The digital economy is not only responsible for creating thousands of new jobs, but helping struggling industries remain relevant, O'Shares ETFs Chairman and "Shark Tank" host Kevin O'Leary said on CNBC's "Squawk Box."
What Happened: The wine industry is as a prime example of how companies were forced to adapt during the COVID-19 pandemic, O'Leary said. Most wine is consumed outside of the home, at restaurants, bars and within the tourism industry.
While many restaurants and bars have closed and remain closed, consumer interest in consuming wine hasn't changed much, O'Leary said.
But wine companies had to pivot and figure out quickly how to get their product into consumer hands in a new way.
O'Leary, an investor in the wine industry and an aficionado, said the industry has hired thousands of well-paid workers so they can sell directly to consumers online.
Prior to the pandemic, just 6% of wine volume was shipped directly to the consumer, but today that figure stands at nearly 24%, he said. The wine industry is far from the only example of companies embracing the new digital economy. "I'm now much more optimistic than I was in March," O'Leary said.
Why It's Important: Despite the ability for companies to more easily pivot online and reach consumers, there are still a lot of "zombie companies" that are on life-support courtesy of the government, O'Leary said.
The market and consumers need to now decide what companies they can support, he said, adding that those that need to fail must fail and be replaced with something else.
What's Next: The government's action to support companies was a smart move months ago, but it is now clear "they are not all going to make it," O'Leary said. The last thing the market needs is another $2 trillion in fresh government funds being pumped into the economy, in his view.
"Why do I want to pour government money — my money as a taxpayer — into businesses that are not going to survive?" O'Leary asked. "And the only way to do that is let 'Mr. Market' do its work."
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Benzinga file photo by Dustin Blitchok.
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