Sales of U.S. Wines Up 4% in October

Wildfire impact limited to hiring as wine industry continues to grow

by Peter Mitham
wine  sales metrics

San Rafael, Calif.—A rising tide lifts all boats, and despite the significant personal losses wineries and their workers faced due to wildfires in October, U.S. wine sales continued to lift the industry’s fortunes higher.

California represents the lion’s share of domestic wine production and sales, and producers benefitted as U.S. wine sales totaled $3.6 billion in October, according to market-research firm bw166. This was 4% higher than a year earlier. Sales for the 12 months ended in October also rose 4%, topping $41 billion.

While off-premise sales through multiple-outlet and convenience stores tracked by market-research firm IRI were flat at $637 million during the four weeks ended Oct. 8, bw166 managing partner Jon Moramarco indicated that this may be due to a shift in where U.S. consumers are buying wine for off-premise consumption.

Direct-to-consumer (DtC) shipments are one emerging alternative to traditional retail purchases, Moramarco said. Wines Vines Analytics/ShipCompliant data indicate DtC shipments in October added 1% over last year to set a new monthly benchmark of $395 million. Despite the challenges wildfire posed, the numbers underscored the resilience of California wineries, which represent 85% of DtC shipments.

Cabernet Sauvignon
Diving into the numbers, Cabernet Sauvignon continues to hold its lead among red wines in both off-premise channels and DtC shipments.

Cabernet Sauvignon held 25% of table wine sales in IRI channels for the 12 months ended Oct. 8, and also led among red wines shipped directly to consumers. Red blends rank second in off-premise table wine sales, with 11% of the market, followed closely by Pinot Noir at 10%. Pinot Noir leapt into second place among red wines shipped through DtC channels, with shipments rising 14% from the previous year to $419 million.

Curiously, however, monthly case volumes through off-premise channels fell for the first time in several months. While the shift was a mere 44,000 cases, it lifted the average price of domestic table and sparkling wines sold through off-premise channels 5 cents to $6.47 per 750 ml. The key beneficiaries among major red varietals were Zinfandel, which saw its average price 34 cents to $11.12 per 750 ml (a 3% increase), and Pinot Noir, which gained 18 cents to $9.83 per 750 ml. Both varietals gained ground against red blends, the only major red wine type to register a price drop, even as sales rose 6%. Red blends now fetch an average of $9.01 per 750 ml, down 12 cents from a year ago.

By contrast, average bottle prices for red wines shipped DtC fell as the channel continued to broaden to include more affordable wines. Shipments of wines priced between $15-$19.99 per bottle increased 21%, the greatest growth rate of any price segment, to total $18 million. Shipments of bottles priced $20-$29.99 increased 18% to total $45 million. Overall, more than $1.9 billion worth of red wine was shipped DtC in the 12 months through October.

There’s more to U.S. wine sales than California and Cabernet, however.

Imports, hiring and more
Total sales of domestic wines and packaged imports rose 5% in October versus a year earlier to more than $62 billion. Sparkling wine and packaged imports showed some of the strongest growth rates. Growth in domestic sparkling wine remains steady, with sales up 8% in October and 7% in the previous 12 months. Packaged imports outpaced the average with growth of 6%, thanks primarily to French wines and, in particular, rosé. The recent strength of packaged imports extends to sparkling wines, with imports of these (led by Italy’s La Marca Prosecco) up 11% in both October and the latest 12 months.

The one area to show significant softness in October was hiring. With many Northern California wineries closed due to wildfire, and harvest coming to an end in all parts of the state, the Winery Job Index dropped 8% to 153. Meanwhile, demand for vineyard, sales and marketing positions posted double-digit growth versus a year ago (83% and 67%, respectively), offsetting weakness in every other subcategory. Demand for winemaking positions showed the least weakness, declining just 25%, but this was the subcategory’s greatest percentage decrease since February 2011.

October also marks the end of Wines & Vines’ tracking of wine flash site sales data. The flash channel was a child of the Great Recession of 2008-2010 and has evolved over time, with significantly less activity in the past year. October was no exception, with just 343 offers, a 26% decrease from October 2016. This reflects fewer flash resellers and an overall drop in the offers fielded by those sites still operating.

While regular coverage of this channel is ending, the final review of activity indicates that offers for red blends remain resilient but not immune to changes affecting the channel.

Red blends accounted for 846 (or 15%) of all wines flash resellers offered in the past 12 months; this was down 10% from a year earlier, and an average of 950 in 2015 and 2016. Overall offers fell 14%, from 6,396 in 2016 to 5,498 in the latest 12 months. Invino and CellarThief both made offers for the most expensive red blend, a $750 wine by Napa Valley’s Bryant Family Vineyard offered by both websites for $350.


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