US wineries shipped more than $3.2bn worth of wine to consumers in 2019 – showing that while the US may be slowing down overall, the direct-to-consumer (DtC) segment still has plenty of life in it.
“Doom-and-gloom reports are missing that the markets are continuing to grow, and that mature markets are inherently going to grow slower than novel ones,” Alexander Koral, Sovos Senior Regulatory Counsel, told Meininger’s. A 4% growth in total volume shipped and 7% growth in total value shipped is still a net positive, he says.
At a time when reports about the US wine market are discouraging – due to changing consumer values, new players on the beverage scene, tariffs, and health reports – doomsday warnings are common. But the state of the DtC market in the US shows all is not lost.
While the overall DtC channel slowed, 2019 saw the largest increase of average price per bottle in almost a decade. In addition, the value of DtC sales increased by 7.4%, and the volume by 4.7%, showing that while the overall pace of sales has slowed, the market itself is still growing strong.
The slowdown is a result of a maturing DtC market, says Koral. The recent explosive growth was the result of regulatory changes in the US market—the outcome of individual states opening up and permitting DtC sales. Now that the majority of states are open, the DtC channel is maturing. “We expect growth to stay within the 5-7% range as direct wine becomes more of a luxury good – subject to market forces like the state of the economy, demographic trends, and sales and marketing innovation,” says Koral.
According to the report, large wineries with production over 500,000 cases experienced the highest growth in volume, increasing by 12.9%. Conversely, wineries that produce between 1,000 and 4,999 cases per year experienced the highest increase in price per bottle shipped, rising 46% to $61.97 on average.
Napa County, the largest and most famous DtC region, showed a 2.8% volume growth compared to 2018, totalling $1.5bn of wine shipped directly to consumers. This represents just under half of the total value of DtC shipping across the entire US market. Oregon, which experienced one of the biggest increases in shipments—24%—did so by focusing on the local marketplace. “Oregon is benefitting from greater tourism and visits from locals, and offers a model for other regions to grow their revenue by connecting with the communities nearby,” says Koral.
According to the Direct-to-Consumer Wine Shipping Report, there is no cause for concern for the future. “As wineries continue to engage with their consumers and bring in younger drinkers and the wine-curious, there is still lots of opportunity to grow in this channel,” Koral says.
The report, compiled by Wines Vines Analytics and Sovos ShipCompliant, details shipping data from over 1,000 wineries in the US, which together totaled more than 20m shipments in 2019. It is available to download.
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