04.13.2018  
 

Northwest Wines Drive Strong Sales

Oregon and Washington wines claiming larger shares of off-premise and DtC sales

 
by Peter Mitham
 
“acrobat“
 
Oregon and Washington wines enjoyed robust growth in the off-premise sector, especially in the desirable $10 to $20 price range.

San Rafael, Calif.—Sales of wine through all channels posted steady growth in March, with market research firm bw166 reporting that total sales of wine in the U.S. increased 5% to $3.7 billion. Northwest wineries were key beneficiaries of the activity, with growth in both off-premise sales and direct-to-consumer (DtC) shipments outpacing the national average.

“The industry’s expanding, and there’s a lot of growth potential up there,” said Hugh Reimers, president of the Californian wine company Foley Family Wines that just announced its purchase of the national brand Acrobat from King Estate Winery in Eugene, Ore. The deal will give Foley a 160,000-case foothold in the hot $11 to $19.99 price segment, and support the growth of The Four Graces, a brand it acquired in 2014 that typically sells in the $25-plus range.

These are the off-premise price segments in which both Oregon and Washington have excelled.
According to the latest Wine Industry Metrics report by Wines Vines Analytics, data for multiple-outlet and convenience stores tracked by the retail scan data firm IRI indicates that Oregon wines saw their strongest growth in the 52 weeks ended March 25 in the $25-plus price range, at 19%. Growth averaged 14% in the three tiers between $11 and $24.99.

Underscoring the growth potential is the fact that Oregon claims just 2% of sales through off-premise outlets IRI tracks, or $122 million, versus 7% for Washington, which has off-premise sales of $489 million.

Dominant position
Washington has managed to leverage its dominance at the lower end of the off-premise market to move shoppers up the price scale. Its strongest growth in the 52 weeks ended March 25 occurred at $15 to $19.99 a bottle, with sales increasing 40% to $16 million. Sales in higher price segments averaged 24% growth, totaling $15 million in the period.

Off-premise channels weren’t the only place Washington saw consumers trading up. DtC shipments also increased in value. Wines Vines Analytics/ShipCompliant by Sovos reported that Washington bottles shipped averaging $33.57 in the latest 12 months, up 4% from the previous year. Washington shipment volume increased 28% to $108 million.

However, the real leader in the Northwest when it comes to DtC is Oregon, which saw shipments rise 35% to top $163 million in the latest 12 months on a case volume of 345,654. Average bottle price increased 3% to $39.37.

Both states compared favorably to the nation as a whole, however, which logged DtC shipments of $342 million in March, up 10% from a year earlier. Shipments in the latest 12 months totaled $2.8 million, up 13% from a year earlier. The average bottle price in the latest 12 months was $37.25.

Foreign headwinds
But if the Northwest showed well, domestic wines as a whole continue to see strong competition from packaged imports. Data from bw166 data indicated that domestic wine sales, including bulk imports, increased 1% in the latest 12 months to reach $41 billion. The increase stemmed from a mere $347 million in additional sales in the period. Half the additional sales occurred in March, underscoring just how robust the month was relative to the rest of the year. Domestic table wines drove the growth, rising 4% on $145 million in additional sales for the month; this contrasted with slightly weaker sales for the segment over the past 12 months.

The weakness stemmed from strong demand for packaged imports, which accounted for $21 billion in sales in the latest 12 months. This was up 6% from the previous year, a gain of $1.3 billion – or nearly four times the gain domestic wines posted. The increase was the key reason total U.S. wine sales saw a lift of 3% in the period to $63 billion.

Keeping track of all the numbers (not to mention new tax policies) meant good times for finance positions, which experienced a 131% surge in demand off a relatively low base according to Winejobs.com’s Winery Job Index.

The index as a whole posted a moderate 4% increase, with winemaking positions experiencing 9% greater demand and DtC positions, including hospitality and retail, increasing 4% to 497. This established a new benchmark for the index, exceeding the previous high of 476 set in March 2017.

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