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02.15.2013  
 

Hot Wine Sales for a Cold Month

Retail and DtC wines sales strong during January, Cab is king in flash

 
by Wines & Vines staff
 
 
wine industry metrics
 
Monthly off-premise sales of domestic table wines grew 7% in January at major food and drug stores compared to a year ago. This was the fastest growth since September 2012.
San Rafael, Calif.—Domestic off-premise wine sales had a good month in January, growing by 7% in value and 1% in volume. That growth rate was the strongest since September 2012, and it kept the 12-month growth average at 6%.

January is usually a slow month for sales. The total at the major food and drug stores analyzed by the Symphony IRI Group (SIG) reached $376 million. Higher priced wines and those packaged in 750ml bottles enjoyed even better growth.

The sales figures are part of WinesVinesDATA’s regular Wine Industry Metrics update available online each month beginning on the 15th. The update also showed direct-to-consumer sales stayed strong in January.  In the flash sales segment, Cabernet Sauvignon continues to lead other varietal wines by offers followed by Pinot Noir and red blends. While the number of wineries in North America surpassed 8,000, the rate of growth has slowed with the United States seeing only 102 new wineries in 2012.

Winery job offers saw a slight drop compared month to month for January because of a decline in sales, marketing and finance job openings but vineyard work offers jumped 43% over 2012.

Off-premise sales up in volume, value
This was the fifth January in a row to experience growing volume for higher priced wines. Wines in the $11-$14.99 per bottle category grew by 8% in volume and 11% in dollars. Wines priced $15-$19.99 increased 10% in volume and 11% in dollars. Continuing a multiple-year trend, $20-plus wines were the hottest category at 24% volume growth and 22% in dollars.

Domestic wines rose one percentage point against imports in market share by dollars, according to SIG, a Chicago-based market research firm. The ratio is now 80% domestic and 20% imports, while a year ago it was 79% and 21%.

The continuing decline in Australian wine sales is dampening imports, which have not grown in value during the past year. Italy is now tied with Australia at 6% market share. Argentina ranks third among imports at retail stores, having grown by 9% to lead Chile and France.

Direct-to-consumer sales increased in January by 4%, which is paltry compared to December’s growth but strong enough to keep the 12-month trend up by 10%. In this segment, the most expensive wines, priced higher than $100, account for the smallest slice of volume while wines priced lower than $20 hold the largest volume share at more than 30%.
wine industry metrics
 
Flash offers show Lot18’s pullback
Flash offers were down slightly year-to-year for January, primarily due to Lot 18, which once led the channel, posting fewer offers as it changes its business model to more of a wine club. The website posted 293 fewer offers in 2012 than it did in 2011.

Cabernet continues to be king in the flash segment, but the websites do offer a small number of lesser-known varietal wines like Alicante Bouschet and Vignoles.

In the past 12 months, WinesVinesDATA collected 5,387 offers for domestic wines by flash sites of which 1,435 (or 27%) were for Cabernet Sauvignon. Pinot Noir came in second with 944 offers (or 17%) of the total and there were 678 offers for red blends. Aside from the major varietals and wine types such as sparkling or rosé, flash sites offered 134 wines made with 37 different varieties.

In January, flash sites offered 383 wines from 282 unique wineries. Of those offers, 100 were for Cabernet Sauvignon and 64 were from Napa Valley. The average retail price for a bottle of Napa Valley Cabernet offered in January was $86.92 and the average flash price was $65.18, for an average discount of 25%.

Wineries by production
The smallest segment of U.S. wineries (less than 1%) accounts for 83% of total domestic production. Only 49 wineries produce more than 500,000 cases a year, but it’s that small group that makes eight out of every 10 cases of U.S. wine.

According to WinesVinesDATA almost all U.S. producers (or 96%) make less than 50,000 cases of wine a year. This largest group of wineries, however, accounts for just 7.4% of the annual domestic wine production of 335 million cases.

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Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
July 2014 $557 million
5%
$7,577 million
6%
July 2013 $533 million $7,128 million
     
Direct-to-Consumer Shipments » Month   12 Months  
July 2014 $61 million
9%
$1,674 million
10%
July 2013 $56 million $1,517 million
     
Winery Job Index » Month   12 Months  
July 2014 312
10%
222
19%
July 2013 283 187
     
 
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