Despite the buzz about web-based sales of wine, North American wineries continue to do much more of their direct-to-consumer sales face to face in their tasting rooms than online, according to a new Wines & Vines survey.

The percentage of wineries that conduct more than half of their direct sales in their tasting rooms is 64%. That number has grown by 16% since the magazine last surveyed wineries in December 2006.

The number of tasting room-oriented wineries dwarfs the number that relies on sales through any of the other three direct sales channels we measured: wine clubs, online sales and mailing lists. The dominance of tasting rooms also may reflect the favorite business model of a majority of new wineries across the continent that have opened since the earlier survey. Anecdotal evidence points to more small wineries with or without vineyards (and sometimes without crushing facilities) using their premises primarily for blending, bottling and retail sales.

More small wineries

Indeed, in Wines & Vines' March 2008 e-mail survey, 11% more responding wineries reported being in the less-than-5,000 case annual production category than 15 months earlier. Sixty-four percent of the 288 respondents said they belong in this category in 2008, while only 53% said the same in 2006.

Both surveys were conducted via Zoomerang using the magazine's database of more than 4,000 winery e-mail addresses, and they drew healthy response rates of more than 6%.

The share of mid-size wineries responding also grew. The percentage of wineries grew in the annual production categories of 5,000-9,999 cases and 10,000-24,999 cases, but the numbers did not jump as dramatically as they did for the smallest wineries. Consequently, the percentage of responding wineries in the three largest production categories dropped.

This year, 59% of wineries overall said they get more than half of their dollar sales from the various direct-to-consumer channels. We broke most results down by the four North American regions defined by Wines & Vines: California, Northwest, Central and East. The East has the largest percentage of wineries (84%) that sell more than half their wine direct to consumers. The Central region is next in emphasis, with 79% of wineries doing more than half of their dollar sales direct to consumers. In the Northwest, 50% of wineries sell more than half direct, and in California, 46% sell a majority direct.

Tasting rooms by region

Our survey indicates that wineries in the Central region are the most likely to sell the largest portion of their wine in their tasting rooms. An impressive 71% of respondents said they sell more than three-fourths of their direct-sales dollar volume in tasting rooms.

Eastern region wineries ranked second in emphasizing tasting rooms; Northwestern vintners are third and Californians last. It makes sense when you consider that most of the medium and large wineries in North America operate in California, and many of these do a good portion of their direct sales through wine clubs and mailing lists. They tend to spread their sales among the four channels, rather than weighting tasting rooms so heavily.

All three non-California regions show a nearly consistent trend toward having more wineries selling 76% or more of their direct sales through their tasting rooms. More California wineries, however, said tasting rooms represent 0-25% of their sales.

How do they feel?

Another part of the survey measured the attitudes of the respondents--largely winery owners and sales directors--to various parameters of direct sales.

Are they happy with their direct sales programs in general? Yes, said 29%, an increase since 2006. But a hefty majority (56%) disagreed with the statement, and 15% offered no opinion, perhaps indicating that they don't yet know how to measure their success.
In a similar vein, it appeared that a smaller percentage of wineries has been taking to heart the advice given frequently in seminars on how to increase direct sales.

• The percentage of wineries that agreed they have a strong relationship with their top 50 direct sales accounts dropped by 10%.
• Those that said they have focused well on collecting postal and e-mail addresses diminished by 2%.
• Twelve percent fewer wineries agreed that it is important for their direct sales staff to get direct financial incentives for sales and collecting contact information. Only 37% agreed, while a whopping 39% gave no opinion on this seemingly crucial sales policy.

Apparently, the tasting room as revenue center is just as valid today as it was at the beginning of the wine boom in the 1970s. Finding a winery location on a main road--and obtaining a permit for tastings and retail sales--was at least as important to a new winery's bottom line as were planting the proper grape varieties and buying small barrels for aging the wine.

Direct sales in general seem even more important today with the consolidation of distributors that has made that sales channel more difficult to access, and the explosion of wine brands from North America and abroad that keep the competition fierce at retail and in restaurants. A winery's own retail room remains a key to success.