U.S. Wine Industry Stays Strong in February

All key industry metrics positive; total U.S. wine sales increase

by Andrew Adams and Jim Gordon
wines vines analytics metrics dtc
San Rafael, Calif.—All of the key metrics of the U.S. wine industry made positive gains in February, with some posting double-digit growth over the previous year as sales and winery hiring stay strong.

According to the latest monthly metrics report by Wines Vines Analytics, total U.S. wine sales grew by 1% or more than $200 million in February; off-premise sales increased by 4%, and direct-to-consumer shipments rose by 32% to $175 million.

The growth in DtC shipments is particularly strong but stems from 2016 being a leap year. February’s extra Monday on Feb. 29 meant more shipments went out during the month than in previous years. According to the ShipCompliant/Wines & Vines model for tracking DtC shipments, Mondays are one of the busiest days for shipping. The total value of February DtC shipments came to $175 million, and the volume was 370,732 cases. Thanks to the extra day in February, the 12-month total of DtC shipments also leaped by 11% to more than $2 billion.

Off-premise sales of domestic table and sparkling wine rose by 4% in February compared to February 2015, according to Chicago, Ill.-based market research firm IRI. The IRI report based on multiple-outlet and convenience stores also showed that sales increased 6% during the most recent 52 weeks. Volume grew more slowly at 3% for 52 weeks, while the volume of sales in February was up just 1% from a year ago.

IRI recently created two new high-end price segments to break down off-premise sales in their reports, which are released every four weeks. The change helps wineries and the trade to focus on the fast rates of growth in these segments.

In terms of sales growth, domestic table wines priced $20-$24.99 per bottle and packaged in glass are the hottest category, with a 30% sales increase in 52 weeks.

The dollar total in this category, however, is small compared to the most popular segments priced at $4-$7.99 and $8-10.99 per bottle. These two categories account for more than $4.5 billion in total sales, while the $20 to $24.99 category total is less than $500 million.

While lower priced wines still have the highest total value and volume, sales growth is at higher price points.

Sales growth at higher price points

Growth in the higher price segments is by now an established theme of the continuing premiumization trend in the off-premise channel. IRI’s three lowest priced segments of bottled wine had the lowest growth rates of the seven segments, and the four higher priced segments all experienced double-digit growth.

Wines priced less than $4 per bottle shrank by 4% in sales, and sales of those $4-$7.99 per bottle were flat. The change in direction began in the $8-$10.99 bracket, which had 8% growth.

Total wine spending by U.S. consumers increased by 1% from $2.67 billion to $2.69 billion. The 12-month total grew by 3% from $36.76 billion to $37.89 billion. Total wine sales include on- and off-premise and DtC sales and are based on data by BW166.com and Wines Vines Analytics.

Winery hiring activity saw some strong increases in February. The Winery Job Index, which is based on postings to WineJobs.com, rose to 309, which is 12% more than last year.

Hiring activity growth was the strongest in the hospitality job subcategory that rose by 22%. The subcategory typically starts increasing this time of year as wineries begin to add staff to help with the increasing number of visitors expected during the spring and summer.

Sales and marketing also posted a solid gain of 16% over February 2015, and winemaking fell just 3% against what had been an unusually high rate of activity the previous year.

Flash offers keep falling

The only negative trend seen in the industry metrics is the number of offers by flash websites, which sell wines at deeply discounted prices for a limited amount of time. For the past four consecutive months, the monthly total of offers has been lower than the previous year.

February’s total flash offers came to 439, which is 18% lower than the 533 offers in February 2015. The reason for the dramatic drop during this most recent month is because Invino held a special sales event last year that generated 182 offers.

The lack of special sales events was behind the drop in offers in three of the past four months. However, the 12-month total of flash offers is still 8% more than last year.

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