Off-premise, DtC Provide Positive Wine Sales Growth
August 18, 2020
Sonoma, Calif. – Direct-to-consumer shipments and spending at off-premise outlets remained strong in July but failed to completely offset lower activity through on-premise outlets in the month.
DTC shipments continued to post double-digit growth in July, rising 30% versus a year earlier, as restrictions remained in place for on-premise consumption and off-premise spending stayed high, according to the Wine Industry Metrics released Monday in the August edition of the Wine Analytics Report https://wineanalyticsreport.com/report/buying-online-drinking-at-home/
The net result was a 2% drop in domestic wine sales in the latest 12 months to nearly $50 billion, market research firm bw166 reported. Table wines drove the decrease, with on-premise sales in the month down more than 50%. Sparkling wine sales in the latest 12 months were up, however, pointing to the fact that celebrations appear to continue to take place — just not at public venues.
The phenomenon was underscored by data from off-premise channels Nielsen tracks, which account for about 23% of U.S. wine sales. Domestic table and sparkling wines through Nielsen off-premise outlets approached $957 million in the four weeks ended July 11, an 18% increase versus a year ago. Volume in the period increased 12% to 10.2 million cases. Sales of domestic table wines increased 15% to more than $899 million while sparkling wines gained 20% to nearly $58 million.
The stronger growth in value versus volume reflected robust spending on table wines priced $20 and up, the value of which increased 42% in the latest four weeks. Conversely, table wines priced below $4 saw the value of sales decline 2%, the first drop in any tier of table wines since February.
While the most popular off-premise varietals remained Cabernet Sauvignon at $3 billion in sales followed by Chardonnay at $2.7 billion, sales of rosé continued to climb, rising 19% in the 52 weeks ended July 11. Sauvignon Blanc ranked second in terms of growth at 18%.
Nielsen off-premise trends found a parallel in the expanding DTC channel, where shipment activity remained strong in July despite the onset of hot weather. Wines Vines Analytics/Sovos ShipCompliant reported that shipment value increased 30% versus a year ago to $154 million. Shipment volume increased 41% to 451,390 cases. The growth contributed to shipments of $3.5 billion in the latest 12 months, an increase of 12% versus a year ago.
Red wines led DTC shipments in the latest 12 months, with Cabernet Sauvignon on top with shipments of $943 million, followed by Pinot Noir and red blends (typically Cabernet-dominant). Chardonnay ranked fourth of the top 10 varietals with $276 million worth of shipments.
The most dramatic growth among the top 10 varietals, however, came off the relatively minor categories of rosé (up 37% to $74 million) and Sauvignon Blanc (up 28% to $87 million). The gains helped them edge out sparkling wine in terms of case volumes for fifth and sixth place.
The demand for rosé and Sauvignon Blanc is as much on the minds of bulk wine brokers as well as growers preparing for another harvest. Staff to assist with winemaking and production roles are in demand as wineries face a lack of international interns thanks to travel restrictions as a result of COVID-19.
Winejobs.com’s Winery Job Index was down 33% from a year ago in July, ending the month at 331, but hiring activity for winemaking and production roles was the most resilient. Demand dropped just 1% versus a year ago to 654, the strongest reading of any subcategory.
The drop in overall hiring activity hit demand for vineyard labor hardest, which saw hiring activity down 72% versus a year ago to 143.
Rising cases of COVID-19 and the rollback of re-openings in many counties were less kind to other parts of the industry. Demand for sales and marketing staff as well as DTC positions, including tasting room and retail staff, 59% and 50%, respectively.