Annual Sovos ShipCompliant Direct-to-Consumer Wine Shipping Report points to slowing channel growth despite prices reaching new highs
(BOSTON) January 22, 2020 – Wineries shipped more than $3.2 billion worth of wine directly to consumers in 2019, according to the latest Direct-to-Consumer (DtC) Wine Shipping Report from Sovos ShipCompliant and Wines Vines Analytics. With the largest increase in average price per bottle shipped in nearly a decade, wineries grew the value of the channel by 7.4% and volume by 4.7%.
This represents a slowdown from past years that saw regular double-digit growth fueled by new states opening their borders to winery direct shipments. Forty-five states and the District of Columbia now allow DtC shipping, leaving only a handful of states as potential new markets as the channel continues to mature.
“The days of annual 13% to 18% increases in the DtC channel are likely over for the wine industry,” said Larry Cormier, vice president and general manager, Sovos ShipCompliant. “Moving forward, we expect expansion in DtC wine shipping to be driven by similar conditions as other luxury goods: the state of the economy, demographic trends, sales and marketing innovation, and continued consumer migration from brick-and-mortar to online purchases.”
The largest DtC region – Napa County – saw only modest growth for the fourth year in a row, lagging behind the rest of the DtC channel with a 2.8% increase in volume compared to 2018. The $1.5 billion in wine Napa County wineries shipped directly to consumers in 2019 represented just under half the total value of the DtC shipping channel at an average price per bottle shipped of $69.39, a 3.4% increase over 2018. Meanwhile, neighboring Sonoma County wineries had a relatively good year with a 5.8% increase in the volume of wine shipments and 6.6% increase in the value of those shipments.
“Despite some signs of maturation, the DtC channel remains the most dynamic and promising sector of the wine business,” said Andrew Adams, editor of the Wine Analytics Report, which is published by Wines Vines Analytics. “Total shipment value increased 12% in December compared to the previous year, and the 12-month total was also much higher than in 2018.”
New for this year, the report breaks out the California Central Coast region from the Rest of California region. Including the counties of Monterey, Santa Cruz, San Benito, San Luis Obispo and Santa Barbara, wineries in the California Central Coast region shipped more than 810,000 cases worth over $326 million in 2019. This makes it the third most active region for DtC shipments behind Napa and Sonoma counties.
And despite some indications that wineries are now operating in a maturing DtC marketplace, Oregon and Washington continue to outperform the rest of the channel. Distinct among regions tracked, Oregon is dependent on a single varietal, Pinot Noir, which accounted for 68% of the total value of the state’s 2019 DtC shipments.
Other notable trends spotlighted in the 2020 Direct-to-Consumer Wine Shipping Report include:
- The lingering impact of wine country fires: Wildfires in wine country destroy more than vineyards, with tourism boards reporting fewer visitors following major fires, carrying negative implications for long-term channel growth.
- Consumers pay more per bottle: In 2019, the highest-priced wines once again saw the greatest growth. The volume of shipments of wines priced at more than $100 per bottle increased by 14% over 2018, far outpacing the overall DtC channel.
- Large wineries see the biggest DtC gains of the decade: Since 2011, large wineries producing more than half a million cases annually have realized a 685% increase in the volume of DtC shipments and a 500% increase in the value of those shipments.
- Oregon again leads other regions in growth: For the 8th year in a row, Oregon outperformed other regions in DtC growth in 2019, with a 9.2% increase by volume and 13.1% increase by value of shipments.
“As more consumers choose to purchase more of their goods online in general, we expect the DtC shipment channel to also increase in size and popularity due to its convenience and broad selection of available wines,” said Danny Brager, senior vice president of Nielsen’s Beverage Alcohol Practice.
The Direct-to-Consumer Wine Shipping Report is an annual collaboration between Sovos ShipCompliant and Wines Vines Analytics, examining shipment trends from wineries to U.S. consumers. The proprietary data included is comprised from an algorithm measuring total DtC shipments based on millions of anonymous direct shipping transactions filtered through the ShipCompliant system and paired with Wines Vines Analytics’ comprehensive data on U.S. wineries.
To download the full Direct-to-Consumer Wine Shipping Report, visit https://www.sovos.com/shipcompliant/resources/wine-dtc-report/.
Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. As VAT and sales and use tax go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit https://www.sovos.com and follow us on LinkedIn and Twitter.
About Sovos ShipCompliant
Sovos ShipCompliant has been the leader in automated alcohol beverage compliance tools for more than 15 years, providing a full suite of cloud-based solutions to wineries, breweries, distilleries, importers, distributors and retailers to ensure they meet all federal and state regulations for direct-to-consumer and three-tier distribution. ShipCompliant’s solutions reduce risk, lessen the burden of compliance, accelerate bringing products to market and enable revenue growth. With 50 partner integrations, Sovos ShipCompliant leads a robust ecosystem of technology partnerships, enabling powerful complementary solutions. For more information, visit https://www.sovos.com/shipcompliant/ and follow us on LinkedIn and Twitter.
About Wines Vines Analytics
The Wines Vines Analytics team maintains the wine industry’s most accurate databases and provides data-driven analysis, data, insights and reports to help our clients grow and manage their businesses. For more information visit www.winesvinesanalytics.com.