Napa wineries ship $1 billion in wine to consumers in 2015

Jan 31, 2016

(NVR) - To remain competitive and relevant, wineries are becoming far more proficient at wooing customers directly with wine clubs, creating memorable experiences and emotional connections to the wineries. It seems to be paying off.

Napa wineries reached an all-time-high shipping record in 2015: More than $1 billion worth of Napa Valley wine was shipped directly to consumers.

The data came from the 2016 Direct-to-Consumer Wine Shipping Report issued last week by ShipCompliant and Wines & Vines.

Last year was a strong one for Napa Valley wines, said the report.

The region now commands over half of the volume for the direct-to-consumer industry.

“The report underscores the importance of the direct-to-consumer channel to wineries today,” said Patsy McGaughy, communications director of the Napa Valley Vintners.

“It gives them direct contact, communication and brand-building opportunities with their customers,” she said. “Consolidation in the three-tier (distribution) system continues and that makes it harder and harder for small, family-owned brands to get attention and sell their wines through traditional channels.”

The data “reflects both the strength and momentum of winery” direct-to-consumer (DTC) business, said Lesley Berglund, chairman of the WISE Academy, and an industry expert.

“We are seeing the direct distribution channel for wine continuing to be a significant source of sales for wineries, and an increasingly desirable way for consumers to obtain wines that they can’t find in their local retail outlets,” said Jeff Carroll, vice president of compliance and strategy for ShipCompliant.

DTC sales cut out the middle man, or distributors. Instead of relying on a distributor, the wineries create wine clubs and other programs to sell their wines straight to the wine drinker.

According to the report, Napa Valley cabernet sauvignon shipments were largely responsible for the DTC growth in the county.

“This makes sense, as DTC shipping is expensive, so it makes the most sense for our highest price point wines and makes less sense for inexpensive bottles,” said Berglund.

According to Berglund, “Napa wineries are getting much better at both delivering a positive, memorable guest experience as well as selling wine, signing up new wine club members and capturing contact data,” so they can stay in touch with winery visitors, which drives future business.

According to Berglund’s research, five years ago, only about one-third of Napa tasting rooms would ask visitors if they wanted to take or ship some wine home.

“Today in Napa we now ask for the order 67 percent of the time,” said Berglund. “Five years ago in Napa we were only mentioning the wine club at all 11 percent of the time. Today we are bringing up wine club benefits 33 percent of the time.”

Berglund said getting a better price by buying direct isn’t the only reason DTC works.

“The main advantage for consumers buying direct from the winery is twofold. First, if they have visited the winery and had a direct brand experience, when they open a bottle of wine that they bought at the winery, they get to relive this memorable brand experience,” she said.

“This emotional connection to the winery brand cannot be duplicated when buying thorough off-premise retail channels.

“Second, consumers have access to special wines sold only directly from the winery – also something they can’t experience through off-premise retail purchases,” said Berglund.

Napa County wines sold direct to consumer represent 50 percent of the total value, nearly one-third of the total volume and the highest per-bottle price for all wine sold directly to consumers.

The average price per bottle shipped by Napa County wineries rose 4.8 percent, said the report. The value of those shipments rose 15.7 percent in 2015.

The average price per bottle of Napa wine shipped direct to consumer was $61.41. That’s the highest price per bottle of all U.S. wine regions. Oregon wines were a distant second at $40.17 per bottle.

“I find these numbers to be quite astounding when you consider Napa Valley makes just 4 percent of all of California’s wine and four-tenths of 1 percent of all the world’s wine,” McGaughy said. “It’s an endorsement of the quality and demand for Napa Valley wines.”

McGaughy noted that 95 percent of Napa Valley wineries are family-owned and 80 percent are making less than 10,000 cases per year. Therefore, “it is more important than ever that these small, artisan producers have access to this important channel to sell their wine,” she said.

In the United States, 43 out of the 50 states allow direct shipment of wine to consumers, and these consumers continue to embrace this wine-by-mail option.

The report shows that the volume of winery shipments to consumers grew at a rate four times greater than the overall U.S. retail off-premise wine market in 2015.

U.S. wineries shipped over 4.2 million cases of wine in 2015, which represented $1.97 billion in sales, an 8.1 percent increase over 2014.


Share: Delicious Digg StumbleUpon Reddit Furl Facebook Google Yahoo Twitter

Comments:

 
Leave a comment





Advertisement