07.14.2017  
 

Wet Winter Drives Up Vineyard Hiring

June metrics show sales growth steady as workers prepare vines for another harvest

 
by Peter Mitham
 
wine sales winejobs metrics
 
San Rafael, Calif.—Steady growth in U.S. wine sales as consumers continue to boost their spending on most types of wine mean the biggest issue for the wine industry this spring was preparing vineyards for another vintage.

Vineyard hiring hit a new peak during the first six months of 2017 according to data from Winejobs.com, with the Vineyard Jobs Index reading 486, up 45% from the first half of 2016.

John Aguirre, president of the California Association of Winegrape Growers, attributed the leap to harsh winter conditions that left vines in need of attention.

“A lot of the growers I’ve talked to have said there’s been a substantially greater workload associated with all of the precipitation that we’ve had,” Aguirre said. (Read more about how heavy winter rains contributed to a “staggering” 2017 wildfire season.) “We’ve seen quite a bit of canopy growth.”

Above-average precipitation in December delayed pruning into the opening weeks of 2017, and then abundant soil moisture kick-started vines such that leaf-pulling, suckering and general trellising and canopy-management chores have put greater demands on scarce labor resources. This in turn may have contributed to greater job postings, given regulatory requirements to thoroughly advertise before contracting guest workers (though use of H-2A labor remains relatively limited among wine grape growers).

The previous high of 417, set in the accelerated season of 2015, was less a function of weather and more a matter of industry expansion as sales picked up in the wake of the Great Recession.

The past two years have been good ones for the wine industry if hiring activity is any indication. The overall Winery Job Index remained at 421 for the second straight month, two points off the 10-year high of 423 logged in March 2017.

Demand for winemaking and sales and marketing positions all increased in June 2017, while direct-to-consumer (DtC) positions saw slightly slower growth as tasting rooms settled in for the summer.

The hiring supported a rise in sales that continued in June 2017 and even picked up slightly with the advent of warmer summer weather.

U.S. wine sales
June brought stronger growth to U.S. wine sales, which market-research firm bw166 reported rose 5% versus June 2016. This was at the upper end of the range seen in the first half of 2017, when growth typically tracked 3% to 5%. Indeed, sales totaled $3.4 billion, the highest monthly tally of 2017. The rolling 12-month sales figure remained steady in June at approximately $40 billion.

Off-premise sales of domestic wine through multiple-outlet and convenience stores tracked by Chicago, Ill.-based market research firm IRI were likewise steady, growing 3% to $640 million in the four weeks ended June 11, 2017, versus a year earlier. Sales in the 52 weeks ended June 11 totaled $8.7 billion, up 4% from the previous year. The growth was slower than in the closing months of 2016, but revenue continued to outpace marginal 1% growth in case volume.

The more aggressive growth in sales reflects consumer willingness to spend more per bottle than in the past, a fact highlighted in a breakout of sales by package type. All packaging types saw an increase in average price per 750ml, even though not all types saw sales increase.

Table wines in boxes posted the most robust growth through off-premise channels IRI tracks, rising 10% in the most recent 52 weeks to $512 million. The average price for boxed wines increased 4% to $3.09 per 750 ml.

Yet the tiny category of sparkling wine in cans (sales tracked by IRI totaled just $2.6 million in the 52 weeks ended June 11, 2017, a drop of 10% from last year) saw the average price per 750 ml increase a staggering 35% to $14.33.

Direct-to-consumer (DtC) shipments also reflected strong growth for premium wines. This sector is typically cools off as summer begins, and this year was no exception, but monthly growth for remained strong compared to a year ago. Data from Wines Vines Analytics/ShipCompliant indicated that shipments totaled $118 million in June 2017, a robust 18% above June 2016. Case volumes totalled 340,560, 17% above June 2016.

Sonoma County wineries, which represent 19% of DtC shipments nationwide, reflected the growth as well as consumers’ willingness to spend. Pinot Noir accounted for 31% of DtC shipments leaving Sonoma wineries in the 12 months ended June 2017, and was worth $151 million—more than twice as much as any other single varietal.

Pinot Noir is also the top-priced varietal for Sonoma, with an average bottle price of $47.95. While it isn’t the fastest growing varietal for Sonoma County wineries shipping DtC—that honor goes to Cabernet Sauvignon, which saw shipments increase 49% in the last 12 months, closely followed by red blends at 47%—Pinot Noir remains comfortably ahead in terms of shipment value. In fact, with an additional $25 million in shipments, consumers lavished more on it than on any other varietal.

This was true even for flash offers from wine reseller websites. Despite a 17% decline in June 2017 from a year ago, the fortunes of Pinot Noir from Sonoma County were resilient. The varietal led flash offers for the county’s wines, with offers down just 1%. Similar to DtC, demand for Sonoma Cabernet Sauvignon increased, with flash offers up 19% to account for 18% of all offers.

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