Really a great read - I’m amazed by a number of items within it:
The volume numbers are staggering! From 2011 to 2016 is almost double! That’s amazing - obviously wine is not dropping much in popularity - quite the contrary.
Interesting also that high season for shipping coincides with high season for tourism. Sonoma’s growth is impressive, and the change in value for ‘rest of California’ is as well - seems like the ‘other areas’ are gaining some good ground.
Thanks for sharing that Todd! I am fascinated by the DTC portion of the market. I consulted with a wine retailer last year, and the owner happens to also own a vineyard and produce wine.When I did my research, the biggest if area of opportunity was clearly the massive growth and great margin in DTC sales. The numbers were very very compelling. Of course, regulatory stuff was the hurdle, since he also had a retail operation.
Looking forward to reading this report in-depth tonight!
Amazingly, cost of shipping has gone up every year, and apparently hasn’t slowed interest in shipping wines
I guess I am not surprised that Colorado is in the top ten shipping destinations. The wine stores here generally suck.
And I imagine part of the drop Illinois had was based on the new laws regarding shipping to the state
The growth in DtC could potentially create some interesting dynamics. I know of one winery that pushed hard on its DtC business resulting in the cannibalization of its local retail market ultimately getting dropped by one of the biggest retailers in the area. I’m sure the higher margins make up for it on the DtC sales but wonder how many additional sales they lose by no longer being on the shelf of a LWS.
I’m assuming that the case I know of isn’t an isolated one.
But see the massive volume of small wineries as included in that report
I see an increase for Illinois both in volume and value. Washington overtook IL based on an almost 33% growth in volume. I believe the changes in IL law had to do with retailer shipping and didn’t affect winery-to-consumer shipping, which is the subject of this study.
But what percent of sales is that? I see total DtC is <10% but unless I missed it I don’t see it broken out by size. So huge increases but still a small portion of overall sales?
I’m surprised by the volume, almost 1.7 million cases, of under-$20 wines. At that price point, shipping adds a substantial percentage increase to the cost. I’d guess the majority of that wine comes from wineries in the “Large Winery” category and they must have broad distribution throughout most of the states. Is it from “in person” purchases that are then shipped back home ? It’s hard to imagine someone ordering an under-$20 bottle of wine from a winery that they can likely find at their local Safeway for less.
There are some board darlings that offer sub $20 wines that are hard or impossible to buy locally.
That might account for 1700 cases, but that’s a tenth of 1% of the reported volume.
I doubt folks are buying grocery store wines direct. I just offered up an example to account for some of that.
Very interesting report. Thanks for sharing.
Hi Todd - there is a bit of a correlation between high tourist season and shipments (technically Aug-November but April-June are hopping these days) but I am fairly certain that what drives the seasonality in shipments is due mostly to the shoulder shipping season when temperatures are safest around the country to ship…Oct/Nov and Feb-Apr are periods of biggest shipments. 5 years ago, prior to cold-chain solutions, the concentration of shipments in those months was far more pronounced. Still, concerns around temperature are a big deal, particularly amongst the higher end buyers who are in no hurry to get the iwne (its going into the cellar) and want to make sure they’re getting undamaged product.
Cameron
The traffic is so villainous in Napa and Sonoma that it seems like its high season all the time.
I can’t understand how the regions prosperity can continue if it keeps getting worse.
I think that’s what I said … “It’s hard to imagine …”. But that 1.7 million cases seems like a huge amount of relatively inexpensive (at least to WBers) wine being shipped, and I’d be interested in learning more about what might make up that volume.
I am correlating the large volume of Spring shipments directly to Berserker Day!
When I meet with vintners for tastings we discuss different aspects of their market. Over the last several years I find more brands have flipped their ratio from 3-Tier to DTC. The majority of who I taste with are brands < 10000 cases and the ones that are <5000 cases already have a high direct ratio. Having some exposure in three tier is important though selecting the right fit with a distributor or broker is crucial. A couple new producers I met with last month in Los Alamos were having a difficult time getting a representative to take them on. I have also seen brands that go with a giant distributor and then get dumped in the market because they end up being way too thin in supply.
