If you make great wine, the world will beat a path to your door.
Such was the mantra for winemakers years ago.
But selling wine today is quite the opposite. Wooing wine lovers directly, enticing them with club memberships, special food and wine events, email blasts and more is essential, especially for small wineries.
“These were concepts unheard of years ago. But direct to consumer wine sales is huge. It’s the future,” said Tom Eddy, and founder and owner of Tom Eddy Winery, and president of the Calistoga Winegrowers Board of Directors.
Going the traditional route these days and paying a third party to put wine in retail stores or restaurants can cut a vintner’s profit by as much 30 percent. That’s why small- to mid-scale producers strive to sell at least half to three-quarters of the wine they make directly to consumers, retailers or restaurants, without a wholesaler, where regulations allow.
And, with consumers who are internet savvy and surfing for deals, a digital strategy is vital to growing sales, with customized advertising regionally and nationally, said Paul Leary, president, Blackbird Vineyards, a small winery with a tasting room in downtown Napa. Leary will participate in a panel discussion on direct to consumer wine sales at the Journal’s Impact Napa Conference Aug.30.
“Direct to consumer sales are growing at a phenomenal rate. Like with other things, consumers are going straight to the producer. With more and more U.S. states (allowing wine) to ship to the opportunity is massive. Just pay attention to your price point. Don’t (waste time) trying to market a $100 bottle of wine to someone who buys wine at $15 bottle,” Leary said.
From April 2016 to April 2017, direct to consumer shipments in the U.S. were up 13 percent, according to Peter Mitham and Wines Vines Analytics/Ship Compliant.
In 2012, direct to consumer sales represented 49 percent of overall revenue for wineries. Five years later, in 2017 that number is 61 percent, according to a Silicon Valley Bank State of the Wine industry report.
Also in 2016, Sonoma County led the way in value of direct-to-consumer wine shipments with an industry-leading growth of 29 percent, twice as fast as Napa, according to the 2017 Direct to Consumer Wine Shipping Report.
But Napa is catching up.
As president and CEO of C. Mondavi and Family Brands, which includes Charles Krug Winery, Judd Wallenbrock points out that wine clubs are nothing new. In the early 1900’s the winery was the first in the Valley to have club members. Wine clubs generally ship members wine monthly or quarterly that they otherwise would otherwise have to fine and purchase on their own.
The irony is that the winery, which puts out about 60,000 cases of wine per year, has only started to ramp up direct to consumer sales in the last few years, and constitutes only 4 percent of sales.
Newly at the helm in June, Wallenbrock, who will also sit on the panel at the conference, said he expects the winery’s direct sales number to rise to about 40 percent in a few years.
Recently, the company heavily invested in a tasting room renovation in its historic building in St. Helena, and it also travels across the U.S., bringing its wines to privately hosted parties in people’s homes.