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First Silicon Valley Bank wine report released since going bust
The SVB Direct to Consumer Wine Survey Report 2023 was released yesterday under new owner First Citizens Bank, with its lowest ever participation rate.
When Silicon Valley Bank (SVB) went under in March this year, the future of the bank’s wine division was uncertain. As was the continuation of its annual DTC Wine Report, a publication that SVB had compiled for 11 years and which has become an invaluable source of information and analysis for the trade.
So industry figures were pleased to receive the results of the 2023 report, which delves into the state of play of the US wine industry during the last 12 months.
“With SVB facing turmoil earlier this year, the production of the gratis SVB direct-to- consumer research was in jeopardy,” said Rob McMillan, the report’s author.
“However, the industry stepped up with strong vocal support, giving us the motivation to continue. Though we were delayed in releasing our annual DTC report, we ultimately decided to go ahead with it, albeit two months later than usual.”
Voicing his frustration, McMillan, added that “Unfortunately, we had the lowest participation rate in our history.”
He urged wineries to take time to complete the survey in future, adding: “It’s a small investment that can make a big impact on the industry as a whole. To those who participated in this survey, we are truly grateful. Without your help, this industry resource would not exist this year. Your willingness to partner with us to advance the industry’s success is inspiring, and we dedicate this report to your spirit.”
Top findings from this year’s report
Among the top findings from this year’s report are that Napa prices are soaring, wineries are axeing free shipping for consumers in favour of discounted shipping, and US wineries have become “over-dependent” on tasting rooms.
Walk-in tastings are down 27%, the survey found, while ‘by-appointment’ tastings are emerging as the preferred choice for consumers.
Oregon wineries receive the lowest number of visitors at 536 per month compared with leading state Virginia which draws 1,914 monthly guests.
Virginia and Washington have the lowest bottle prices of all US states, charging an average of US$31.73 and US$49.79 respectively, compared with Napa which charges in excess of US$100 per bottle.
Despite fears to the contrary, email marketing remains effective for wineries, especially for smaller production, premium brands producing less than 100,000 bottles and charging more than US$20 per bottle.
Instagram trumps Facebook when it comes to brand marketing, with 79% of participants using Instagram to showcase their wines and build relationships with consumers compared with 68% who use Facebook.
What happened to SVB’s wine division?
In May, McMillan detailed on Linked In how he was pleasantly surprised by the relatively smooth transition following SVB’s takeover by First Citizens Bank.
“From everything we are seeing at this early stage, we’re starting to believe we’ve somehow landed in the best outcome imaginable for our clients, employees and our community,” he said.
“We could have been sold to one of the largest banks, in which case we would have been absorbed and lost our flexibility and identity. It was possible we could have been split up and sold by divisions, or if there was insufficient interest, they could have sold off loans one at a time. None of those possibilities took place.
There is no cross-over in business segments so no staff reductions coming, and our new benefactor First Citizens Bank is running Silicon Valley Bank as a division of First Citizens. They are pragmatic and know that we are the experts in what we do and have told us to keep doing that.”
Concluding, McMillan said “I’m sure it’s unprecedented in these types of circumstances, but the Wine Division of Silicon Valley Bank has retained 100% of our employees, as well as all of our borrowing clients. In fact, we’ve added a half-dozen significant clients and are at record client counts, and record loan volumes.
“We are completely operational and doing what we do.”