Watershed Moment: Winery Shipping Captures 8.6% of Wine Retail Market

ScdirectYesterday's ShipCompliant DIRECT Conference provided a number of highlights. Among the highlights at a conference that focuses on the task of complying with direct shipping regulations and how to sell more wine direct was the announcement that Winery-To-Consumer shipments of wine had increased 11.5% over the past 12 months to a whopping $1.35 Billion dollars.

I was very pleased to be able to moderate the session yesterday where Kent Nowlin of ShipCompliant and Danny Brager of Nieslen presented the various facts and figures that emerged from the ShipCompliant-Wines & Vines authoritative research into the Direct Shipping Marketplace. (The presentation can be found here)

The 11.5% increase in the value of winery to consumer shipments is big. In fact, it's more than double the increase in value of the traditional retail market that Brager continually measures at Nielsen.


The Winery to Consumer direct shipping market now represents 8.6% of the total U.S. Wine retail market.

According to the Beverage Information Group, the total U.S. wine market is valued at $28 Billion. Retail sales represent 56% of the marketplace or $15.68 billion, while on-premise sales represent the rest.. That $1.35 billion worth of wine shipped from wineries to consumers coming out of the ShipCompliant/Wines & Vines Report = 8.6% of retail sales.

If anyone every doubted the importance of direct shipping to American wine consumers, there is really no excuse to do that now. And consider this, RETAILER to consumers shipments of wines are not factored into the $1.35 Billion worth of wine being shipped reported at yesterday's ShipCompliant DIRECT Conference. There is no good source for how much wine e-tailers, wine stores, auction houses and non-winery wine clubs are shipping to consumers. But, take my word for it when I tell you that a "a whole lot" is a pretty accurate estimate. This leads to the question, just how large is the total direct to consumer wine shipping marketplace in the United States? Ten-percent of total retail? Fifteen percent? More?

What we do know for sure is that this sales channel continues to grow at a pace well outpacing the overall retail market and there's no reason to believe its growth won't continue.

At yesterday's ShipCompliant DIRECT conference, Rowan Gormley, Founder of Naked Wines—one of Europe's largest direct to consumer e-tailers that recently entered the U.S. marketplace—predicted that while in the future the average price of direct shipped wines (which is currently $37 from wineries) would decrease in the coming two decades, imported wines shipped direct would increase significantly. Imported wines are shipped by retailers, not wineries. If this prediction is true, I'm led to believe that both winery and retailer direct shipments to consumers will continue to increase over the coming years—significantly.

This has great importance to the American wine regulatory system. As both Jason Eckenroth, CEO of ShipCompliant, and Steve Gross of the the Wine Institute pointed out in their seperate presentations yesterday, the burden of complying with direct shipping regulations is severe. Additionally, continued restrictions on both winery to consumer and retailer to consumer shipping still hamper what could be an even more significant sales channel.

States and the federal government both ought to give deep thought on how to help support the fastest growing channel of wine sales in the United States as well as help consumers use this channel. Making direct-to-consumer sales easier to undertake, easing the regulatory burden on direct shippers and giving consumers better access to this channel would do a great deal to help small business across the United States as well as spur more commerce in an important industry that consumers have embraced.

Is the coming capture of 10% of the retail wine market by Winery-to-Consumer shipping a watershed moment in the American wine industry? Does the additional retailer to consumer shipments (likely at least 60% of the winery shipping channel) mark a profound shift in the American wine marketplace? I think so. I think it needs to be appreciated as just such a thing. And government policy needs to change more rapidly to take account of the modern American wine marketplace

2 Responses

  1. Erica Valentine - June 15, 2012

    Great summary! We are in a sea change and it is very exciting. Technology is helping us to more efficiently navigate the compliance landscape. Encouraging to hear the progress Steve Gross covered in getting states to be more consistent and realistic in their processes.

  2. Mike Meisner - June 16, 2012

    Those are some valuable insights. The data W@V has pulled together, along with other reports from organizations like Silicon Valley Bank should be catalyst for winery owners and brands to focus on how to expand that channel.
    Technology and creativity, along with the online social landscape should excite them, and I think a lot of wineries are coming around to accepting this. There sure does seem to be a lot of opportunity in the industry.

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