EIDL program is run by the Small Business Administration (SBA), which is where you would apply.
Most wine school owners are self-employed. These additional 11 weeks of federal unemployment benefits are helpful. $300 a week isn’t much, but it helps. If your school is in the red financially –and it very likely is– you are eligible for this program. PUA Unemployment is managed by the individual states, so applying for these benefits depends on where you live.
Paycheck Protection Program (PPP)
An alternative to the PUA is this program. If you showed at least a 25% loss from 2019, then you can get a forgivable loan of 2.5 times your average payroll costs. If your school runs payroll, this is a great option. The total is calculated on your 2019 payroll and is fully forgivable if use 60% of the funds on payroll. You can also specify which period you want to use if for, up to 24 weeks in the future.
If your school is listed by the IRS as a food service company, then the amount you can receive is much higher: you can get 3.5 times your average payroll! To qualify, you need to have a NAICS code 72 (Accommodation and Food Services). That said, NAICS codes are not set and stone and there is a good argument that a wine school is a Food Service company, especially if you train sommeliers.
This program is helpful as we move out of the pandemic and into the vaccination phase. If you plan on restarting wine classes in a few months, then you can stay on PUA until you are ready to relaunch your programs. This program is run by the SBA.
Grants for Shuttered Venue Operators
This is –by far– the best news the wine school trade has had all year. A wine school is very much a live venue, according to this new law, That makes sense when you think about it:, if you run wine tastings for the publice, then most of your clientele are attending a wine tasting as entertainment.
This “Grants for Shuttered Venue Operators” shows great financial benefit to the wine school sector of the wine trade.
This program covers up to 45% of your 2019 revenue. For many wine schools, this would mean recouping nearly all losses for the year. The program is designed to issue two grants. One in winter 2020/21 and another in the spring of 2021. Priority is being given to venues with losses in the 70-90% range: once this program is underway, those venues will get grants in the first month. The rest of the grants will be issued after that.
To qualify for this program, a wine school show at least a 25% loss from 2019. You also need the standards of all live venues, which include selling tickets to attend, audio mixing equipment, a public address system (aka speaker system), and a lighting rig. These are systems all wine schools should have, and most do. if you opt for this program, you will not be ineligible for the Paycheck Protection Program (PPP).
You also need to have a person who takes care of bookkeeping and manages the tickets.
There are other grant programs in the December 2020 Relief Bill that are directed toward schools, but wine schools do not qualify, except for regionally accredited ones.