Off-Premise Sales Grow as Total Wine Market Falls
December 22, 2020
Sonoma, Calif. – While the decline in on-premise sales continued to drag on total U.S. wine sales in November, the latest Wine Industry Metrics point to price sensitivity in some channels.
Domestic wines saw consumer spending fall 6% to $47.7 billion in the 12 months ended November, market research firm bw166 reported. On-premise sales continue to drive the decrease, falling 39%, by value effectively countering a 13% rise in off-premise expenditures versus a year earlier and helping cut the value of the total wine market in the U.S. by 8% to $67.9 billion.
Yet Nielsen off-premise channels, which account for 23% of the value but 45% of case volume in the overall market, saw sales of domestic table and sparkling wines of $1.1 billion in the four weeks ended Nov. 28, up 9% from a year ago. While growth was significantly slower than in recent periods, sales typically peak in November meaning the growth remained relatively strong as it came off a large base.
Domestic table wine sales increased nearly 8% to approach $1.1 billion while sparkling wines gained 21% for sales of more than $75 million. Wines retailing for $20 a bottle and above saw the strongest growth across both categories while table wines less than $8 and sparkling wines less than $5 saw sales decline in the period.
All of the Wine Industry Metrics are featured in the monthly Wine Analytics Report, published last week. The December issue of the report also examined the growth in U.S. wineries offering custom crush services, hard seltzers and the continued sales strength of spirits.
Other recent metrics included Nielsen CGA on-premise data for the 52 weeks ended Oct. 3, which showed restaurant wine sales came to $10.6 billion, down 41% from a year earlier. Many restaurants have pared their wine lists as a result of pandemic-related closures, retreating from higher-priced offerings.
A parallel phenomenon is playing out at Nielsen off-premise outlets, where the strongest growth among table wines occurred in the $20-$24.99 price tier, which saw sales rise 30% to $767 million. Growth among $25-plus wines slowed, however top-end bubbly maintained strong growth as $100-plus sparkling wines saw sales increase 37% to $57 million in the 52 weeks ended Nov. 28. The counterpoint was lacklustre growth of just 14% in the $30-$49.99 segment, the weakest growth among sparkling wines priced above $10 a bottle. While consumers have been spending more through Nielsen channels, a bifurcation in markets is emerging.
A split was also apparent in the direct-to-consumer (DtC) channel, where shipment value gained nearly 8% in November versus last year to approach $516 million, according to Wines Vines Analytics/Sovos ShipCompliant. Strong volume growth of 17% resulted in a peak monthly volume of 977,958 cases. The exceptional growth in volume versus value highlighted a broadening of the channel in the run-up to the holidays and drove the average bottle price of shipments down 8% versus last year to $43.94.
While wines worth $60 and more accounted for $1.6 billion in shipment value during the latest 12 months, up 5% versus last year, their share of the DtC channel fell to 45% in the period from 49% a year ago.
Nevertheless, the Wine Analytics Database indicates that the number wineries with an average bottle price of more than $50 grew 70% since 2015. Growth was led by wineries producing fewer than 500 cases.
Weakest among wine industry metrics for the month was hiring activity. Winejobs.com’s Winery Job Index was down 46% versus a year ago in November, closing the month at 133. Renewed closures dampened demand for DtC positions, including tasting room and retail staff, as well as sales and marketing staff. December, however, is typically among the slowest months of the year for hiring and this year proved no different.