The Evolution of a More Competitive DtC Market

Andrew Adams
February 13, 2020

When I joined Wines & Vines magazine in 2011, I received an in-depth introduction to the world of direct-to-consumer wine shipments through the magazine’s collaboration with ShipCompliant.

Back then the channel still seemed new, relatively novel, and while sales were strong in a few key markets, the overall growth of the segment was hobbled by several large states being closed to direct shipments. White wines accounted for a tiny share of overall shipments and the time of year had a huge impact on total shipment volumes.

Now in 2020, with the release of the tenth annual DtC Wine Shipping Report, we’ve seen Chardonnay grow to account for 9% of all shipments by volume and rosé shipments have exploded, growing more than 10% by volume in 2019. I didn’t even think about rosé back when I first started writing about DtC shipments. Shipment volume during the summer has also increased year to year, and in July 2019 it was 8% higher than in the previous year.

The segment has also become one of the strongest-performing parts of the overall market and accounts for more than 10% of all domestic, off-premise wine sales.

Over time our partnership with what has become Sovos ShipCompliant has also changed as Wines & Vines merged into pages of Wine Business Monthly and I launched the new Wine Analytics Report in which we report on the latest DtC numbers every month and other key industry metrics, news and analysis.

In recent weeks, I presented findings from the report at a few wine industry conferences where I’ve been lucky to highlight the positive growth of DtC shipments while everyone else has been delving into the doom and gloom of weak off-premise sales, the explosive growth of hard seltzer, finicky Millennials, aging Boomers, and the oversupply of grapes and wine.

DtC is still strong but as the market has grown steadily it’s also become increasingly challenging for wineries to simply join the channel and enjoy assured and solid growth. Wineries can no longer rely only on producing quality wine in a well-known region and running an efficient tasting room to maintain and expand a wine club.

Larger wineries focusing on DtC

As a winery you are already competing with similar brands for consumer attention and loyalty, but now price has become more important in DtC as large wineries have entered the channel. One of the notable takeaways from this year’s DtC Wine Shipping Report was the emergence of a few of the industry’s largest wineries taking a more active role in DtC. This has the potential of lowering prices and making it that much more competitive as these companies bring their vast marketing resources to the market.

E-comm, brand stories are key

E-commerce and DtC hold the most potential for wineries seeking to engage with new consumers and offset any decline in retail or on-premise sales. However, being successful in this channel means taking a hard look at your e-commerce system to ensure it is frictionless for consumers to purchase your wines, from any type of platform.

You also need to understand what makes your brand compelling and unique in a segment dominated by smaller wineries all of which may have similar stories to tell. Even if your story may be similar to that of your neighbor and competitor, the way you tell that story and with what content and medium can set you apart.

Control your destiny

DtC continues to offer the best margins and opportunities for growth. And unlike the wholesale and retail markets, wineries control their own DtC destinies themselves. It’s up to you and your team to succeed in DtC; you’re not subject to the whims of distributor reps or somms.

It may not be as easy as when new states were opening every year and the market was doubling, but there are many paths to DtC success for wineries willing to do the research to select the right markets and consumer base for their business.  

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Author

Andrew Adams

Andrew Adams is Editor of Wine Analytics Report at Wines Vines Analytics.
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