Wineries' Direct Shipments Reach $1.4 Billion

Small wineries had 74% market share but larger wineries grew more rapidly

by Jim Gordon
ship compliant direct shipping report
San Rafael, Calif.—Small wineries dominated the fast-growing market for direct-to-consumer wine shipments, according to a report to be released Monday by ShipCompliant and Wines & Vines.

U.S. wineries producing less than 50,000 cases per year collected 74% of the $1.4 billion 12-month total for DtC shipments through July 2012. Shipments by wineries in all size categories except one grew in value, for a total growth rate of 10%, which beat the 7% rate at retail stores.

These results and many more are contained in the Direct-to-Consumer Shipping Report 2012 available free for downloading here. It provides data-driven information regarding the scope and trends of this distribution channel and and weighs the size of wineries, wine varieties shipped, price-point performance, destination of shipments and regional considerations.

Results by winery size
Wineries making 5,000-49,999 cases per year dominated the DtC sector with 51% of value and 47% of volume shipped. They grew at 6% in value over the previous 12 months. Wineries in the 1,000-4,999 cases per year bracket represented 18% of value and grew by 12%. Wineries producing less than 1,000 cases accounted for 5% of the total value.

Medium and large wineries accounted for only 26% of DtC shipments by dollars, but their sales were growing. Those producing 50,000-499,999 cases increased sales by 27%, and the biggest wineries (producing 500,000-plus cases per year) grew by 6%.

The two smallest winery size categories—less than 1,000 cases and 1,000-4,999 cases per year—were the only ones to shrink in volume. The smallest size was the only category to experience falling sales, by 9%. The good news for those smallest wineries, however, was that consumers paid on average $51 per bottle for their wines.

The report calculated that DtC shipments accounted for 9% of the total retail wine market.

October, November, March and April are the most popular months for shipments, the data showed. October shipments grew the most and surpassed November as the biggest DtC month with 400,000 cases shipped. Cases shipped in 11 out of 12 months increased.

DtC shipments by price
The average price of all wines shipped DtC increased by $1.11 to $37.69 per bottle. Wines priced at $100-plus grew 15% in sales, making them the hottest price category, but not the biggest: The most profitable category was $50-$99 wines, which brought in $405 million.

Average prices varied significantly by month shipped. The average price per bottle dipped as low as $29.91 in June and rose as high as $45.72 in March.

Wines in all price categories grew in either volume or value or both, but the $15.99-$19.99 category was the only one that saw a decrease in both volume and value.

Sales by varietal
Cabernet Sauvignon, Pinot Noir and Chardonnay held places No. 1, 2 and 3 in percent of value and claimed 59% of volume.

Cabernet Sauvignon brought in $414 million. Pinot Noir grew at the fastest rate of the top three varietals, climbing 19% in value. Zinfandel, in the No. 4 spot, grew by 16%. Syrah, which has slumped in retail store sales, grew by 13% in DtC shipments.

The biggest losers in value were Merlot, Sauvignon Blanc and sparkling wines.

By regions and states
Napa Valley led all regions in value of wine shipped, with sales of $670 million representing 49% of the DtC market. Sonoma County tied with the “Rest of California” category as No. 2, each responsible for 20% of sales.

The DtC shipping report also analyzed the destinations of shipments. Four states—California, Texas, New York and Florida—accounted for 54% of all wine shipped direct to consumers. California consumers received one out of every three bottles shipped. But the District of Columbia received the most bottles per capita, at 0.49.

Maryland saw the biggest increase in bottles shipped, due to its legalization of direct shipping by wineries that went into effect July 1, 2011. The next fastest-growing states were Pennsylvania, North Dakota and Delaware.

What was covered
The report focused entirely on wines that were shipped directly to consumers from wineries. It did not examine the “direct sales” of wines, which might include wines purchased at the winery and carried home from the winery without any shipment involved (carry-out sales). Additionally, this report did not include data from retailers that shipped wine directly to consumers.

The report’s authors observed that the 10% growth rate in this wine sales channel was especially impressive considering the slow economic growth during the period measured. They concluded, “Even while the economy traverses difficult economic waters, this growing channel far outpaces the general wine retail sales marketplace. This fact provides us with optimism for the channel going forward as the economy improves.”

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