Winery Hiring, Shipments Rebound from October Wildfires

U.S. wineries set new benchmark for direct-to-consumer shipments

by Peter Mitham
wine direct to consumer sales
DtC shipments increased 26% to $417 million in November versus a year earlier, and shipment volumes totaled 803,063 cases for the same month.

San Rafael, Calif.—Direct-to-consumer (DtC) shipments set a new benchmark in November as wineries shipped orders deferred in the midst of the wildfires that swept through North Coast wine regions in October.

Shipment volumes totaled more than $417 million, as 803,063 cases headed to consumers across the state and around the country. This represented 26% more shipments than in November 2016, and a 20% increase in cases.

October is traditionally the peak of club shipments as cooler autumn weather kicks in, and this year saw a new benchmark set during the month. However, deferred shipments led to exceptionally strong growth in November and pushed tallies to even greater heights. The increase was augmented by orders placed in support of affected wineries.

Perkins Harter, a small winery in Healdsburg, Calif., is emblematic of this trend. Wildfire came within 3 miles of the winery’s warehouse in Windsor, Calif., and it halted all shipments for the duration of the disaster.

“I basically suspended…shipments for the rest of the month of October,” winemaker Shelby Perkins said.

What is usually a popular time for shipping was pushed into November, but even an announcement that shipping had been halted didn’t stop the orders from flowing in.

“People went to my website and tried to order anyway, because I think people wanted to find a way to contribute any way they could,” Perkins said. “They knew that buying wine would be a way to support the industry.”

Perkins has pledged 20% of all sales to wildfire relief as a way to show support and allow others to do so as well.

Winery Job Index

Shipments weren’t the only aspect of winery operations that saw growth in November. Notwithstanding a minor adjustment to WineJobs.com numbers, demand for sales and marketing positions as well as vineyard labor demand remained exceptional, rising 78% and 33%, respectively, versus a year ago. The activity drove the Winery Jobs Index 6% higher, to 190 for the month. Other subcategories saw activity fall, with direct-to-consumer positions (including tasting room and retail) dropping 29%.

The rebound in shipments and hiring stood out against otherwise lackluster growth on the national front.

U.S. wine sales rose 2% to $3.8 billion in November 2017, market-research firm bw166 reported, modest growth from a year ago. Sales for the latest 12 months rose 1% to $41 billion. Total sales of domestic wines and packaged imports rose 3% to $63 billion in November versus a year earlier.

Domestic wines generally showed weaker growth, but bw166 managing partner Jon Moramarco felt sales remained reasonable, even as French imports (particularly rosé and Champagne) grabbed a larger share of retail dollars. Packaged imports posted the strongest growth of any segment at 5%.

Underscoring the weaker picture on the domestic front was a $29 million drop in domestic wine sales in the latest 12 months, a fact hardly worth mentioning were it not that the decline was countered by rising sparkling wine sales, which increased by $129 million, or 8%, to $2.3 billion.

Similarly slim movement was seen in off-premise sales through multiple-outlet and convenience stores in the four weeks ended Dec. 3, 2017, which market research firm IRI reported rising 1% to $777 million versus a year earlier. Domestic sparkling wine sales increased 2%: twice the rate of domestic table wine growth. Sales in the previous 52 weeks rose 3% to $8.8 billion, with sparkling wines again leading growth at 4% versus 3% for table wines.

The most active segment of the market may well have been the top end.

While imported table wines priced $15-$19.99 per bottle saw the strongest growth through multiple-outlet and convenience stores IRI tracks, gaining 20% in the latest 52 weeks, domestic table wines priced $25 and up ranked second, with sales growing 17%. This was the strongest growth among domestic wines at any price, and slightly above that of similarly priced imports.

Overall pricing in the $25+ segment outpaced growth in domestic table wines overall, with a 2% increase to $35.13 per bottle. The gain reflected the ongoing willingness of consumers to spend more in a strong economy and, to a lesser degree, the popularity of red wines. Cabernet Sauvignon holds a 40% share of wine sales above $25 per bottle, with per-bottle pricing for the varietal increasing 2% in the past 52 weeks to $45.22.

Similarly, even as the direct-to-consumer channel has broadened to include lower priced bottles, the average price of bottles shipped increased 5% in November to $43.27, well above the 12-month average of $37.16. The priciest bottles are almost exclusively red wines: Cabernet Sauvignon, red blends and Pinot Noir represented approximately 88% of $60-plus bottles shipped. Chardonnay, the sole white varietal among the top five wine types in the DtC price segment, ranked fourth with $56 million in sales in the latest 12 months.

While shipments typically drop in December, the activity promises a strong finish to the year that has seen DtC shipments rise 15% in the latest 12 months.


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