The Hidden Factor That Will Further Boost Winery DtC Shipments

Winery shipments to consumers skyrocketed during 2020 and the pandemic according to the New 2021 SOVOS-Wines Vines Analytics DtC Shipping Report. This should not surprise anyone, nor should the disclosure that that average price per bottle shipped dipped considerably during 2020 as new DtC shipment recipients stocked up on less expensive wines than the channel normally trades in.

But the really interesting question now, which can’t be answered with great precision but will eventually be answered, is to what degree will this increase in winery DtC shipments be sustained in a post-pandemic/Herd immunity world? The DtC report addresses this question directly:

The question many are asking is to what degree the increased online wine purchasing patterns during the COVID-19 pandemic will continue when the pandemic is over. We believe three factors work in favor of a continued boost to online wine sales. First, lockdowns early on in the pandemic caused many – including younger, first-time purchasers – to discover the convenience and greater choice available when buying wine through the DtC channel.

Second, with more professionals opting to permanently work from home, online purchases have become much more commonplace, and wine sales are no exception.

Finally, wineries that have seen the positive impact of aggressive online marketing will devote more resources to this marketing and sales channel. We believe when taken together these three factors could lead to a doubling of the volume of winery DtC shipments over the next five years

The assumption made in the report is that some portion of new online buyers will continue in some degree or another to order directly from wineries when the pandemic is quelled.

One factor that is not taken into consideration, however, is the real size of the total universe of new online wine buyers. By most accounts, online purchases from wine retailers also saw a significant increase in 2020. According to Wine.com, for example, their sales increased 119% in 2020 over 2019. Other brick and mortar and online wine retailers have also been noting large increases in sales and shipments over 2019. 

Some portion of the new buyers that appeared to have migrated to online purchases from wine retailers during the pandemic will almost certainly remain online buyers and will also most certainly find their way to winery websites. This increases the potential universe of new online buyers beyond those who were drawn to winery websites during the pandemic.

Finally, it’s important to note that retailers, unlike wineries, are still officially restricted from shipping wine to the overwhelming majority of states. If retailers can increase the collection of states to which they can ship with the consent of the state to include New York, Illinois, Massachusetts, Michigan, New Jersey and a few others, I would expect to see the amount of retailer-to-consumer shipments increase substantially, along with the number of new winery shipment recipients. This would bode well for the winery DtC shipping channel.

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Disclosure: Wark Communications was part of the team that helped create the 2021 SOVOS-Wines&Vines DtC Shipping Report

Posted In: Shipping Wine

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8 Responses

  1. Jeff Stevenson - January 27, 2021

    Tom,
    All good, valid points, and I totally agree w/ your premise. However, you often forget about the phone channel. It’s MUCH more effective than email, Facebook, and often even on-prem sales when you consider the over $20 segment. Especially the over $30 segment. We also sign up more actual, long-term wine club members over the phone than many tasting room do in person, especially now. And it all exploded last year. We sold over $10,000,000 of wine over the phone last year. That puts our total sales as a company to $110,000,000+ over the phone since we started doing this. No emails, no FB, no Twitter. Not even any voicemails. Just live, warm, friendly, relationship-building phone calls. We make over 10,000 calls a day, every day of the year except Sundays.

    We honestly can hardly keep up w/ the demand. We’re now opening our 4th state – TX – after CA, NV and AZ to hire new employees.

  2. José - January 27, 2021

    Do you officially restrict retailers from shipping alcohol interstate, or who does?

  3. Tom Wark - January 27, 2021

    Jose,

    It is state laws that restrict interstate shipments of wine by retailers.

  4. José - January 28, 2021

    I doubt that the power to regulate interstate shipments belongs to the states.

  5. Rew Craig - February 3, 2021

    What were sales like for your service pre-covid? I know a few guys that were doing well with it, however, I assume you are killing it during this. I’m selling a ton.

  6. Jeff Stevenson - February 3, 2021

    We’ve been doing this as a company since 2008. Sales are always strong. It’s just now that we’re in a pandemic, fence sitters are finally waking up to the fact that phone sales are MUCH more important than ever and they need to embrace this channel. In fact, many of the clients we service had an UP year in 2020 due to our efforts over the phone. It’s hard to argue facts like this, although we still get the “my customers don’t want phone calls” from some wineries we talk to. Unfortunately, they are the ones who will lose out in the long run… wine is unique and personal and lends itself to be sold over the phone. All you have to do to prove that is listen to any winemaker talk about the efforts they put into making their wines. Especially after they’ve had a few glasses!

  7. Rew Craig - February 4, 2021

    so I gather from what you’re saying – maybe 10ish years ago you were at 300k and you’ve grown to approximately 5.3mm does that sound about right? Fantastic numbers – I’m sure I’m off a bit but I’m curious what kind of growth you had from 2019 to 2020. Perhaps not the place and thank you for your reply. It absolutely makes sense.

    Jose – of course Mr. Wark does not make up the rules, you’re joking and it’s funny. it’s a combination of state and federal. State makes sense if you look at which states are the most difficult. Several in the Bible Belt – do we still call it that? Lol.

  8. Jeff Stevenson - February 5, 2021

    Well, we’re private, but have had 20% YOY compounded annual growth consistently. ’19 to ’20 isn’t really fair to analyze for anyone. Some won big (phone/ecommerce), others suffered greatly. Hopefully 2021 will stabilize somewhat. However, I think we’re going to see a lot of consolidation in our neck of the world. You can’t keep wineries and an entire industry closed for a year+ and expect it to survive. Heck, Vintage Wine Estates is now doing a SPAC public offering. They will soon have a new trading currency (stock) to snap up tons of brands. Things are going to get interesting.


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