11.15.2018  
 

High-Priced Red Blends Hot in DtC

DtC shipments up 22%, U.S. wine sales rise 5% in latest Wine Industry Metrics report

 
by Peter Mitham
 
hertz
 
Wines priced more than $100 account for 37% or $175 million of the $473 million worth of red blends shipped direct to consumer in the past 12 months.

San Rafael, Calif.—Surging sales of red blends made headline news as consumer spending ticked up following the Great Recession of 2008-2009, but much of the growth was in price bands below $20 a bottle. Today, sustained economic growth has helped produce more discriminating wine buyers — ones buying less but spending more when they do.

Once again, red blends are a prime example. Direct-to-consumer (DtC) shipment data compiled by Wines Vines Analytics/ShipCompliant by Sovos reveal $100-plus bottles claiming the biggest portion of red blend shipments by value at $175 million in the latest 12 months, followed by $30-$59.99 bottles at $128 million. Bottles priced $30 and more represent 80% of all red blends shipped DtC.

Many of those blends feature Cabernet Sauvignon, which remains the dominant red varietal shipped DtC, a channel in which red wines dominate. Wineries shipped nearly $3 billion worth of wine DtC in the 12 months ended October, of which $2.2 billion were the top seven red varietals. Of these, Cabernet led with $860 million in shipments, followed by Pinot Noir at $494 million and red blends at $473 million.

One doesn’t have to go far to find top-tier red blends in Napa Valley, which represents 46% of DtC shipments. Screaming Eagle, Opus One, Harlan Estate, Bryant Family Vineyards all produce examples which are available on an exclusive basis and shipped direct to club members.

Other, more affordable — yet still pricier than most other U.S. wines — are available from Duckhorn Wine Co. and Joseph Phelps Vineyards that is credited with releasing Napa Valley’s first proprietary red blend, Insignia, in 1974.

Shipments from Napa, as well as Sonoma, are also worth keeping in mind with this month’s data, which comes a year after the October 2017 wildfires that ripped through wine country, disrupting shipments. DtC shipments increased 22% in October versus a year ago, when shipments grew just 1%. Combined with five Mondays in October — the most popular day for dispatching wine to consumers — shipments for October increased to $481 million on a volume of 802,651 cases, up 13% from a year ago.

A more discerning consumer was also buying wines through multiple-outlet and convenience stores tracked by market research firm IRI. Off-premise sales in the four weeks ended Oct. 7 totaled $650 million, up 1% from a year ago even as case volumes declined slightly to 8.2 million.

Cabernet Sauvignon remains the undisputed king among red varietals sold off-premise, with sales totaling nearly $1.8 billion in the 52 weeks ended Oct. 7 — 20% of all off-premise sales during the period. Red blends and Pinot Noir rounded out the triumvirate of top reds, with sales of $765 million and $741 million, respectively. All three saw sales increase in the latest 52 weeks versus the other top red varietals, Merlot, Malbec, Syrah and Zinfandel, which lost ground as consumers spent more selectively. Yet consumers’ willingness to spend helped boost the fortunes of all varietals, whether in terms of volume or average bottle price.

All told, total sales of U.S. wine jumped 5% in October versus a year ago, market research firm bw166 reported, the strongest growth seen this year. Sales totaled $4.3 billion, with domestic table wines increased nearly 6% and sparkling wines rising more than 1%.

Total wine sales in the U.S. also rose nearly 5% in the latest 12 months, reaching $71 billion. The period saw domestic wine sales, including bulk imports, rise 4% to nearly $48 billion. Packaged imports increased 6% in the period to $23 billion. Sparkling wines were a driving force, representing 22% of all packaged import sales.

The activity was good news for winery hiring, which increased 14% in October versus a year ago and lifted Winejobs.com’s Winery Job Index to 196. Demand for finance and general administration staff drove activity, with the two categories growing 100% and 81%, respectively. DtC and winemaking positions followed with 56% and 27% growth.

Reflecting a seasonal shift towards slower hiring, demand for vineyard and sales and marketing positions dropped 62% and 40%, respectively. Demand for sales and marketing positions was in line with seasonal norms, however, following unusually strong activity last year. The subindex stood at 133, the median of the past five years.

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