06.15.2017  
 

DtC Sales Extend National Reach

Colorado and Washington state see increase in direct shipments

 
by Peter Mitham
 
wines vines analytics
 

San Rafael, Calif.—Direct-to-consumer (DtC) shipments continue to rise on the back of steady growth in overall U.S. wine sales, with Napa Valley continuing to be a dominant player in the channel.

U.S. wine sales rose 3% in May 2017, market research-firm bw166 reported, topping $3.1 billion for the month and approaching $40 billion for the 12 months ended May 2017. Total wine sales, including packaged imports and all other wines, also increased 3% to more than $60 billion in the 12 months ended May 2017.

DtC sales

DtC shipments continued to post strong growth. Wines Vines Analytics/ShipCompliant reported that the value rose 16% in May 2017 versus May 2016 to reach $213 million in DtC shipments, and case volumes increased 15% during the same period. The slightly stronger growth in value over case shipments pointed to increased shipments of premium wines. Growth in DtC shipments has generally been even, however, with an 18% increase to $2.5 billion for the 12 months ended May 2017, which is in step with an 18% rise in case volumes for the same period.

The growth is good news for California, where 85% of U.S. DtC shipments originate. And within California, Napa wineries account for 58% of DtC shipments, making the channel’s growth of key importance for them.

The latest numbers from Wines Vines Analytics/ShipCompliant underscore just how much Napa’s national reach is expanding.

California remains the single-biggest destination state for DtC shipments from Napa wineries, with 32% of the region’s shipments staying in-state (up a point from 31% a year ago). Texas, Florida, New York and Illinois round out the top five destinations, in that order, with one difference from a year ago: they’ve ceded market share to the other 45 states.

The shifts start in sixth and seventh place, where Colorado and Georgia swapped spots. Washington—home of its own healthy wine industry—jumped into the ninth position with an additional $4 million worth of deliveries from Napa for a total of $24 million from the region (2% of what Napa ships direct).

The opening of Massachusetts and Pennsylvania to DtC wine shipments also has diversified destinations.

Pennsylvania, which began allowing DtC shipments in June 2016, received $19 million (1.6%) worth of Napa wineries’ DtC shipments in the 12 months ended May 2017. Massachusetts, for its part, saw growth similar to Washington state, rising $4 million to $23 million (2%) of the region’s DtC shipments.

The average price per bottle Napa wineries shipped DtC in the 12 months ended May 2017 was virtually unchanged at $61.93, up a mere 14 cents from a year ago.

The lack of dramatic growth reflects the growing democratization of the channel, but also greater resistance to big gains facing prices. A glance at flash offers is illuminating in this regard.

Flash sales

While total offers for domestic wines fell 43% in May 2017 compared to a year earlier, Napa remained resilient and in demand. The big shift was in the price bands where offers landed.

Offers for wines from Napa County wineries with a flash price of less than $30 fell 16% to 1,259 offers in the 12 months ended May 2017, according to Wines Vines Analytics. However, wines at flash prices $30-plus rose 21% to 1,040 over the same period. Moreover, wines at flash prices $50 and up grew 29% over the previous year, showing people are still willing to spend on wines perceived to be great value.

On the other hand, a drill-down into off-premise sales of Sauvignon Blanc reveal that people are buying that variety by the box.

Off-premise sales

Overall, off-premise sales through multiple-outlet and convenience stores tracked by Chicago, Ill.-based market-research firm IRI totaled $642 million in May 2017, up 2% from May 2016. Sales for the 52 weeks ended May 14, 2017, totaled $8.7 billion, up 4% from the previous year. The growth exceeded that of case sales, underscoring the upscale shift among many drinkers.

Yet the strongest growth in sales of Sauvignon Blanc, which totaled $583 million in the 12 months ended May 2017, was for boxed wines priced $4.50 and up per 750 ml. Sales of those premium boxes jumped $6 million (or 67%), overtaking both the $20-$24.99 and $25-plus price segments for market share. The single biggest chunk of Sauvignon Blanc sales (70%) continues to occur between $8 and $14.99 per bottle.

The growth promises to keep wineries hiring or the foreseeable future.

Winejobs.com

According to winejobs.com, demand increased 15% in May 2017 over May 2016, with the Winery Job Index hitting 421, on par with the 10-year high of 423 posted in March 2017. Demand rose in all job categories except for finance, with demand for vineyard workers up a whopping 150% compared to May 2016. Hiring for winemaking and DtC positions was in line with the index as a whole, with the subcategory indices up 16% and 17%, respectively.

 

 

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