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Wine: Napa, Sonoma winery-direct shipments surge
Shipments of wine directly to consumers from wineries in Napa and Sonoma counties, accounting for 69 percent of such shipments from U.S. sources, last year grew at 8.0 percent and 10.1 percent in value, respectively, helping push U.S. winery-to-consumer shipment value past that of wine exports for the first time, according to a new study.
The value of direct shipments to consumers was $714 million from Napa County in 2012 and $286 million from Sonoma County, amounting to 49 percent and 20 percent shares of the $1.46 billion in such transactions, according to an annual report by Colorado-based regulatory compliance data clearinghouse ShipCompliant and San Rafael-based trade publication Wines & Vines.
“We hope that the data in this report will act as a lens for wineries, magnifying the opportunities that abound in the direct-to-consumer channel,” said Jason Eckenroth, ShipCompliant chief executive officer. The study (shipcompliant.com/shippingreport) anonymously compared millions of transactions through ShipCompliant’s software, which is incorporated into a number of direct-to-consumer order-processing systems, with the magazine’s database of more than 7,400 wineries.
U.S. wine exports, 90 percent from California, were an estimated $1.43 billion and 47.2 million cases in 2012, according to recent figures from San Francisco-based Wine Institute. [See "California wine shipments dip for first time in 11 years," April 15, p. 2.]
Yet winery-to-consumer orders are but part of all direct-to-consumer sales.
The winery-to-consumer shipping report noted that 73.8 percent of the value and two-thirds of the volume of such shipments come from producers of less than 50,000 cases a year. Among producers of that scale, shipments to consumers on average account for 7 percent to 10 percent of production, the report said.
For wineries making fewer than 1,000 cases a year, sales fell 13.8 percent by volume and 9.7 percent in value , but average bottle price rose 4.7 percent to $55.48, the highest among the winery-to-consumer production-scale categories in the study. The next highest average price, $47.51, came from wineries producing 1,000 to 5,000 cases a year, and those sales fell 7.6 percent in volume but rose 3.7 percent in value as the average bottle price also rose 12.3 percent.
In Napa County, the average bottle price tracked in the study was $56.87, up 4.4 percent from 2011. Meanwhile, Napa sales volume increased 3.4 percent to 1.05 million cases. The study started singling out red and white wine blends, said to be a big factor in winery-direct sales, and that proved the case in Napa County. Red blends commanded 23 percent of county winery-direct sales value, or $156 million, 15 percent of volume at 146,900 cases and an average price of $88.52. No. 1 ranked cabernet sauvignon fell 2.0 percent in value to $311.0 million and 5.4 percent in volume to 329,700 cases, but bottle price rose 3.5 percent to $78.61.
Sonoma County’s bottle price slipped 1.2 percent to $35.42, behind that of Washington and Oregon direct shippers, whose bottle prices rose 18.9 percent and 3.6 percent last year. Sonoma’s winery-to-consumer sales increased 11.4 percent to almost 672,600 cases.
Pinot noir had the largest share Sonoma County’s winery-direct sales volume — one-quarter — and value — one-third. The varietal wine also had big growth, up 26.9 percent in volume to 155,500 cases and up 32.2 percent in value to $89.45 million. Bottle price rose 4.2 percent to $47.93, topping cabernet sauvignon, which slipped 8.1 percent to $47.80 on 3.3 percent volume growth and 5.1 percent value decline.
Prices of bulk wine imported into the U.S. may decline while global supply is tightening, according to one new report from agrilender Rabobank International. Dwindling bulk inventories in Europe, a major source for low-priced wines, is pushing prices up for such wine, accelerating the decline in continental consumption, according to Stephen Rannekleiv, one of the authors.
Pricing for Chilean grapes and bulk wine, a significant source for New World producers, is poised to decline, given little additional demand for bulk wine is expected and the size of the forthcoming Southern Hemisphere crop appears to be sizable, he observed. Prices of imported bulk wine are a ceiling for high-volume winegrape growers in California
Another new Rabobank report on the wine business raised some eyebrows with a reported conclusion that the lender considers there to be a shortage of bulk wine.
“We weren’t trying to sound alarm bells around a shortage,” Mr. Rannekleiv said. “The ability to source the right wine at the right price is becoming more of a challenge.”
He noted that solutions to meet that sourcing challenge include vineyard acquisition, grape purchase contracts and sourcing from other growing regions, though land pricing can make deals impractical, contract growers may not expand acreage and other regions could face supply challenges from water and crop competition.
San Francisco-based Bacchus Capital Management on Thursday said it provided an undisclosed amount of “significant growth capital” to Madrigal Family Winery in Napa Valley between Calistoga and St. Helena. Along with the funds comes Ed Sbragia as consulting winemaker and Steve Cousins as chief operating officer.
They come from a 2011 Bacchus equity growth capital investment, Sbragia Family Vineyards in Sonoma County’s Dry Creek Valley. Mr. Cousins became Sbragia’s general manager in 2011.
Jackson Family Wines continues its North Coast land acquisitions. It purchased 100 acres of livestock grazing land on three parcels south of the Santa Rosa-based company’s “welcome center” at the Fulton Road and Highway 101 interchange north of Santa Rosa. A spokesman declined to comment further on the purchase.
The price paid to property owners Heartland Grains & Milling and Prairie Flower Trucking was undisclosed in public records. Both entities were purchased by Pacific Elements of Ceres in 2011. Shawn Johnson, Ken O’Farrell and Ken Bizzell of Keegan & Coppin brokered the April 5 sale.
This is among more than a dozen vineyard and vineyard-suitable properties Jackson companies have acquired in the North Coast in the past 18 months. Earlier this year, the company made its first U.S. vineyard purchase outside California, buying a few hundred acres of land with 42 in vines in Willamette Valley in Oregon.
Healdsburg-based graphic design and advertising firm Firefly Creative has experienced growth in demand from wineries seeking professional photo and video services as well as conversion of their websites to “responsive” design, which automatically adapts to the size of a visitor’s screen, from widescreen to smartphone. Firm principal Christine Martin, one of the 3 percent of female creative directors at ad agencies, said this demand is set to push gross revenue past $1 million this year, in what could be the third consecutive year.
Fetzer Vineyards, based in Hopland, California, hired Ben Byczynski as grower relations manager, North Coast. Mr. Byczynski was most recently was viticulturist and chief administrative officer at Vimark Vineyards and Trione Vineyards in Geyserville. He has a B.S. in plant science and viticulture from Fresno State University and is a past president of the Alexander Valley Winegrowers Association.
OFFbeat Brands of appointed three new sales executives. Keri Kennedy-Morgan is vice president of Northeast sales, based in New York. Aaron Fein is vice president of West sales, based in San Francisco. Chad Donegan is Central Region sales manager, based in Louisville. OFFbeat Brands’ expanding wine portfolio includes its own brands, Jellybean Wines and Slices Sangria, and “luxury estates” and “domains” imported wines. Ms. Kennedy-Morgan, Mr. Fein and Mr. Donegan will report to Mike Kenton, founder and chief executive officer of OFFbeat Brands.
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