Metrics Show Healthy U.S. Wine Industry

DtC shipments and winery hiring activity grow rapidly in March

by Jim Gordon
Direct-to-consumer wine shipments jumped 19% by value in March compared to the same month in 2014.

San Rafael, Calif.—March brought very significant growth in direct-to-consumer shipments and the Winery Job Index compared to March 2014, plus steady growth in off-premise domestic wine sales. All three of these key indicators of U.S. wine industry health in March beat their 12-month averages. Wine flash sales offers declined by 7%.

The entire March metrics report from Wines Vines Analytics is available here.

Wine clubs spur DtC shipments
The value of direct-to-consumer shipments from U.S. wineries in March rose 19% from the March 2014 value, and the 12-month growth rate stayed at last month’s level of 14%. March is a big month for wine club shipments, including numerous high-value purchases, and those contributed significantly to the monthly total of $251,896,707.

Average bottle price in March was $44.98 compared to $43.75 in March 2014, and compared to $38.40 for the 2014 overall average bottle price for DtC shipments. In 2014, March had the third highest average bottle price after October and November, and in 2013 March had the highest average bottle price.

March DtC shipment volume of 466,712 cases was also up 61,888 cases from March 2014, a 15% gain and the third highest volume month since at least 2011.

Wines Vines Analytics took a closer look at Northwest wineries’ DtC shipments this month. Oregon wineries passed Washington wineries in value of DtC shipments about two years ago and stretched their lead in the 12 months ending in March.

Oregon direct-shipped $91,155,582 worth of wine during that period, up 38% from the previous 12 months. This compared to Washington’s value of $61,159,178, which was up 13%.

The average bottle price for Oregon DtC shipments grew $2.18 in three years to $40.27, while Washington’s average bottle price decreased by $1.18 to $35.44.

DtC shipment market share by varietal in Oregon and Washington looks very different, too. The accompanying donut graphs show the radically different product mixes in the adjoining states. It’s no surprise that Pinot Noir dominates Oregon direct shipments, but the extent of its dominance – 70% market share by value – is quite unusual. The next closest varietal, Chardonnay, had only a 6% share.

Washington’s most popular varietal or type in DtC shipments was Cabernet Sauvignon. But with a 24% share compared to a 21% share for red blends, it was not a commanding lead. The high diversity of types that Washington wineries ship to consumers is further illustrated by Syrah in third place.

Hiring activity up 22%
The Winery Job Index for March was up 22% from March 2014, indicating a strong hiring trend, according to Winejobs.com. Hiring activity for the subcategory of winemaking jobs saw the highest growth rate, followed by hospitality jobs. Sales and marketing job activity grew slightly.

Hiring activity for winemaking jobs in March was 47% higher than the previous March. It was the fastest March growth rate since 2010. Winejobs.com reported that March hiring activity for direct-to-consumer, tasting room and retail jobs grew 21% from March 2014.

Job postings for winery sales and marketing jobs in March grew 3% from last March, while dropping in number from January and February of this year. Grapegrowing and vineyard jobs grew 11% from March 2014.

Domestic wine continues off-premise growth
A monthly growth rate of 7% for off-premise sales of domestic wine in March beat the 12-month rate of 5% for the third month in a row. Both rates remained the same as in March 2014, and the combined sales for table wine and sparkling wine surpassed $622 million in the multiple outlet and convenience stores measured by IRI through March 22. It was a four-week gain of $39 million.

The new numbers showed the continued advantage that domestic wine sales have over imports, which grew 4% in March and just 2% during the most recent 12 months, according to IRI, the Chicago-based market research firm.

Both domestic and imported wines grew faster in value than in volume, indicating upward price movement. Volume went up by 3% for domestics in March, and for the recent 52 weeks, compared to a year previously. For imports the volume rose by just 1% in March, and by 2% in 52 weeks.

The average price of a bottle of domestic wine rose by $0.15 to $6.09 since a year ago while the average import increased by $.27 to $7.47.

The $8 divide

Sales data in March also continued to show a sharp divide in growth rates between domestic wines priced under $8 and those priced at $8 and higher. The IRI price segments on the high side of that divide captured 59% of the off-premise market share in value at stores measured by IRI, while those on the low side had 41%.

Moreover, all of the higher price points gained dollar share in the past 52 weeks, while none of the lower price points did, except for box wines. The largest gain in market share went to the $8-$10.99 price segment, which was already the biggest dollar segment. Conversely, the next segment down, $5-$7.99, saw the largest loss in market share.

Box wines are the exceptions to the rule, at least the higher-priced box wines are. Those priced from $3.50-$4.99 per 750 ml grew 22% in value during the past 52 weeks, but remained a small part of off-premise sales. They increased their dollar share by .5 points to 3.5%.

Among domestic wines in glass bottles, those priced at $20 and above had the highest sales growth rate of 19% during the past 52 weeks. Their average price came down $.50 to $25.95.

Sparkling up 10%
Domestic sparkling wine sales rose 10% in March compared to March 2014, and rose 7% in 52 weeks, according to IRO. They claimed 52% of sparkling sales by value and 60% by volume. Domestic sparkling wine averaged $8.60 per bottle, up $.16 in 52 weeks.

Imported sparkling wine, however, climbed 19% in March sales and 15% in 52 weeks. Italy was the leading country among sparkling imports, with 30% of the market share in value and an average price of  $11. France had 10% market share by value and an average price of $49.

Flash offers dip in March
The total number of domestic wine offers by flash sales websites fell 7% in March compared to the total number of offers during the same period last year. The drop in offers stems largely from Invino making just 44 offers in March compared to 132 last March during a special offer promotion. Five of the nine major flash websites tracked by Wines Vines Analytics offered the same or more wines in March than last year.

About eight of every 10 domestic wines offered by flash websites are from California wineries, but wineries in Oregon and Washington account for the second largest share of flash offers. The two Pacific Northwest states are also home to the most wineries after California.

Pinot Noir accounted for 75% of all offers for Oregon wines in the two 12-month periods ending in March. No other varietal wine came close to matching the number of offers for Oregon Pinot Noir. Offers for Washington wines were much more diverse, but Cabernet Sauvignon and red blends still accounted for about 50% of all the state’s offers.

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