DtC Sales Soar in October

Total shipments hit $284 million in value; off-premise also strong

by Andrew Adams
The value of direct-to-consumer shipments from U.S. wineries in October grew 18% from October 2013.
San Rafael, Calif.—As 2014 comes to a close, it’s poised to be the biggest year on record for direct-to-consumer wine sales.

DtC shipments in October spiked 18% over the previous year to reach $284 million, which is $121 million more than in September. Although DtC shipments typically start to exhibit a large increase in October as consumers order more wine and the weather cools, this year has seen the largest fall increase since Wines Vines Analytics started working with ShipCompliant to track the channel.

The total value of DtC shipments for the 12 months ending in October reached $1.75 billion, which is 13% more than the same period last year.

All metrics continue positive growth
October’s record DtC shipments were also matched by strong sales in the off-premise channel and more winery hiring activity that kept all of the Wine Vines Analytics metrics positive for another consecutive month. For the complete metrics report, click here.

Off-premise sales increased 6% in October, marking the first time since April that total sales rose more than 5%. Total sales value in October reached $570 million, and the 12-month total hit $7.78 billion, which is 6% over 2013.

Focus on red blends
This month the Wines Vines Analytics team placed a special focus on red blends, a wine type that has enjoyed a strong run of consumer success in recent years. Total sales of red blends reached $565 million in the past year, according to data from IRI, a Chicago, Ill.-based research firm.

As red blend sales increase, the sales of Merlot and Syrah wines continue to fall. Merlot and Syrah sales declined by 4% and 13% respectively over the past year, while red blends rose by 15%.

Red blend sales now are five times as high as Syrah/Shiraz. It does not mean that Syrah and Shiraz grapes and wine are going to waste, however, at least in domestic production. Many red blends use Syrah and Merlot as substantial components. In the case of the brand that was a category pioneer, Ménage à Trois, Zinfandel is also part of the blend.

Red blends had the highest total sales in the $8-$10.99 price segment, according to IRI, growing by 19% in sales and volume. At higher price segments red blends grew at even faster rates, but from much smaller bases.

Syrah, however, lost sales at every price point in IRI’s analysis, notably dropping by 17% in the $8-$10.99 category that was so good for red blends.

Flash sales websites, which offer wines at deep discounts for a limited amount of time, also are offering more red blend wines.

Red blends accounted for 765 offers (or 12.5% of the 6,096 total offers) for domestic wines in the past 12 months ending in October. The total number of offers for red blends increased 18% since the 12 months ending in October 2012, when flash resellers offered 650 red blends. The websites Invino and WTSO, which frequently account for the highest number of offers, consistently had the most red blends for sale. In the past three 12-month periods ending in October, the two websites offered 750 red blends, or 36% of the 2,100 total offers for red blend wines by all websites.

Most of these wines are being sold in the $15 to $29.99 range, which accounted for 989 offers, or nearly half of the total. There has been a slight downward trend in the number of offers for wines priced between $30-$39.99, which slipped from 112 to 96. Wines with flash offers of more than $100 accounted for just 4.6% of all offers.

Hiring activity slows, yet still positive
Despite the typical downturn in winery hiring that comes in the fall and winter, Winejobs.com’s Winery Job Index of winery jobs remained at a higher level than where it was last year. The overall index was just 6% higher than October 2013, but the 12-month index was 18% higher because of the high level of hiring activity earlier in the year.

The winemaking job subcategory was 43% higher than last year, yet the index was about four times lower than where it was in July, as hiring for production jobs approach the seasonal low point. Hospitality job postings were 73% up over 2013.

Hiring for sales and marketing jobs continues to trend lower than 2013. October was 23% lower, but the index rose substantially compared to the previous month.

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