Red blends No. 2 in Napa; pinot noir surges in Sonoma
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 were an estimated $1.43 billion 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.] But U.S. winery-to-consumer volume was much lower than export volume, equivalent to 3.17 million standard 9-liter cases, according to the latest report. That’s compared with the 47.2 million-case figure for U.S. wine exports, 90 percent of which come from California, cited by Wine Institute.
Yet winery-to-consumer orders are but part of all direct-to-consumer sales, which come sources such as retailers and third-party marketers such as wine clubs. For example, one major online retailer — Wine.com — sent about $60 million in wine to consumers in 2011, which is more than each of the total values of Oregon and Washington winery-direct shipments last year. Direct sales themselves are a fraction of the $22.0 billion in total U.S. wine sales last year.
However, it is a big deal for smaller wineries.
“The direct-shipping channel continues to grow at a faster rate than the overall wine market and has become vital to the small- and medium-sized wineries,” said Chet Klingensmith, publisher of Wines & Vines. “The higher margins realized by wineries using this channel, and the access it gives consumers to the increasingly diversified wine market, provides a win-win situation for all parties.”
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.
Producers of more than a half-million cases annually on average shipped a scant 0.1 percent of their volume directly to consumers last year, or nearly 143,600 cases. But large vintners increased their direct-to-consumer shipments by 14.2 percent last year from 2011 and harvested a 16.6 percent increase in such revenue as the average price per bottle increased 2.1 percent to $25.86.
However, 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.
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