DtC Leads Another Month of Industry Growth

Total direct-to-consumer shipments up 35%, U.S. wine sales reach $3.4 billion

by Andrew Adams
wine grape direct to consumer shipments metrics
Source: Wines Vines Analytics/ShipCompliant
San Rafael, Calif.—Direct-to-consumer (DtC) shipments shot up 35% over the previous year in October, and DtC was the segment with strongest growth in another good month for the U.S. wine industry overall.

Total DtC shipments came to $391 million in value during October, and the volume was 659,615 cases, a 51% increase over the volume shipped in September. The 12-month total hit $2.3 billion, which is 20% higher than last year. October is typically a strong month for DtC sales largely due to fall wine club shipments, but this past month was even bigger than normal as the channel continues to grow. The return of cooler weather means safer shipping conditions for club members and individual customers.

Nearly all of the other Wine Industry Metrics tracked by Wines Vines Analytics also showed moderate to robust growth in October.

According to the market research firm bw166.com, sales of U.S. wine in October increased by 5% to $3.4 billion, and the 12-month total grew by 3% to $38.8 billion. Including nearly $20 billion worth of imports, total wine sales in the past 12 months reached $58.8 billion. During the month of October, sparkling wine grew by 8%, table wine rose 3%, and imported bulk wine decreased by 1%.

The one negative metric was winery hiring activity that fell 4%. Based on job postings to winejobs.com, the overall Winery Job Index fell from 179 in October 2015 to 171 in the past month. The 12-month index increased 6%, however, and the subcategories of winemaking, sales and marketing and direct-to-consumer jobs stayed about even with where they were in October 2015.

Off-premise sales continued to post a steady growth rate, increasing 5% over October 2015, and the 12-month total rose by 6%. Sales reached $626 million in October and $8.6 billion for the year in stores measured by Chicago, Ill.-based market-research firm IRI. In volume, off-premise sales increased by 3% over October 2015, reaching 8.1 million cases.

Red blends continue to be a leading wine type in off-premise sales. In the 52 weeks ending Oct. 2, sales of red blends priced $15 to $19.99 were up 42%, and the segment’s total value of $695 million was the second largest among red wines after Cabernet Sauvignon at $1.6 billion. Pinot Noir trailed just behind red blends at $690 million.

In the DtC market, red blends also account for the second-largest share after Cabernet Sauvignon. Red blend shipments totaled $384 million or 23% of the total red wine sales, while Cabernet Sauvignon’s $687 million represents a 42% share. Pinot Noir also came in third in DtC, accounting for $368 million (or 22%).

Red blends priced $100 and more per bottle claimed the lion’s share of total sales at more than $140 million.

The wine type is a popular offer by flash resellers as well. In 2014, red blends accounted for 13% of all offers, and in the past 12 months that share had grown to 15%. Flash websites offered 650 red blends in 2012, and that number has grown 45% to 943 in the past year. More than half of these wines had a flash price of between $11 and $29.

Total offers in October increased 6% over October 2015, but the 12-month total was 7% less. In 2016, offers have generally trended lower than in previous years, with October’s small increase reversing a four-month trend of monthly totals being lower than at the same time during the previous year.

The decline in offers could be indicative of less wine being available to flash resellers, and that may also explain why nearly all (or 32 out of 33) of Lot18’s offers for domestic wines were for the company’s in-house brands. The flash reseller now operates a bonded winery, TR Wines, at a large custom-crush operation in Napa Valley. Lot18 has been offering its own wines under a variety of different brand names since Wines Vines Analytics first started tracking offers in 2011.

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