In January, we released the 2018 Direct-to-Consumer Wine Shipping Report, which offers an exclusive deep dive into the direct-to-consumer (DtC) wine shipping channel with our partners Wines & Vines. The report is produced using Wines & Vines’ algorithm, which extrapolates data from the extensive ShipCompliant by Sovos transaction library.
This article will focus on a few key trends we found in analyzing DtC wine shipping data by the size of the wineries using the channel. The report broke wineries into four categories based on the volume of wine they produce:
- Limited Production (fewer than 1,000 cases)
- Very Small (1,000 to 4,999 cases)
- Small (5,00 to 49,999 cases)
- Medium (50,000 to 499,999 cases)
- Large (more than 500,000 cases)
Limited Production wineries went for quality over quantity.
The smallest category of wineries saw a decrease in volume of shipments by 11 percent last year. On the surface, that sounds troubling for these smaller operations. But they made up for any lost volume with a remarkable 26 percent increase in the average price per bottle shipped to $64.37 each, the largest average price of any category. This is the first time Limited Production wineries have claimed that title since 2010. Overall, these wineries increased their value of shipments by 13 percent.
Very small wineries slightly underperformed their lofty standards last year.
Since 2012, this category has outperformed the overall DtC channel, but this was not quite the case in 2017. Very small wineries still saw increases in both value and volume, at 11 percent and 13 percent, respectively. However, the category has increased its value over 200 percent since 2010, compared to 127 percent for the overall channel. So, while these increases are still positive, they are actually a bit of a step back relatively.
Small wineries maintained their dominance of the channel.
While it may come as a surprise to some, wineries that produce more than 5,000 but fewer than 50,000 cases per year have been the driving force behind the DtC shipping channel for years. This trend continued in 2017, with 70 percent of the channel’s value generated by wineries in this category. Small wineries accounted for 43 percent of all DtC shipments and 46 percent of all DtC sales. This category appears to have a stranglehold on the top spot in DtC channel value.
Medium-sized wineries rebounded from an underwhelming 2016 to drive growth.
While smaller wineries may have held steady in 2017, the medium-sized category took massive steps forward, experiencing an incredible rebound from a poor 2016 performance. This category was responsible for 37 percent of the DtC shipping channel’s total dollar growth, with a 22 percent increase in volume of shipments. While medium-sized wineries contributed greatly to growth, they were only accountable for a more modest 23 percent of the overall channel.
Large wineries followed up a wildly successful 2016 with a meek 2017.
In 2016, large wineries looked to be en route to taking control of the DtC shipping channel, delivering some of the largest year-over-year volume growth in any category ever. But these wineries did not continue their explosive growth from last year, with underwhelming 3.4 percent and 4 percent increased in volume and value, respectively. With an average price per bottle of just $16.14, this category relies heavily on volume increases, and it fell somewhat short in 2017.