Pricing of California North Coast direct-shipped wine rebounds after significant pandemic discounting
The reopening of tasting rooms last year after vaccine rollout is credited with U.S. vintners, particularly in the North Coast, reversing the heavy discounting to move cases as in the first year of the pandemic, according to a new report.
The total value of 8.5 million 9-liter cases shipped directly to consumers nationwide last year was $4.2 billion, up 13.4% from 2020 and roughly $1 billion above shipments in 2019, according to the annual report by Sovos ShipCompliant and Wine Vines Analytics. The report analyzed shipments from about 1,300 producers monthly, based on modeling from over 11,000 vintners in the U.S. It doesn’t look at sales made directly at the winery, such as pick-ups.
“2021 marked both a recovery in the winery DtC shipping channel as well as something of a reset to a new normal,” the report said. “The price recovery seen in the DtC shipping channel in 2021 is the result of fewer new buyers in the channel and a trend of discontinuing discounts as the economy returned to a more customary state.”
The overall jump in value came more from a bounce back in the average price per bottle, because the number of cases shipped increased just 1.4% from the previous year, the 37-page document said. Direct shipment volume had jumped 27% in 2020, as vintners and consumers turned to the internet to connect amid restrictions on travel and winery visitation.
“Wineries producing fewer cases annually, and with higher average bottle prices, enjoyed larger increases in shipping value in 2021,” the report said. “The larger wineries with their lower price points saw smaller value gains. This is a reversal of trends in 2020.”
The average bottle price shipped rose 11.8% last year to $41.16, but that’s after the average price had dropped 9.5% in 2020 from around $40 in 2019, according to the analysis.
Napa County rebounds faster than Sonoma County
Much of the half-billion-dollar increase in U.S. wine shipment value last year (60.3%) came from Napa County, the report said. Average bottle price shipped from those vintners jumped 14.1% last year to $72.41, 4.4% higher than in 2019 and following an 8.6% fall in 2020.
Napa County direct wine shipments, at $1.89 billion on 2.18 million cases last year, accounted for 45% of such shipments in the U.S. and one-quarter of the volume tracked in the report. Napa cabernet sauvignon accounted for 30% of county shipment volume and 47.5% of value.
Average bottle price for Napa cab was $114.40, up 4.6% from 2019 following an 8% decrease in 2020.
While Sonoma County’s 2.7 million cases shipped direct last year made up nearly one-third of such U.S. volume — the largest of any region — the county’s share of total value was just nearly 22% ($906.9 million). That’s because the average price of a bottle shipped was just over $28, part of a county trend for the past five years of gaining share of overall shipment volume at the expense of price growth, the report said.
The average bottle price from Sonoma County came back last year, rising 5.2% from 2020 after a 10.3% fall from 2019.
While chardonnay in 2020 eked out cab as the top grape crushed at Sonoma County wineries, the higher priced pinot noir and cab wines were the top varieties shipped to consumers. Average bottle prices for pinot and cabernet had “significant” price recovery last year, up 11.7% and 13.4%, respectively, from 2020.
Silicon Valley Bank’s recently released 2022 premium wine industry forecast expects direct shipments to ease back to 4%–6% of winery sales as the pandemic economy normalizes, with more restaurant and tasting room traffic.
Yet the Sovos ShipCompliant/Wine Vines Analytics report suggests there remains traction for direct shipments. Last year they reached their highest share of sales of domestic wines for off-premises consumption, achieving 12.1% of $34.8 billion altogether. That’s up from a big jump to 10% in 2020 from around 2% for the better part of a decade before.
Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at email@example.com or 707-521-4256.