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05.01.2008  
 

Who Buys Wine Direct?

Winery marketing people learn about their customers at Napa symposium

 
by Jim Gordon
 
 
Winery Direct to Consumer
Napa, Calif. -- It wouldn't be difficult to guess that affluent, suburban professionals from the San Francisco Bay Area who visit wine country often are big customers for wine shipped directly from wineries to their homes.

But how many winery marketing directors would have guessed that some of their other big customers are in Reno, Nev., Birmingham, Ala., Charlottesville, Va., and Bend, Ore.? Or that these customers 10 favorite magazines do not include Gourmet and Vanity Fair, but do include Wired and GamePro?

These were a few of the insights gained by about 240 wine industry attendees at the new two-day Direct to Consumer Symposium which began this morning. Now that 35 states representing 81% of the US market are open for direct-to-consumer sales from out-of-state wineries, those wineries are intensely interested in this sales channel.

The symposium began this morning with an examination of who the direct-buying consumers are. Barbara Insel of Stonebridge Research Group presented her company's picture of these wine drinkers based on an analysis of research by the Napa Valley Visitors Bureau, New Vine Logistics and Nielsen.

She observed that direct-to-consumer sales shot up by 30% from 2005 -- the year that the Supreme Court demanded equal treatment for in-state and out-of-state wineries -- to 2006. In 2007, consumer direct sales grew a healthy 7.4% but in an atmosphere that became increasingly complex as various states enacted permit and paperwork requirements that were complex for wineries to manage.

One other popular direct sales channel for wineries -- their tasting rooms -- saw a rapid 21.2% increase in sales in the second half of 2007, while a third channel, winery wine clubs, fell 10.3%, Insel said. She observed that wine clubs seem to be suffering as the economy dips, perhaps reflecting consumers' reluctance to approve those automatic monthly or quarterly charges from wine clubs.

Insel made the point that people who visit wineries are much more likely to become repeat customers, both directly and from retail and restaurant sources back home who buy those wines indirectly, through distributors. "Ultimately, it's brand building," she said. "I don't see why distributors are not supporting this rather than opposing it."

More than 88% of consumers never buy direct from wineries, according to Nielsen. So who are those rare few who do? Insel said they have higher incomes than normal wine consumers, they include a significant number of Asian-Americans and Hispanics, they are often tech-savvy and get lots of information about wine online, yet they avidly read magazines.

Two speakers from American Express Business Insights shared demographic and sales information gleaned from their vast database of wine-buying cardholders. Joe Kosta and Rachele Dembrowski observed that winery-direct purchases trended from month to month very similarly to purchases from Internet wine retailers, complete with peaks around Thanksgiving and Christmas-New Year's. Yet the retailers had much higher spikes for the December holidays.

Dembrowski said a big study of Am Ex cardholders over a two-year period confirmed that many more West Coast consumers buy direct from West Coast wineries than East Coast consumers do. One reason, she suggested, is that East Coast wine drinkers don't realize yet that most of them can order direct from out of state.

The study showed that Santa Rosa in Sonoma County, Calif., is the hottest spot for Am Ex customers who buy wine direct. Favorite interests beyond wine among direct-buying consumers included tennis, skiing and snowboarding, scuba, sailing and golf.

The symposium continues through Friday morning at the Meritage Resort in Napa Valley. For more information go to coalitionforfreetrade.org.
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Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
November 2014 $708 million
5%
$7,844 million
6%
November 2013 $673 million $7,428 million
     
Direct-to-Consumer Shipments » Month   12 Months  
November 2014 $274 million
21%
$1,799 million
16%
November 2013 $225 million $1,558 million
     
Winery Job Index » Month   12 Months  
November 2014 127
-5%
226
15%
November 2013 134 196
     
 
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