Wine tasting sales boom but club churn high, survey finds

Napa County's wine producers enjoyed strong growth in case sales through their tasting rooms last year and even stronger growth in consumer spending on wine purchases at those venues, and membership in the county's winery-based clubs is rebounding at a strong clip as visitors are convinced to become purchasing members, according to a recently updated annual survey of several hundred mostly North Coast vintners.

But there is clear room for improvement suggested by the even higher rate of attrition from Napa County winery clubs and below-average typical length of membership -- just short of two years, according to the 2013 Tasting Room Survey of 552 vintners by Silicon Valley Bank and Wine Business Monthly.

Napa County tasting rooms sold 11.9 percent more wine last year than in 2011 and harvested 13.2 percent more revenue, respondents said. Average growth was 9.9 percent by volume and 9.4 percent by value. Vintners in Sonoma and Mendocino counties followed that volume-over-dollars pattern, with 9.2 percent and 9.7 percent volume growth and 8.7 percent and 6.6 percent dollar growth, respectively.

Rob McMillan, bank senior vice president and founder of its Premium Wine Division, in a webcast last week on the survey pointed to a California Winery Advisor informal poll from a few years ago that found the top reason for leaving a wine club -- 26 percent of visitors to that website -- was not liking the wine.

"When they signed up, they liked it," Mr. McMillan observed. Other top responses in that poll were bottle prices and shipping costs that were too high.

He pointed to responses in the latest survey that suggest the ability to choose wines in a club shipment reaped higher sales per member -- $362 with choice and $324 without -- but 35 percent of vintners asked if they give their club members such a choice said they didn't.

Eighty-five percent of respondents offer a club. Annual revenue per member is $583 in Napa County, $448 in Sonoma County, $191 in Mendocino County and $183 to $393 for other regions in California and the nation.

The fastest growth in club membership last year was 15.3 percent in San Luis Obispo County, followed by Washington, Oregon, California's Central Coast, 11.9 percent in Sonoma County, Middle America, 10.8 percent in Mendocino County and 9.7 percent in Napa County.

Mendocino, Sonoma and Napa ranked second, third and fifth in the rate conversion of visitors to club members -- 9.0 percent, 8.8 percent and 7.7 percent, respectively.

However, Sonoma, Napa and Mendocino had the second-, third- and sixth-highest rates of club membership attrition -- 12.2 percent, 10.4 percent and 7.7 percent. The average time members stayed with a club was nearly 28 months, tied with the loyalty period in Sonoma County. Napa County vintner respondents said they kept members two weeks short of two years, and those in Mendocino County, a quarter shy of three years.

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