Price Increases, Sale Reductions, And Varietal Changes: A Temperature Check On The Direct-To-Consumer Wine Business

Food & Drink

During the pandemic, direct-to-home wine thrived. With on-premise locations closed, it was easy to order wine to your doorstep — no need for the hustle and fuss of heading to your local wine shop.

But after the major sales boosts of 2020 and 2021, how is the direct-to-consumer wine scene doing? Sovos ShipCompliant and WineBusiness Analytics released their mid-year direct-to-consumer wine report that examines shipment data from US wineries.

The main takeaway of the report? A return to pre-pandemic trends in the wine market. Here are the other notables.

Volumes decreased

Overall volume of wine shipped over the first six months of 2023 decreased by 7%, making a total of 3.4 million cases. Values also dropped — falling 2% to $1.9 billion.

The DtC market experienced substantial growth over the pandemic. Bars and restaurants were closed, so drinkers turned their living rooms and backyards into their bar, ordering wines and spirits directly to their home from their favorite distilleries and breweries. While this decrease in volume may cause worry for the wine industry, it’s a sign that the market is returning to normalcy after the record-breaking growth.

“At the midway point of 2023, the DtC shipment channel may not be hitting the highs of previous years but it’s far ahead of where it was pre-pandemic and remains a dynamic and vital sector of the overall U.S. wine market,” said Andrew Adams, an editor with WineBusiness Analytics. “And while wineries continue to contend with inflation, the DtC market remains the most effective way to engage with their best customers and create new ones in the intensely competitive total beverage alcohol market.”

Shift in destination states

The destination states for direct-to-consumer shipping have seen some intriguing growth over the last six months. California is still the top destination state for DtC wine shipping, but its position is up for grabs — the state saw a 14% drop in volume year-over-year for the first half of 2023. Oregon experienced a huge dip into both direct-to-consumer sales and value, at -17% and 18%, respectively.

While some states lagged, others saw a prosperous few months. Alabama saw the largest spike of any state — a 25% increase in value, along with 26% YoY increase in volume. That spike can be attributed directly to the state’s allowance of direct-to-consumer wines in 2021.

“With multiple destination states experiencing flux in both DtC wine volume and value, it’s apparent that both wineries and consumers are still navigating changing demand and preference,” said Larry Cormier, vice president, general manager, Sovos ShipCompliant.

Average bottle prices rise

The average cost of bottles has risen 5% compared to last year, rising to $46.12 per bottle. The West Coast is undergoing big shifts — wines from the Napa Valley just hit an average bottle price of $80.97. While that seems like a big jump, it’s only a 1% increase from years prior.

Farther up the coast, Washington has seen the largest rise in average bottle price, with the state’s average rising to 11%. Sonoma has seen a 10% rise and the Central coast has risen 9%

Mid-size wineries losing steam

The report noted that wineries producing between 1,000 to 4,999 cases per year saw the biggest drop in average bottle prices, with decreases falling 7% to $60.53 a bottle. These same wineries also saw the largest decline for value shipped at -13% year-over-year.

Single varietals losing steam

Not one varietal saw an increase in volume shipped. Merlot and Riesling had the smallest dip in volume, each with a 2% YoY decrease.

Products You May Like

Articles You May Like

How to get around France: from cycling to traversing by train
10 free things to do in Oaxaca City
Meet Losa Yi, The Chef Revolutionizing Korean Cuisine In New York
A first-timer’s guide to Gran Canaria, Spain
Savoy Palace Reflects Best Of Madeira

Leave a Reply

Your email address will not be published. Required fields are marked *