US Dtc market cools during 2022 as market returns to pre-pandemic normality
US direct-to-consumer (DtC) shipments have cooled in the last 12 months indicating a “correction” from the pandemic-induced boost, a new report has said – although shipments of wines priced over $200 soared.
The overall value of DtC shipments fell 1.6% from 2021, with volumes also down 10%, the report from Sovos ShipCompliant and Wines Vines Analytics said, however the writers of the report said this “correction” should be seen in relations to the “pandemic-induced market conditions of 2020 and 2021, as well as the unusual economic climate of 2022”.
“After the all-time high of $4.2 billion in value that the DtC shipping channel experienced in 2021, the declines seen in 2022 were not that surprising,” Andrew Adams, Wine Analytics report editor at Wines Vines Analytics said. “Consumers were spending much more time in restaurants and bars as the on-premise sector rallied.”
Larry Cormier, vice president, general manager, Sovos ShipCompliant said reading the data required “some nuanced consideration”.
“One on hand, we have signs of cooling with our first-ever decline in either volume or value for the DtC shipping channel in 13 years of reporting on the market — let alone a drop in both. On the other hand, DtC wine basically maintained its share of the U.S. off-premise retail wine market, at 12%, even as the value of that segment contracted by half a billion, from $34.8 billion in 2021 to $34.3 billion in 2022.”
Meanwhile, the average price of a bottle shipped jumped “significantly” for a second year in a row, rising 9.7% in 2022 to $45.16, after last year’s largest-ever year-over-year increase (11.8%). This marked a return to normal pre-pandemic levels, the company said, following the price drop in 2020.
This came on the back of premium wines escaping significant volume declines in 2022. Wines priced $100 or over saw volumes up 7.8% while wines priced over $200 soared in volume terms by more than 20% during 2022. At the other end of the spectrum, wines priced under $30 dropped in volume by 17.5%, a continuation of the trend seen in from 2021.
And in terms of customer behaviour, it was clear that on a state-by-state basis, the higher the increase in the average price per bottle shipped to a state, the greater the decrease in the volume of wine shipped.
Cabernet Sauvignon shows continuing strength seeing the value of its sales up 5.7%, while volume declines were smaller-than-average compared to other varietals, falling -7.2% from 2021.
“Just like everything else these days it’s more expensive to make wine, market it and ship it so wineries can no longer offer as many incentives in the DtC space as they did during the pandemic,” Adams said.
“However, it’s not getting any easier for small and medium wineries to sell their products in retail, so DtC remains an invaluable sales channel as well as the most effective way to engage your best customers and attract new ones.”
There were no changes to the top five states by volume of shipments with Californian consumers received the most shipments (30.81% of the total volume of Dtc wine), followed by Texas, New York, Florida and Washington.