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 key trends we found in analyzing DtC wine shipping data by region. We identified five primary regions that were noteworthy: Napa County, Sonoma County, the Rest of California, Oregon, and Washington. All other wineries were grouped together as Rest of U.S. due to their relatively insubstantial outputs when compared to the five leading regions.
With that in mind, here are our key takeaways:
Napa continues to dominate, despite adversity
Napa Valley wineries have been the dominant force in U.S. wine production for decades. That trend has transferred over to the DtC shipping channel, with almost half of the entire value in the channel coming from Napa exports. In 2017, these wineries shipped 12.4% more in volume and increased the value of their shipments by 14.1% over 2016’s figures. Not too shabby for the deeply entrenched leader of the channel.
What makes these numbers particularly notable this year is the continued growth despite the tragic wildfires that ravaged much of northern California last October. While the fires were devastating in many ways and emerged in the middle of peak harvest season, the year-over-year shipping numbers were strong for Napa wineries. We’d like to tip our caps to everyone involved for overcoming such adversity and doing amazing work.
Sonoma and Oregon driving growth YOY
While Napa County maintained its massive share of the market, it was actually a couple of disruptive up-and-comers who drove overall growth: Sonoma County and Oregon. These regions accounted for 40 percent of the $361 million increase in shipment value.
Sonoma wineries increased their shipment volume by 25 percent and the value of shipments by 23 percent, while Oregon put up 31.2 percent and 34.9 percent increases in those respective categories.
While Oregon wineries still pale in comparison to Sonoma’s production overall – Sonoma accounted for 26 percent of the DtC channel’s shipments, while Oregon is under 10 percent – the state is clearly on the rise. Since 2012, Oregon wineries have increased the volume of their shipments by a whopping 214 percent. Not to be outdone, the value of those shipments increased by 227 percent over the same time period. It’s safe to say Oregon has the potential to be the DtC channel’s next big player.
The Rest of California is at risk of falling behind its neighbors
Wineries in Napa and Sonoma counties had great success in 2017, but their California brethren did not fare quite as well. The Rest of California region only saw increased of 3.7 percent in volume and 2.1 percent in value. In particular, red blends and Pinot Noirs underperformed significantly, which was the region’s ultimate downfall.
California wineries outside of Napa and Sonoma have struggled to keep pace with the growth seen in the rest of the DtC shipping channel, as its market share has dropped from 28 percent in 2012 to 22 percent last year. Despite modest growth in 2017, there is reason to be alarmed.
Other U.S. wineries are performing well, but remain mired in relative obscurity
The Rest of U.S. category – it would be strange to call this a “region,” so we’ll go with “category” here – saw steady, impressive growth in both volume and value, at 16.9 percent and 16.2 percent respectively. These figures are indicative of a strong year in the category, but it’s important to remember these wineries still account for well under 10 percent of the value of DtC shipments.
However, with sustained growth in the coming years, this category has the opportunity to make some noise in the market and gain a larger share.
Keep an eye on Washington in the years to come
Washington accounts for under 5 percent of the DtC channel’s value, but don’t sleep on the Evergreen State. Washington had some of the biggest increases of any region in 2017, with volume increasing by 25.8 percent and value jumping by 32.8 percent. The Pacific Northwest’s wine production and shipping volumes are expanding rapidly and look poised to continue doing so for the foreseeable future. At this rate, it won’t be long before Oregon and Washington make even more sizable dents in the DtC channel’s market share.