Wine Industry Metrics Show Steady Growth
DtC shipments stay strong despite onset of summer; flash offers up
Off-premise sales continued a pace of steady growth; the direct-to-consumer channel reached $61 million despite it being one of the slowest times of the year for wine shipping, and winery hiring remained bullish in July. For the complete metrics report including more data and analysis, visit the Wine Industry Metrics page.
The overall Winery Job Index grew 10% above July 2013, with strong growth in both the winemaking and hospitality fields. Winemaking grew by 15%, which is not uncommon for July as winemakers hire additional staff for the coming harvest. The hospitality index, however, was 21% higher than July 2013. A 22% decline in the sales and marketing index was not enough of a drop to crimp overall job index growth.
Off-premise sales steady
According to Wines & Vines’ analysis of data collected by Chicago, Ill.-based market-research firm IRI, the rate of off-premise sales of domestic wine stayed the same in July as in May and June. Total sales from the most recent four weeks tallied $557 million, a 5% increase from the same period a year ago. The 52-week total reached $7.6 billion, which is 6% more than a year ago.
Chardonnay still holds the largest share of the off-premise market at 19% and accounted for $1.8 billion in sales, according to IRI’s data from multi-outlet and convenience stores. While Cabernet Sauvignon is in second place by market share, this varietal wine’s sales growth rose from 7% to 10% among all domestic and imported Cabernets. The fastest growth for a major varietal or wine type was for red blends, which grew 16%. Merlot slipped by 3%, and white Zinfandel sales dropped by 8%.
Flash offers remain strong
Flash websites, which sell wines at steep discounts for a limited amount of time during what’s known as “flash sales,” made about 100 more wine offers per month during the first seven months of 2014 than during the same period in 2013. There were 483 flash offers in July, up from 402 in July 2013.
The total number of offers for the 12 months ending in July was also up by more than 17%. Flash websites offered 6,073 wines during the 12 months ending this July (up from 5,162 wines during the 12 months ending in July 2013).
The largest growth in number of offers between the two 12-month periods was for white wines. Offers for white wine blends grew by 24%; Chardonnay increased by 36%, and Sauvignon Blanc enjoyed the largest increase of 54%. Flash websites offered 208 Sauvignon Blanc wines during the 12 months ending in July 2013 and 320 during the same period ending this July. However, Sauvignon Blanc accounted for less than 5% of all offers during the entire 24-month period.
The number of offers for Syrah dropped by 2% (from 256 to 250) between 2013 and 2014, and Merlot saw a slight increase from 191 to 201 offers.
Big discounts for Syrah
The most heavily discounted wine varietals on flash sites are Syrah and Chardonnay. Syrah, with an average winery retail price of $40 and an average flash price of $23, had the largest average discount at 44%, followed by Chardonnay’s average discount of 43% during the 12 months ending in July.
Syrah also had one of the highest average discounts, which is understandable given the grape’s long struggle in the U.S. market. Steve Dorfman, a broker and partner with The Ciatti Co. based in San Rafael, Calif., said it’s not surprising to see the biggest discounts on Syrah, which has not been able to resonate with consumers. “I can understand that there would be some deeper discounts for that,” he said.
DtC Shipments Grow Despite Heat
Direct-to-consumer shipments continued to grow faster than off-premise sales in July. The value of shipments increased 9% over July 2013 and 10% compared to the previous 12-month period, according to the Wines & Vines/ShipCompliant Model. It meant that the usual low point of the year, due to hot weather that can damage wine shipments in transit, was almost $5 million higher than in 2013.