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09.15.2013  
 

DtC Shipment Growth Leads Wine Metrics

Wine sales and hiring remain strong, but direct-to-consumer sales see largest increase

 
by Andrew Adams
 
 
direct to consumer wine sales
 
August marked the fourth month in a row that direct-to-consumer shipments exceeded their levels from the same months of 2012, according to the Wines & Vines/ShipCompliant Model.

San Rafael, Calif.—Direct-to-consumer shipments in August were up 23% over last year and totaled $67 million for the month.

August marked the fourth month in a row that DtC sales exceeded levels from the same months in 2012. The sustained growth in the DtC segment was the most remarkable of all the positive industry metrics included in the latest report from Wines Vines Analytics, the new name of the wine industry data collection and analytical function of Wines & Vines.

DtC sales in past 12 months
DtC sales are also 13% higher for the past 12 months compared to the same period a year earlier, according to the Wines & Vines/ShipCompliant Model.

The majority of the total value of DtC shipments is found at the higher price points, making the channel much different from off-premise store sales. For Cabernet Sauvignon, the $100-plus segment accounts for more than $150 million of the $1.5 billion in total DtC shipments. Wines Vines Analytics focused on Cabernet Sauvignon wines during its analysis of August data.

In the off-premise category, the $5-$7.99 segment is Cabernet’s best seller, although it performs nearly as well in the next two more-expensive segments, forming a slightly concave top to the classic bell curve.  The average sales price overall is $7.36, but in 750ml bottles the average rises to $9.47.

Higher priced Cabernets see strong sales
Domestic Cabernet grew fastest in the $20-plus segment, where sales increased 19% during the past year, and volume increased 32%. It may have come at the cost of brand prestige in some cases, however, since the average bottle price dropped 10%, or $2.93, along the way.

The second-fastest growth for Cabernet came in $11-$14.99 brands, as sales rose by 13% and volume climbed 11%. The average price rose by 21 cents. Sales at the two lowest price points dropped, both in dollars and volume. 

Cabernet Sauvignon enjoyed $1.28 billion in sales during the 52 weeks ending Aug. 11 at stores tracked by IRI, a Chicago, Ill.-based market research firm. Its sales growth rate of 7% beat Chardonnay’s 4%, and matched the overall domestic wine sales growth rate. Cabernet increased in volume by 4% and price per bottle by 23 cents, while Chardonnay rose just 4% in sales, 1% in volume and 16 cents per bottle

Cabernet in the flash market
Just as Cabernet Sauvignon is popular in the off-premise and direct-to-consumer segments, the variety represents a quarter of all wines offered by flash websites during the past 12 months. Of the 5,090 total offers for domestic wines, 1,246 were for Cabernet Sauvignon, and almost all (93%) of these wines were from wineries in California. Napa County wineries accounted for 60% of the California Cabernets and 25% were from Sonoma County.

By winery retail price, the offers were almost equally divided above and below $50. Flash sites offered 660 wines with a retail price of $49 and less, and 580 with a retail price of $50 and more. However, when looking at offers by flash price, 1,019 (or 82%) of the Cabernet wines had a price of less than $50, and 492 were offered for less than $20 with an average price of $16. The average flash price in the $20-$49 range was $33.

Flash offers down 16%
Discounted wine offers by flash sites continued to decline compared to 2012, reaching levels similar to 2011. In August, flash websites offered a total of 366 domestic wines in August, and that total is just five offers more than in August of 2011 and 72 offers less than in August 2012.

The 5,088 offers in the past 12 months is also 2% lower than the 5,204 offers during the same 12-month period last year.

Hiring remains strong
The Winery Job Index remained 7% higher than August 2012, driven by a 44% increase in hospitality jobs. That sector has fueled record levels of hiring activity through the spring and summer. The sales and marketing index decreased 8%, and the production index dropped by 9% compared to August 2012.

 

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Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
March 2013 $546 million
5%
$6,988 million
7%
March 2014 $572 million $7,451 million
     
Direct-to-Consumer Shipments » Month   12 Months  
March 2013 $177 million
20%
$1,483 million
10%
March 2014 $213 million $1,634 million
     
Winery Job Index » Month   12 Months  
March 2013 253
15%
166
27%
March 2014 292 210
     
 
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