We haven’t seen direct sales growth at this level since we started tracking the channel more than five years ago. With more states allowing wine shipments, direct shipping has become a lifeline for small and medium-sized wineries.
Wilmington, Massachusetts (PRWEB) January 25, 2017
Wineries shipped more than $2 billion of wine directly to consumers in 2016, a record 18.5 percent surge in direct-to-consumer shipping over the previous year. Wine shipments outpaced retail sales growth by more than three-to-one during 2016, despite an uptick in the average price per bottle, according to a new report from Sovos ShipCompliant and Wines & Vines.
While the majority of wine in the United States is still purchased through brick-and-mortar retailers, the 5.02 million cases purchased directly from wineries in 2016 follows the consistent growth seen for this channel since 2011. Growth of direct sales outpaced retail significantly, reaching 8.6 percent of total retail domestic wine sales, according to the DtC Wine Shipping Report.
“We haven’t seen direct sales growth at this level since we started tracking the channel more than five years ago,” said Kent Nowlin, general manager of Sovos ShipCompliant. “With more states allowing wine shipments, direct shipping has become a lifeline for small and medium-sized wineries. We’re now seeing interesting growth in just about every segment we track.” Nowlin presented an early look at these trends during the 2017 Direct to Consumer Wine Symposium earlier this month.
While growth drivers vary by segment, the addition of new states and adoption of e-commerce business models have accelerated the expansion of direct-to-consumer wine sales, according to Chet Klingensmith, Publisher & President of Wines & Vines. “We continue to see important changes in shipping regulations in key states,” he said. “And, we’re starting to see a significant shift in consumer behavior as the popularity of ordering wine online and enrollment in wine clubs increases.”
Forty-five states and the District of Columbia now allow direct wine sales in some form, including relative newcomers Massachusetts, South Dakota and Pennsylvania, which opened its borders for wineries to apply for permits to ship directly to consumers in August and immediately jumped to 22nd in sales volume. California remains the leader in winery to consumer orders, representing nearly a third of all direct shipping orders and saw double-digit growth in shipping volume last year. Ohio led the way in most orders per capita.
The 2017 Direct-to-Consumer Wine Shipping Report details several notable trends from 2016, including:
● Large wineries take hold of DtC shipping. The vast majority of U.S. wine is produced from large wineries, which have traditionally shied away from direct-to-consumer sales. However, the segment’s direct shipping volume ballooned by 183 percent in 2016 as medium-sized wineries with well-developed direct shipping models grew into the category.
● Consumers are ordering more low-priced wine. Shipments of wine priced under $15 per bottle grew faster than any other segment, bucking the trend of high-end wines dominating the direct-to-consumer channel.
● High-end tastes contribute to the Napa Valley’s substantial sales. Wineries in the Napa Valley region led the way in direct-to-consumer sales again, riding the popularity of its coveted cabernet sauvignon. At an average sale price of $97.93 per bottle, this varietal is priced at more than double the price of wine in any other region.
● Preferred tastes for cabernet sauvignon hold strong, but variety also favored. Cabernet sauvignon was the most shipped wine in 2016; but its growth slowed as consumers leaned toward variety, demonstrated by impressive growth in sales of red blends, merlot and rosé.
● Nearly half of the total value of direct-to-consumer sold in just three months: March, October and November. Holiday demand, in addition to spring and fall wine club shipments resulted in 43 percent of total sales and 36 percent of total volume sold during these three pivotal months.
The Direct-to-Consumer Wine Shipping Report is an annual collaboration between Sovos ShipCompliant and Wines & Vines, examining shipment trends from wineries to consumers in the United States. The proprietary data included is comprised from an algorithm measuring total direct-to-consumer shipments based on millions of anonymous direct shipping transactions in the Sovos ShipCompliant system. The 2017 Direct-to-Consumer Wine Shipping Report is available for download here.
Sovos Compliance is a global leader in tax, compliance and business-to-government reporting software, safeguarding businesses from the burden and risk of compliance around the world. With a 35-year track record of accurate and complete regulatory analysis and a global suite of software solutions, Sovos helps 4,500 companies, including more than 1,500 wineries and half of the Fortune 500, stay ahead of complex and fast-changing government regulations. The company’s ShipCompliant product enables the direct-to-consumer channel for wineries by automating tax and compliance in 45 states. Based in Boston, Sovos has offices throughout North America, Latin America and Europe. For more information on Sovos visit http://www.sovos.com. For information on Sovos ShipCompliant product visit http://www.shipcompliant.com.
About Wines & Vines
Wines & Vines offers a comprehensive collection of products providing news, information, and marketing and research capabilities. Its monthly magazine, Wine & Vines, and its Directory/Buyer’s Guide and Online Marketing System provide a wide range of information solutions to the wine and grape industry. For more information visit http://www.winesandvines.com.