Top Wine Brands Reveal Market's Momentum

Barefoot, Sutter Home and Franzia take top three spots for off-premise sales

by Peter Mitham
wine grape wines vines analytics top 20 retail sales

San Rafael, Calif.—A trio of familiar names headed a list of the top 20 table wine brands for the 52 weeks ended Jan. 22. Based on off-premise sales data collected from multiple-outlet and convenience stores, Chicago, Ill.-based market-research firm IRI reports that Barefoot topped the chart, followed by Sutter Home and the box brand Franzia.

While hardly the most expensive wines, prices per 750 ml for each of the three leading brands either held steady with last year or increased from a year ago. Where sales slipped elsewhere in the top 20, the shift was attributable to lower volumes and the ascendance of other brands.

Robert Mondavi Private Selection dropped to 20th place, for example, even as sales gained 1% and average bottle price increased. Yellow Tail held steady in fifth position despite sales falling 3% and a lower reported average bottle price.

A big winner was Apothic, with sales growth of 29% and a No. 7 ranking overall versus 12th place last year. Box wines also came on strong (see “Premium Boxed Wines Are Smoking Hot”), with Delicato Family Vineyards’ Bota brand ranking 17th on 31% growth, while Black Box Wines leapt into the 10th spot, up from 13th last year on 30% growth. Sales of lower priced Franzia also strengthened, rising 2% (double last year’s 1% growth) to displace Woodbridge in third place.

Comfortably ahead
The growth in these brands contributed to 2% growth in off-premise sales in January 2017 versus the same month a year earlier. Sales for January 2017 totaled $690 million, which was less than November and December sales but still comfortably ahead of all other months in 2016.

Price trends for the more expensive top brands bear out the trend toward premium products, noted not only in previous reports from Wines Vines Analytics but in the most recent export report from the Wine Institute.

Turrentine Brokerage president Steve Fredricks recently highlighted the trend during the Washington Winegrowers’ annual convention. Consumers have shifted away from bottles priced $7 and less to embrace more expensive offerings (at the same time, Fredricks’ data pointed to a 0.14% decline in pricing for $12 to $20 bottles).

With many observers pointing to balanced markets for grapes and no glut of wine, the fundamentals seem to support the retention of price gains.

Total wine sales
Despite the traditional lull in sales that follows the year-end holidays, U.S. wine sales totaled $2.6 billion in January 2017, according to market research firm bw166. This was up 4% from a year earlier. Sales for the 12 months ended January 2017 also increased 4%, rising to $39 billion.

Year-over-year sales growth for each month ranged between 4% and 6% for most of 2016. A similar start to 2017 bodes well for the months ahead. Should the trend continue into February, another traditionally slow month, the data would support the widespread optimism in the industry.

DtC sales remain strong
The fastest growing sales channel, however, remains direct-to-consumer shipments.

Shipment value for January 2017 tracked 16% above January 2016. Despite the month having five Mondays, typically a strong day for shipments, the New Year’s holiday fell on a Monday, muting the impact and leaving sheer demand to fuel the increase. It was, for all intents and purposes, a regular month with strong growth.

Wines Vines Analytics/ShipCompliant data indicates that more than $100 million worth of wine shipped direct in January, ensuring that 12-month DtC sales remained 18% above the previous year at more than $2.3 billion.

Volume posted even stronger growth, increasing 19% to 266,572 cases. Those shipments continued to include a greater volume of more affordable bottles, reflecting the channel’s importance to the market as a whole—not just high-end wines.

This is especially true for large wineries, which shipped 182% more wine DtC in 2016. However, the average bottle price for these shipments dropped 35% to $16.04.

Regional revelations
Regional trends were also revealing. A year ago, shipments from California (excluding Napa) were logging lower average bottle prices. This year, California bottle prices increased while Oregon and Washington saw bottle prices inch down. DtC bottles from Oregon dropped 6% to $37.88, reversing the price gain logged last year.

The average price for Washington bottles shipped directly to consumers fell 7% to $31.63, the second year in a row the average bottle price dropped. This was the result of small wineries (those producing 5,000 to 49,999 cases) shipping more wine DtC. Washington’s small wineries accounted for 47% of shipments, up from 39% last year, and saw per-bottle pricing slip 6%. Contrary to the national trend, large wineries were the sole segment of the Washington industry to achieve a higher average bottle price in the 12 months ended January 2017.

Flash recovery
Flash sales activity staged a modest recovery in January 2017, with offers for domestic wines from online flash resellers up 39% over the total from the same month last year. The surge in offers came largely from Invino, which saw 255 total offers in January, or 44% of all offers for the month.

With strong demand, rising prices and tightening supplies, wineries are investing in personnel. Hiring activity stepped up in January 2017, according to winejobs.com, rising 13% versus January 2016. Winemaking and direct-to-consumer, retail and tasting room positions drove the strong showing.

The winemaking job index surged 27% in January 2017 versus January 2016, making it the second-strongest January in five years for this segment of the winery job market.

Reflecting the strength of DtC activity, hiring for these positions rose 22% in January 2017 versus January 2016, steady with the previous month’s growth. At 423, the index was more than four times stronger than a decade ago, in January 2007.

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