On March 22, ShipCompliant hosted a webinar on sales trends in the Direct to Consumer (DtC) wine market from 2017. The webinar had Alex Koral of ShipCompliant by Sovos, and Jim Gordon from Wines & Vines, reviewing key data points from the 2018 Direct to Consumer Wine Shipping Report along with some responses from a recent Wines & Vines DtC seller’s survey.
This all served as the backdrop for a robust discussion between Alex and Jim on how the DtC market is developing, where wineries should put their current DtC sales efforts, and where the market may go in the future.
The DtC Wine Shipping Report is an annual collaboration between ShipCompliant by Sovos and Wines & Vines, which, by aggregating sales data into an industry model, provides detailed insights into the DtC market. The 2018 report is free to download here.
For those who were unable to attend the live broadcast of the webinar, it will soon be posted for you to stream.
2017 Key Trends
As discussed in the webinar, 2017 was another banner year for the DtC wine market. While this market has been growing unabated for years, both the total volume and value of wine shipped DtC in 2017 grew at a remarkable 15% rate.
In absolute numbers, the 2017 DtC market saw 5.78 million cases shipped for a value of $2.69 billion. This represents a doubling of the market since 2010.
Notably, DtC sales now represents 10% of the total U.S. market of off-premises consumption wine sales. (DtC sales are those where the wine purchased is shipped to the consumer’s home through a common carrier, include remote/online sales, wine club sales, and sales made in tasting rooms where the consumer does not take immediate possession of their wine.)
Digging a Little Deeper
2017 was fairly stable in terms of which states saw the most deliveries, with California still far ahead of any other state. Though other usual suspects like Texas, New York, Illinois, and Florida remained near the top. The biggest shift was Pennsylvania, which leapt all the way to the 10th largest destination for DtC sales, growing by well over 150%. Big growth was expected, as 2017 was the first full year for DtC sales in Pennsylvania; getting all the way into the top ten, though, was a pleasant surprise.
When it comes to where DtC wine is coming from, again there weren’t any big shockers, with California (and in particular Sonoma and Napa counties) shipping a majority of DtC sales. However, both Oregon and Washington saw notable growth of 30% and 25% more bottles shipped, respectively. This reflects both greater awareness among consumers of new sources of wine, and greater efforts by these wineries to market their products.
2017 also continued a trend in which wineries are engaging in the DtC market. Historically, DtC sales have been dominated by smaller scale wineries (those producing fewer than 50,000 cases annually), which captured roughly 75% of the total value of DtC sales in 2017. But medium sized wineries (producing between 50,000 and 500,000 cases annually) grew their DtC sales by nearly 30% in terms of total value shipped.
While smaller scale wineries also grew in value of DtC sales by a nothing-to-sneeze-at 10-13%, this does show that larger wineries, once largely focused on traditional sales through local wholesalers and retailers, are noticing the benefits of DtC sales and making efforts to get in on the market.
Predictions for the Future
Data from Wines & Vines from January and February show a big bump in year on year sales. If these trends keep up for the rest of 2018, we could be in line for another exceptional year for DtC sales. As the central coast recovers from last year’s fires, and as regions like Oregon and Washington continue to grow, 2018 could be very exceptional, indeed.
One of the more interesting takeaways from the webinar came when Alex and Jim examined the generational divides. As could be expected, the Boomer generation still dominates, buying nearly half of all DtC wine; and while there is an enormous amount of attention paid to Millennials’ potential as a customer base, they’re still an undeveloped market, making up less than 10% of the total DtC market.
Instead the big news is the rise of Generation X as wine buyers. While less numerous than both the Boomer and Millennial generations, Gen-Xers are now moving into their peak purchasing years. They have both the interest and the money to go after more luxury items, like wine. And they have the know-how and drive to seek it out through alternative market lines, like online sales.
This all tends to indicate that wineries should be looking more at Gen X in the coming years as a key customer base. Boomers and Millennials, of course, should not be ignored. But as one group ages out of, and the other malingers into the wine market, it is critical to make sure that the middle ground is captured.
In all, when developing your DtC strategies, you should use as much data as you can get. It is this kind of insight that we seek to bring to the industry through webinars and reports. Make sure to download a copy of the 2018 DtC Wine Shipping Report, and check regularly with Wines & Vines, who provides monthly updates on the market so you can stay ahead of any trends as they develop.