—Alexandra Russell
The 2022 Direct to Consumer Wine Shipping Report has been released, and the industry is likely breathing a collective sigh of relief. The report, an annual collaboration between Sovos ShipCompliant and Wines Vines Analytics, shows the industry slowly returning to its pre-pandemic state.
COVID-19 nonetheless made its presence known, as data analysis was approached differently than in years past: “In this report, it was necessary to compare 2021 shipping data to 2019 as well as 2020 to get a sense of the degree to which the winery DtC shipping market had recovered from the historic impact COVID-19 had on the channel in 2020.” The good news is, overall, “2021 looks a good deal like what we would have expected it to look like had the pandemic never happened.”
Crunching numbers
Using the Wines Vines Analytics model, the report analyzes detailed, monthly, direct-to-consumer (DtC) shipment data from more than 1,300 anonymous U.S. wineries. This data—totaling more than 42 million shipments over the course of 2021—is projected to the set of all U.S. wineries, and a model of DtC activity is created for study. (Purchases picked up or carried-out from wineries are not included.)
January and February 2020 had not been impacted yet by the pandemic, so comparing these months directly to their 2021 counterparts yielded little easily useable data. Beginning in March 2021, however, when vaccinations became available, stay-at-home orders were lifted or revised, and wineries and restaurants began to see return of some foot traffic, a pattern of recovery became evident.
“At this time last year, I would not have predicted with much certainty that we’d finish the year as we did,” says Andrew Adams, editor of the Wine Analytics Report. “By the end of spring, however, it was becoming much clearer that the channel was going to grow past the record level it did in 2020.”
Tracking sales and shipping
The DtC shipping channel increased 13.4 percent in 2021 to a milestone total of $4.2 billion. Topping $4 billion for the first time was a direct result of “significant increases in average price per bottle shipped as winery discounting waned.” In the end, 2021 saw the largest ever year-over-year increase in the average price per bottle shipped (up 11.8 percent to $41.16 per bottle).
While impressive on its surface, this significant increase in the average price per bottle comes on the heels of a 9.5 percent decrease in average bottle price in 2020. When the price change is factored in, the case volume of DtC shipments increased by a mere 1.4 percent—the smallest year-over-year increase ever noted in the 12 years the report has been issued.
Despite “relatively small year-over-year increases in volume of wine shipped,” 2021 saw the well-established patterns of winery DtC shipments reassert themselves. Spring and fall saw increased volumes of shipments due to weather and the timing of club shipments, while winter and summer shipping declined in volume.
As recovery continues, Adams cautions, “One of the biggest challenges for wineries continues to be the rising costs of shipping coupled with consumers hesitancy to pay for shipping.
“Offering ‘free shipping’ requires an astute pricing strategy that needs to be flexible to accommodate rising costs while also staying in step with retail and on-premise prices.”
Consistency and surprises
There were no surprises when determining which wines are most in-demand, as the same five varieties that, for the past decade, have been most commonly shipped remained in those top slots. Cabernet Sauvignon, Chardonnay, Pinot Noir, red blends and Zinfandel together account for 58.9 percent of all wines shipped and 71.8 percent of the value of the 2021 DtC shipping channel.
“From what I’ve heard and based on the data, it doesn’t appear winery shipments see much experimenting by consumers,” says Adams. “I’ve heard there’s a bit more of that experimenting in three-tier ecommerce, but even that’s pretty minimal.”
That said, wineries producing fewer cases annually, and with higher average bottle prices, enjoyed larger increases in shipping value in 2021. In a reversal from 2020, larger wineries with lower price points saw smaller value gains.
Napa Valley, predictably, led the rebound, both in price per bottle and the total value of wines shipped in 2021. The region’s volume increase over 2020 was twice the overall DtC channel’s 2021 volume increase.
Further up the West Coast, Oregon also came back strong. Oregon wineries outperformed all other regions tracked in 2021 with a 12.9 percent year-over-year increase in volume and 18.7 percent increase in value of shipments, all primarily due to popularity of the state’s Pinot Noir.
Perhaps more surprisingly, shipments to Kentucky increased by 244.8 percent over 2020 as residents took advantage of a law, enacted in December 2020, that opened the state to DtC for the first time. The Bluegrass State ultimately landed at 39th on the list of most shipped-to states.
Conclusion
Adams optimistically predicts, “2022 will bring steady growth but at pace that’s likely to be much more modest than what we’ve seen recently.” He also gives voice to what so many of us are feeling: “Hopefully we won’t see any more seismic shifts this year — I think there were plenty in the past two years.”
After two years of uncertainty and volatile fluctuations, a modest and steady recover will be most welcome.
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Alexandra Russell is a writer and editor living in Sonoma County, Calif. Formerly editor-in-chief for Spirited Magazine and NorthBay Biz, she is currently a freelance jill-of-all-trades, covering topics as diverse as employee benefits insurance, health and wellness, and the alcohol beverage industry. Contact her at alexrussell.ink@gmail.com
