Direct-to-consumer channel sees volumes rise, but cheaper wines dominate
US wineries shipped a record $3.7 billion of wine direct to consumers in 2020, according to a new report – a rise of 27% on the previous year – however the average price by bottle dipped 9.5%, as consumers turned to cheaper varietals and blends.
The 2021 Direct-to-Consumer Wine Shipping Report from Sovos ShipCompliant and Wines Vines Analytics, showed that there was a significant increase in shipments in the final quarter of 2020, as consumers dramatically increased the amount of wine purchased for direct shipment from wineries.
Larry Cormier, vice president, general manager, Sovos ShipCompliant said the channel had become “truly essential” for wineries forced to shut down their tasting rooms and pivot from traditional sales due to COVID-19, with volume orders rapidly increased at the beginning of the pandemic and continuing at higher levels throughout the year.
However, the report shows that the boom in winery DtC shipments does not make up for the decline in sales at wineries, tasting rooms and restaurants, which have been close due to the pandemic.
“We have yet to witness the full impact of this decline in winery visitation and the sales that occur there,” the report said.
Despite the record volume growth, value growth rose only 14.9% (compared to 2019’s $3.2 billion in sales) which although up on 2019’s 7.4% or the 15.5% in 2018, still reflects the fall in average price of nearly 10%, as the average price fell nearly 10%. To put this into context, prior to 2020, the biggest decrease in the bottle price was 1.7% in 2013.
“New consumers coming into the DtC market in response to business lockdowns and quarantines sought out less expensive wines, lowering the average price per bottle shipped,” the report pointed out.
And as consumers turned to lower-cost varietals, the average price per bottle for DtC shipments dipped by 9.5% to $36.83 per bottle (down from $40.70 in 2019), marking the sharpest-ever annual drop in price reported. Shipments of wines costing under $30 soared by 41.6% while those over $100 fell by 2%.
According to Cormier, this bucked past trends, as the cheaper varietals significantly outperform the wider channel in 2020, particularly Pinot Gris and Sauvignon Blanc, while Rosé and white blends significantly have also seen volume growth between 39% and 45%.
The report found that the three regions with the lowest average price per bottle shipped – Sonoma, wineries located outside of the West Coast (up 30.6% by value on volumes up 34.7% and California’s less well-known wine counties, such as Mendocino – accounted for 53.1% of the total volume of wine shipped in 2020.
Sonoma for example saw the biggest volume increase, representing around 40% of the entire DtC channel, following a rise of 685k cases.
The volume jump follows nine years of growth, although this had slowed slightly in 2018 and 2019, from 15.3% growth in 2017, to 8.9% and 4.7% respectively.
Drilling further into the data, it becomes apparent that it is the largest wineries that have made the biggest gains in terms of market share, up from 5.5% in 2015 to 18.2% in 2020. As the largest wineries saw volume gains of 54.7%, with the average price of a bottle shipped fell 17.3%, while the smallest wineries saw volume sales rise 64.9%, as the average bottle price fell 16%.
Beverage alcohol consultant Danny Brager said that in terms of ecommerce, “the genie is now out of the bottle.”
“The e-commerce sustained effect is likely to continue into 2021 as more wineries invest in digital marketing and direct-to-consumer shipping to both compensate for restrictions on tourism and in-person visits and to maximize their consumer touch points,” he said.