US wineries see big jump in direct wine sales

More premium wine lovers in the US are going straight to the winery to buy their top bottles than ever before, says a new report showing record-breaking direct shipments in 2016.

US wineries sent 17% more wine direct to drinkers in 2016 versus 2015, topping the five million-case barrier for the first time.

Shipment value rose faster, by 18.5%, to $2.33 billion. It’s the first time direct-to-consumer sales have exceeded $2bn, said the report, compiled by trade publication Wines & Vines together with Sovos ShipCompliant.

Most US states now allow some level of direct shipping, allowing wineries and drinkers to cut out the traditional three-tier model of distributors and retailers.

US states allowing direct-to-consumer wine sales. Credit: Wines & Vines / Sovos ShipCompliant.

But, direct-to-consumer sales were still only 8.6% of the total US retail market for wine last year – and that doesn’t include restaurant or bar sales.

Small wineries selling wines at $20 and above were instrumental in driving growth in 2016, according to the Wine & Vines report.

It drew a link with tourism, suggesting that tasting room visitors were ordering wines to drink at home. It also said that social media and online ordering had helped to make this easier.

Large wineries also enjoyed strong growth, especially in volume, but the report said that this was partly due to some estates being re-categorised from ‘medium’ to ‘large’ after expanding their output.

Of the wines ordered, a disproportionate number of wine lovers ordered Pinot Noir direct from the winery. Pinot accounted for nearly a quarter of orders, double its market share in the total US wine retail market, excluding bars and restaurants.

Zinfandel made up 9% of orders, but barely figures in the overall US retail market. Several critics have tipped Zinfandel for a comeback after years in the doldrums.

direct to consumer wine sales, US states

Top growth markets by state for direct-to-consumer wine sales in 2016. Credit: Wines & Vines / Sovos ShipCompliant.

The report also highlighted some issues for wineries to consider in the future.

Millennials are an unknown quantity, it said.

‘Though Millennials are not yet impacting the shipping channel significantly, we expect their impact to grow over the coming years,’ said the authors.

It added wider economic growth has helped wine sales in general and that consolidation in the wholesaler distribution market was making smaller wineries more reliant on direct shipments to build sales.

But, it warned against an assumption that growth is inevitable. ‘How this increasingly important distribution channel reacts to recession is not documented.’