- Homepage for the Wine Industry

Wine During Lockdown: DTC Sales See Boost--In Delivery Form

Delivery services are working overtime to get customers the items they need. Among the essentials--wine.
by Stacy Briscoe
March 20, 2020

Sonoma, Calif.—According to Alex Koral, senior regulatory counsel for Sovos ShipCompliant, the overall growth of the DTC wine shipping market in 2019 was lower than in previous years. “There are a number of explanations for this,” Koral said in an interview with Wine Business Monthly, noting that one reason could be that there have not been any new states joining the wine shipping market.

The most recent Wine Industry Metrics published in the Wine Analytics Report show that DTC sales totaled $262 million in February, which is about even with February 2019. DTC sales typically grow through March and in April. March 2019 total sales value came to $358 million. Shipment value and volume start to decline compared to previous months through summer before picking up again in September.

But, Koral added, “DTC wine shipping presents a great deal of opportunity for wine industries."

That opportunity has presented itself even more clearly with the COVID-crisis sweeping the nation. Many cities are in “shelter-in-place”-mode, a large part of the U.S. population have become home-bodies; businesses not deemed “essential,” including bars, restaurants and tasting rooms, have closed their doors. Yet it seems that consumers, despite previous behavior to the contrary, have deemed wine an essential part of their well-being, and DTC wine shipping is now on the rise.

Sovos ShipCompliant does not yet have enough data to quantify just how much this type of wine sale has increased. But individual services have reported their businesses are booming.

“The latest trends for the past week showed that Drizly sales are growing four times the growth rate from earlier in the year,” said Drizly's head of consumer insights, Liz Paquette. As of Tuesday, March 17, the company recorded that gross merchandise volume (GMV) was up 500 percent year over year in growth. Furthermore, Paquette reports that Drizly customers are spending upwards of more than 50 percent than usual. While they can’t disclose what that amounts to in dollars, they are able to say that the wine and liquor categories are now growing 1.5 times faster than beer, and the top selling category overall for the online retailer is wine.

What wine pairs with a lockdown? “As of Tuesday (March 17), red wine was the top subcategory nationally within the past week, with Cabernet Sauvignon being the number one varietal sold,” Paquette wrote to WBM. Additionally, more consumers are opting for domestic wine than usual, albeit by a small percentage. "Typically, it's a pretty even split. Domestic wines make up about 51 percent of sales on Drizly, while regional wines outside of the U.S. make up about 49 percent. This has changed in the last week, with domestic sales sitting at 55 percent of sales on Drizly and regional wines outside of the U.S. sitting at 45 percent."

New York-based Gary’s Wine & Marketplace uses Drizly’s services, in addition to local delivery and pickup services. According to a recent press statement, the business saw an increase of 62 percent in overall sales and a 300 percent increase in local delivery and pickup orders across its four locations in N.J., as of Sunday, March 15. The boost in sales began just three days prior, on Thursday, March 12.

“Gary’s newest location in St. Helena, Calif., has seen a significant decrease in foot traffic, but a sizable increase in basket size,” said owner of Gary’s, Gary Fisch. In other words, customers who are willing to venture out may be far and few between but they are spending a good chunk of change on their wine purchases at Gary’s. For those unable or uncomfortable making their purchases in person, the company provides options, including a dedicated website that features real-time feed of the inventory of each store location, where customers can choose to either pick up their wine or have it delivered directly to their home. “We have strongly encouraged our community to practice social distancing and place their orders from home,” Fisch said.

Online wine clubs are also seeing an up-tick in consumer spending. According to Philip James, CEO of online wine club Firstleaf, the company has seen orders increase 500 percent since March 1. Additionally, the company touts that they’ve received an “acquisition surge by 400 percent, and former customers are reactivating their membership at a rate of 250 percent.” So-called "a la carte orders," or one-off orders from non-members, has more than doubled, according to the company.

What about DTC wine shipping for wine producers? Currently, beverage alcohol shipping regulations vary by state. Koral reported that, at the moment, 45 states permit wine producers to fulfill DTC sales to residents within the state through common carriers, such as FedEx or UPS. “DTC wine shipping from wine producers is a more time consuming and generally more expensive process,” warned Koral. “While there may be some spike in DTC wine shipping from wine producers that will be tied to the COVID crisis, there will likely be a smaller impact than on other markets.”

Only time will tell just how much of an impact that will be.

“We’ve seen that, even under the direst of circumstances (such as Prohibition), people will still drink. And, so, while there will certainly be a harmful impact, I fully expect the wine industry to survive and grow in the future,” Koral said.

Copyright© 1994-2021 by Wine Communications Group. All Rights Reserved. Copyright protection extends to all written material, graphics, backgrounds and layouts. None of this material may be reproduced for any reason without written permission of the Publisher. Wine Business Insider, Wine Business Monthly, Grower & Cellar News and Wine Market News are all trademarks of Wine Communications Group and will be protected to the fullest extent of the law.