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Metrics Signal Popularity of Red Blend Wines

Winery hiring activity stays strong in February, overall wine sales remain positive

by Andrew Adams
red blends dtc
In the DtC shipment channel red-blend wines generated much more revenue in the highest priced segments, than the lower or mid range.
San Rafael, Calif.—The popularity of red blend wines is clearly evident in the most recent batch of wine industry metrics by Wines Vines Analytics.

At both the relatively low price points of off-premise sales and in the rarefied air of high-end direct-to-consumer (DtC) shipments, red blends are hot. All other key wine industry metrics also posted positive growth in February, with the Winery Job Index growing by more than 20% over 2013 figures for the fourth consecutive month.

Off-premise sales
According to data from Chicago-based market research group IRI, red blend wine sales grew by nearly 20% in the past 12 months. The company tracks sales in liquor, grocery, drug and convenience stores, and red blends in the $8 to $10.99 segment were exceptionally strong during the past 12 months, growing to nearly $300 million. Sales of red blends priced higher than $20 also did better in the past 12 months than the same period the previous year.

Total off-premise sales grew by 7% in February compared to the same month in 2013, and the 12-month total also grew by 7% to $7.4 billion. While red blends/Meritage wines had the strongest level of growth for the past 12 months, Fumé/Sauvignon Blanc and Pinot Noir also grew by more than 10%.

At the high end, red blend wines with an average bottle price of more than $100 accounted for more than $90 million in DtC sales during the past 12 months through February. Wineries with allocated sales make up a significant portion of DtC shipments, and these wineries often have non-varietal labeled proprietary blends.

Total DtC sales grew by 12% from February 2013 to $126 million, and the 12-month total came to $1.6 billion, which is 7% more than the same period last year.

Hiring remains strong
The Index rose 21% in February over a year ago to maintain a steady streak of strong growth. The index increase was led by job offers in the hospitality sector, which increased 45% over last year and is up 41% year-to-date.

Winemaking job offers in February stayed relatively flat compared to January, but hiring activity in production was still 13% above where it was last year.

Winery activity on flash sites
Although the number of wineries with flash offers each month has steadily increased since Wines Vines Analytics starting tracking flash offers, it appears the total number of wineries participating in the channel is on the decrease.

Generally the number of unique wineries making an offer has increased each month, yet a detailed look at the offers reveals they’re often from the same wineries. Based on data for the past 12 months through February, the total number of wineries with a flash offer was 1,041, or 13% of all U.S. wineries. For the 12 months ending in November 2012, 1,352 wineries, or 18% of all wineries, made a flash offer. The rate of participation fell for wineries of all sizes except for the 56 largest, which each produce more than 500,000 cases of wine.

Of the 1,041 total wineries with an offer, most of them are small wineries making between 5,000 and 49,000 cases per year. These wineries accounted for 373, or 36%, of the wineries with an offer. Very small wineries, those making 1,000 to 4,999 cases, had the next highest share of 30%, or 313 offers.

Wineries with an average bottle price above $50 had the highest level of participation in flash offers (26%), and the lowest was for wineries with an average bottle price of $1 to $19.99. Most offers came from wineries with an average bottle price of $30 to $49.99. This category accounted for 438 wineries with an offer in the past 12 months, or 42%.

Flash websites made 408 offers for domestic wines in February. The monthly total was 6% higher than a year ago, and the 12-month total of offers for domestic wines grew 4% to 5,585.

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Wine Industry Metrics
Off-Premise Sales » Month   12 Months  
August 2015 $608 million
$8,178 million
August 2014 $568 million $7,729 million
Direct-to-Consumer Shipments » Month   12 Months  
August 2015 $80 million
$1,908 million
August 2014 $78 million $1,686 million
Winery Job Index » Month   12 Months  
August 2015 261
August 2014 218 224
MORE » Released on 09.15.2015
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