Direct-to-Consumer Wine Sales See a Spike

Shutterstock

Shutterstock

Although we recently reported that millennials are drinking less wine than the baby boomer generation, direct-to-consumer (DtC) wine sales have increased by 12 percent in 2018.

According to the 2019 Direct to Consumer Wine Shipping Report by Sovos and Wines Vines Analytics, consumers are also willing to buy more expensive wines directly. The average shipped wine bottle price spiked by 2.4 percent.

So why the rise in these sales? Well, thanks to e-commerce giants, buyers now expect direct shipping on most products. So why not from their favorite winery too?

“The direct-shipping channel has matured into a mainstream option for wineries to meet growing consumer demand,” said Larry Cormier, general manager of ShipCompliant by Sovos, in a press release. “As buyers continue to prefer direct shipping of all the products they buy, this channel must rely on organic growth, not new states opening for shipments. As a result, we anticipate strong but slower growth in the years to come.”

Most of today's wine sales are on-premise, but of the $30 billion in sales made from off-premise wine sales, DtC accounted for 10 percent.

Back in 2012, DtC wine sales were $1.5 billion. Fast forward to today and the sales have more than doubled.

Napa County wineries are shipping the most wine in the country with 45 percent of shipments coming from this region. The average price of wine from this region spiked by 7.1 percent last year, which means wine prices are expected to decrease come 2019, especially as the market becomes more saturated with more affordable wine options.

“This may be an early indicator of what’s to come for the whole channel in 2019, as price increases have historically been followed by flat or declining prices the following year,” said Klingensmith, publisher and president at Wines Vines Analytics.

Learn more about the 2018 DtC wine trends at "Wine Business" now.

Want to know what 2019 will bring when it comes to wine? Listen to this recent episode of The Barron Report below where Host Paul Barron talks with Emily Wines, master sommelier & vice president of wine and beverage experiences at Cooper’s Hawk Winery & Restaurants about the new era of wine drinkers.

The Wine Industry to Face Challenges in 2019

Wines

Although today's wine drinkers, especially millennials, are more adventurous, they aren't drinking nearly as much wine as baby boomers.

This presents a future challenge for the wine industry because it’s no secret that the millennial generation has and will continue to have the greatest buying power in the market. There are more millennials working and earning a living than any other age group. With that in mind, brands are all fighting to appeal to this segment of the population.

According to Lulie Halsted, CEO of London-based market-research firm Wine Intelligence, millennials are drinking less wine than the previous reigning population segment.

“We’re proportionally losing some wine drinkers,” said Halsted at 28th Sonoma County Winegrowers Dollars & Sense Seminar and trade show last week.

The population that drinks the most wine is aging. 21 percent of the wine drinkers in America are over 65 years old. This is quite a spike from the 16 percent of wine drinkers being in this age bracket in 2015.

Three years ago, there were 7.5 million wine drinkers between the ages of 21-24. Fast forward to 2018, there were one million fewer wine drinkers in this age group.

“It feels like from the information and insight we have that we have kind of reached a sort of plateau and a peak in terms of growth in the number of drinkers we have in the marketplace,” said Halsted.

But this isn't just the trend in the U.S. either. In the U.K. and Australia, there fewer and fewer wine drinkers as the baby boomers grow older.

So what are millennials gravitating too instead?

Well, today's market offers a range of alcoholic beverages including craft cocktails, craft beer, and even boozy milkshakes. These alternatives could be tempting millennials away from wine.

“It feels to them like there is more choice available, and maybe wine isn’t quite up there in their consideration set,” said Halsted.

Read more about how millennials aren't drinking as much wine as their parents did at the "North Bay Business Journal" now.

It's more important than ever to have a wine list at your restaurant that is compelling to pique millennials' interest.

On this recent episode of The Barron Report, we took a closer look at some of the top wines on the "Wine Spectator's" annual list with the Wine, Sake and Cocktail Journalist and Consultant Shana Clark. Watch the video below to learn more about these beverages and why they made the coveted list from this wine expert.