August 2010 Issue of Wines & Vines

Direct Shipments Up 8.9%

New data model measures consumer-direct wine sales

by Jim Gordon

  • Other publications and organizations including the Los Angeles Times and Wine Institute have referenced the DTC Shipment Reporting model.
More signs that the wine industry is climbing back from a two-year recession came from a new study of direct-to-consumer shipping by ShipCompliant and Wines & Vines. The monthly dollar value of DTC shipments grew by 8.9% from April 2009 to April 2010, while the monthly shipment volume rose by 4.9% to 266,000 9L case equivalents.

The collaborative study was not a survey but an anonymous analysis of more than 3 million actual DTC transactions managed by ShipCompliant. A model designed by Wines & Vines using its massive database of wineries, winery sizes, locations and numerous other data points then examined transactions in detail. The DTC Shipment Reporting model measured the total size of the DTC shipment market as 2.6 million 9L cases, or about 1% of total domestic wine production. The 12-month dollar value was more than $1 billion.

The model does not identify or infer specific winery or consumer information and focuses more on the patterns of distribution than the performance of any one direct shipper. It does not cover tasting room carry-out sales, only sales of wine that are delivered direct as a result of wine club memberships, internet or phone orders, and tasting room purchases that are shipped to the customer’s home later.

Monthly DTC shipment sales in April, the first month for which year-on-year reports were available from the model, grew faster than overall retail sales that month. Symphony IRI had measured off-premise sales of domestic table wines at 6.8% in value.

Regions that ship most
Output of the model demonstrates that California is by far the biggest sender and receiver of DTC wine shipments. Looking at wine-producing regions, Napa Valley leads all regions of the United States in cases shipped direct during 12 months (760,000 cases) and in shipment value ($481 million). Sonoma County was second in both measures, the rest of California was third, and the rest of the U.S. was fourth.

Next in line, Oregon beat Washington in DTC shipping, even though Oregon’s overall wine production is significantly smaller. Oregon shipped 188,000 cases worth $75 million, while Washington shipped 121,000 cases totaling $35 million. The volume shipped collectively by the rest of the U.S. outside the West Coast totaled 325,000 cases, more than Washington and Oregon combined.

The model also calculated interesting findings about which regions achieve the highest average bottle prices. Napa leads by a long shot at nearly $53 per bottle shipped, based largely on the fact that high-priced Cabernet Sauvignon accounts for 35% of Napa’s DTC shipments. Sonoma was second at just under $37 average per bottle, based on a diverse mix of varietals in which Pinot Noir was the most-shipped at 22%.

Oregon earned the third highest average bottle price by region of origin, at just under $33, based on 53% of the bottles being relatively high-priced Pinot Noir. In this category it was clear that the non-West Coast regions lagged far behind, with an average price of less than $17 per bottle direct-shipped.

Small wineries dominate
Wine marketers understand that the biggest wineries always dominate traditional off-premise wine sales. Various brands of Constellation, E. & J. Gallo, The Wine Group, Trinchero Family and so on occupy many of the top spots of traditional distribution. Medium and small wineries, however, control the direct shipment sales. The DTC Shipment Model reported that wineries in the three smallest production sizes—all less than 50,000 cases per year—owned 67% of the market by volume.

Small wineries with sales of 5,000 to 49,999 cases annually tallied by far the most DTC shipments, at about 1.2 million cases during the study period. The very smallest two categories, both under 5,000 cases, contributed an impressive 591,000 cases to the total. Medium-size wineries with annual sales from 50,000 cases to 499,999 cases shipped a combined 740,000 cases, while the largest wineries barely registered. Those with more than 500,000 cases in annual production shipped just 33,230 cases direct to consumers during a 12-month period.

Prices by varietals
Cabernet Sauvignon from domestic regions led all other varietals in average price per bottle when shipped direct to consumers.
At an average of more than $60 per bottle, it was far ahead of No. 2 Pinot Noir, which averaged $43, and surprise No. 3, Cabernet Franc at $36.

The numbers seemed to confirm Cabernet Sauvignon’s status as the most coveted, most collected wine type among those not readily available to consumers around the country in their local retail stores. As mentioned before, Cabernet’s high price ties into Napa Valley’s dominance in price per bottle and overall dollar sales.

But when you consider that the lowest average price of 10 popular varietals shipped was nearly $28 per bottle for Zinfandel, and that the producing wineries garner the full retail price, these are all high-value sales. It’s no wonder that smaller wineries find direct shipping a valuable channel, if not the only sales channel, to use.

Price by destination
The DTC Shipment Model also parsed sales by destination and varietal. Perhaps it’s no surprise that New York state consumers buy the most expensive wines on average, at nearly $44 per bottle compared to the national average of $36. Illinoisans were the second biggest spenders per bottle, at $38, while Floridians and Californians averaged $37. Residents of Oregon, by contrast, spent only $29 per bottle on average for their direct shipment purchases.

More detailed results can be extracted from the model to compare the various states’ most desired wines and how much their residents will pay for them. For example, two populous East Coast states, Virginia and New York, vary significantly when it comes to buying Chardonnay and Cabernet Sauvignon direct.

New Yorkers selected Chardonnays that averaged $44 per bottle, about $9 more than their Virginia counterparts. The disparity was even more pronounced for Cabernet Sauvignon. New Yorkers chose Cabernets that averaged a whopping $72 per bottle, while Virginians stayed at $42.

The principals of ShipCompliant and Wines & Vines believe this kind of information can be valuable for wineries considering where to allocate their limited marketing budgets. Wineries that sell Cabernet Sauvignon direct might, for example, consider focusing on New York state.

Top state markets
The roster of top state markets for direct shipments does not look radically different from the roster of top overall wine-consuming states. Much of the activity is on the coasts, but there are good-sized markets in between, too. Here are the “Top 10” states in terms of percentage of total DTC shipments for 12 months ending in March 2010.



  • 29%    California
  • 12%    Texas
  • 7%    New York
  • 6%    Florida
  • 5%    Tie: Illinois and Washington
  • 4%    Virginia
  • 3%    Tie: Colorado and Oregon
  • 2%    North Carolina

Collaborative effort
ShipCompliant and Wines & Vines worked together for more than a year to develop the DTC Shipment Reporting model before it was unveiled June 10 at the ShipCompliant Direct Shipping Seminar & Users Conference in Napa, Calif.

The model uses anonymized data on a portion of transactions managed by ShipCompliant for its winery clients. The model does not examine individual shipments by brand, but concentrates on industrywide performance. The model uses only transaction data from wineries that have opted in.

Wines & Vines publisher Chet Klingensmith stated that the size of this statistical sample was so large, however, that it enabled modeling of the DTC shipment market as if the sample covered all transactions of this kind.

Jason Eckenroth, CEO and founder of ShipCompliant, with offices in Boulder, Colo., and Napa, Calif., explained the genesis of the collaboration by pointing out that wineries have long faced a dearth of information about the size of the DTC shipping market and its sales trends.

“Understanding the value of the direct-to-consumer market is so important to creating effective sales and marketing strategies for wineries of all sizes,” Eckenroth said. “This data-driven analysis provides vital industry benchmarks through the participation of wineries who contribute their direct shipping data in an anonymous aggregate format for this study.”

Eckenroth said that ShipCompliant partnered with Wines & Vines due to its extensive expertise in market intelligence analysis and supplier data points.

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