A Continued ‘Normalization’ in DtC Wine Shipping – What Does it Mean?

Sovos ShipCompliant’s recent 2023 Direct-to-Consumer (DtC) Wine Shipping Report, released with our partner Wines Vines Analytics, showed the first-ever decline in both value (-1.6%) and volume (-10.3%) of shipments. While these numbers are concerning, it’s important to look at the industry in its entirety and keep in mind the overall context of pandemic responses from both consumers and wineries.

This point was stressed in our recent webinar, “Insights from the 2023 DtC Wine Shipping Report,” hosted by Alex Koral, regulatory general counsel, Sovos ShipCompliant and Andrew Adams, Wine Analytics report editor at Wines Vines Analytics. Specifically, there is an ongoing “normalization” in the DtC wine shipping market, the two explained.

Without underplaying the significance of the decline in value and volume of DtC wine shipments, the drop reflects a return to a growth pattern that may have been seen from 2020-2022 had there not been a global pandemic. There were 8.39 million cases of wine shipped to consumers in 2020, which was a 27% increase over 2019. In 2021, 8.5 million cases of wine were shipped DtC, representing a 1.4% increase in volume shipped.

Koral and Adams added that 2020 was not a normal year, and the DtC results from that time should be taken with a grain of salt.

Expensive wines lead the way, younger consumers buy differently

The highest-priced wines—those priced at $100 or more per bottle—increased their volume shipped by 7.8% in 2022, and those priced at $200 or more per bottle increased by more than 20%. Comparatively, wines priced under $30 per bottle dropped in volume by 17.5%. This was a continued pattern from 2021, following large increases in shipments of lower-priced wines in the unprecedented sales from 2020. Additionally, buyers of higher-priced wines are likely better equipped to withstand the inflationary pressures seen in 2022 and are less likely to change their buying habits because of it.

The average price per bottle shipped grew 9.7% in 2022, reaching $45.16. The average price per bottle shipped has increased 10.9% since 2019. This is likely due to wineries responding to higher costs, including energy, goods, services and borrowing.

However, it’s not necessarily cause for wineries to lower prices. It could be a matter of better communicating the value of the product to consumers, according to bw166.

“For young consumers, pricing is a limitation which is a problem for the Wine industry – in 2022 the average price of a serving of Wine at retail was $2.29, $1.38 for Beer, and $1.12 for Spirits,” the article said.

It will also be important for wineries to find strategic new opportunities in the DtC market, including more targeted marketing for consumers of all ages. Wine is more expensive to make, market and ship, meaning wineries cannot rely on the same incentives in the DtC space like they did during the pandemic, Adams explained to The Drinks Business.

“It’s not getting any easier for small and medium wineries to sell their products in retail, so DtC remains an invaluable sales channel as well as the most effective way to engage your best customers and attract new ones,” he said.