As the number of virus cases, hospitalizations and deaths continue to surge in California, Governor Gavin Newsom announced this week that all 58 counties across the state must mandate that bars cease all operations and a wide range of businesses stop all indoor operations immediately.

The mass rollback on reopening plans could impact the promo industry in the Golden State, which saw a whopping $2.1 billion in promotional products sales in 2019, the second most lucrative state for promo behind Texas.

A broad swath of venues across the state will only be allowed to provide outdoor and takeout services, including restaurants, wineries, tasting rooms, movie theaters, family entertainment centers, zoos, museums and gaming establishments.

Meanwhile, 30 counties that have been on the state’s monitoring list for three or more consecutive days, including Los Angeles, Orange, San Diego and Ventura, must also re-close indoor operations at non-essential offices, malls, fitness centers, worship sites, hair salons, personal care facilities and barbershops. Those 30 counties are home to 80% of the state’s population, affecting nearly 32 million people.

On the same day as Newsom's announcement, the Los Angeles Unified and San Diego Unified school districts said that students will begin classes in the fall with virtual learning.

NEW: #COVID19 cases continue to spread at alarming rates.

CA is now closing indoor operations STATEWIDE for:

-Restaurants
-Wineries
-Movie theaters, family entertainment
-Zoos, museums
-Cardrooms

Bars must close ALL operations.

— Gavin Newsom (@GavinNewsom) July 13, 2020

The last month saw a steady increase of infections and fatalities as Californians started summer recreational activities and the state began relaxing restrictions. California officials reported more than 8,300 new cases of the virus on Sunday, July 12, as hospitals reported an increase of almost 30% in COVID patients over the past two weeks. The number of positive test results increased 8.3% between July 5 and 12, the highest increase since April. The state’s death toll as of July 14 stands at just over 7,000.

“This virus is not going away any time soon,” said Newsom during Monday’s press conference. “I hope all of us recognize that, if we’re still connected to some notion that … when it gets warm it’s going to go away or that it’s going to take summer months or weekends off, this virus has done neither.” He emphasized that actions must be taken to mitigate the spread of the virus while a vaccine or effective therapy is being developed.

Newsom’s announcement is one of the most significant reopening rollbacks in the country. Over the past two months, California’s governor had been working on a gradual phased re-opening plan. On June 12, he had allowed gyms, fitness facilities, day camps, museums, galleries, zoos, aquariums, campgrounds and swimming pools to reopen, though residents are still required to wear masks in public.

Ahead of the announcement, Debbie Abergel, chief strategy officer for marketing, sourcing and compliance at Top 40 distributor Jack Nadel International (JNI, asi/279600) in Los Angeles, says employees were eager to get back to the office. Those plans are on hold.

“People here did fear the growing numbers and were anticipating a rollback,” she says. “This is the normal for 2020, so we don’t have real sales expectations for the year. We hadn’t completely re-opened any of our offices yet.”

Evans Manufacturing (asi/52840), a Top 40 supplier in Garden Grove, part of Orange County, CA, was gradually receiving more traditional product orders from cautiously optimistic distributors. The governor’s announcement shows that PPE will continue to be a daily must-have as regular promo sales come back slowly.

“Closures are temporary, but the economy needs to move forward,” says Cyndy Greier, vice president of marketing & new product development at Evans. “We’re helping businesses adapt to the current situation and plan for the coming quarter.”

Terry Town (asi/90913), a supplier of beach towels and related products in San Diego, was finally seeing a notable increase in requests for summer towels and blankets for home use. Deemed an essential business from the beginning because of their PPE manufacturing capabilities, they’ve kept most employees in remote setups while limited staff is on site to continue fulfilling orders.

“We’re past the fear stage of this pandemic, and we’re in a different mindset compared to the first shutdowns,” says Esmeralda Anaya, the company’s marketing manager. “We now find some normalcy in the new way of living. We’re hopeful that distributors don’t shy away from promoting the power of promotional products beyond PPE.”

Abergel says JNI has seen gradually increasing demand for more traditional products over the past month, like comfort kits, barware, drink mixes, food gifts, leisure apparel and tech products, and she predicts that those will continue coming in.

“Our partnerships with clients are stronger than ever,” she says, “and our company infrastructure is strong.”

Distributors are “extremely anxious” to get back to normality as traditional product orders slowly ramp up, says Kellie Claudio, senior vice president of sales & marketing for Top 40 supplier Sweda Co. (asi/90305) in City of Industry, CA, in Los Angeles County.

“We have no historic experience to use as a barometer for forecasting how quickly sales here will recover,” she says. “But we’re a resilient state of very hard-working individuals.”