First End-of-Pandemic Wine DTC Data Is Good News

Posted by Tom Wark on Apr 21, 2021

Beginning in March 2020, American wineries began to see the impact on direct-to-consumer shipments due to pandemic lockdowns and isolating inside our homes. We are just now beginning to see a hint of what a post-pandemic DTC market can look like.

The beginnings of the pandemic led to a 30% year-over-year increase in winery shipments in March 2020. The March 2020 thirty-percent increase in the volume of shipments far exceeded the average monthly increases seen in previous months of March. However, this significant increase in year-over-year monthly volume in March 2020 would hardly be the largest. In the subsequent five months of 2020, wineries would increase their DTC shipments by 45%, 44%, 40%, 41% and 32% respectively.

Now we read in Wine Business Monthly that the year-over-year increase in DTC shipment volume for March 2021 was 10%, amounting to just over 919,000 cases of wine shipped from American wineries to consumers last month.

This is important data because it is really the first piece of information we have that will help answer the question, to what extent will consumers who newly entered the DTC marketplace during the pandemic remain DTC customers as we come out of the pandemic? So far so good.

The first thing to take note of is that the 10% year-over-year increase in the volume of shipments last month matches almost exactly the 9-year average change in volume for March from 2011 -2019, which according to my past copies of the ShipComplaint/SOVOS-Wines&Vines DTC reports is 9.2%.

March is really the first month during which we can legitimately try to guage what the rollout of the COVID vaccines and the reaction to mass vaccinations can do to consumer behavior. Moreover, a number of states in March began to reduce restrictions on dining out and occupancy in businesses. While this lessoning in restrictions was in no way complete or universal, they have started to alter consumer behavior.

If those who had newly entered the DTC marketplace in early 2020 after the pandemic hit were to retreat from their interaction with wineries, we really should have seen flat or reduced volume in March. Instead, we saw what would be considered to be expected gains on a historical basis. This is good news for wineries as it suggests that pandemic buyers aren’t retreating en mass.

On the other hand, this last march saw a 6% increase in average price per bottle shipped. During the height of the pandemic buying we saw prices go down as new buyers focused on less expensive wines. The 6% increase in average price per bottle shipped over March 2020 is in part due to March being a big month for wine club shipments. But, it also should be a note of caution. Were the new buyers with their focus on lower-priced wines still impacting the market in a significant way, we may not have seen this kind of per bottle price increase.

April will be the big test for the winery DTC marketplace.

The April 2021 year-over-year change should see a decline if the impact of the rollout of the vaccines and more people trying to go back to “normal” has an impact on the DTC market. Last April saw the peak impact of COVID-influenced online buying. A 10% increase (even a 5% increase) over April 2020 would be a very good indication that the new pandemic wine buyers remain winery direct buyers. I expect a small decline in the volume of shipments from 2020 when Wines Vines Analytics reports on this month’s DTC shipments. Wouldn’t that be something if I was wrong?