Cabernet on the Decline in the US?

The Cabernet Sauvignon wave in the United States may have crested in 2019 when nobody was looking.

This is the biggest, most surprising takeaway from the annual Direct to Consumer report from Sovos ShipCompliant and Wines Vines Analytics.

Don't misunderstand: Cabernet is still King Kong in the US market and every other grape variety is Donkey Kong at best. The report doesn't say people have stopped ordering Cabernet or paying too much money for it.

It does say: "Cabernet Sauvignon, with the highest average price per bottle, performed the worst of all 20 wine varietals tracked, due in large part to the lower than expected performance of Napa Valley's Cabernet Sauvignon shipments."

And there are several other signs that Cabernet's wave might have finally peaked:

• Cabernet sales from both Napa and Sonoma Counties lagged behind sales of other varieties in those regions;
• The average price of a Napa Cabernet ordered direct actually dropped 8 percent, but wineries did not see a boost in volume from the discounting;
• Online buyers weren't uninterested in expensive Napa wines. One of the hottest wines from Napa was Sauvignon Blanc – sales were up 38.6 percent – even though Napa makes easily the most expensive Sauvignon Blancs in the world.

"Cabernet was shocking to me too," Sovos ShipCompliant vice president and general manager Larry Cormier told Wine-Searcher. "What we saw last year was not only healthy category growth in Cabernet itself, but the leading price category for growth was wines over $100. We saw a total flip in that with the shift toward more value-oriented wine."

Cormier said that because of Covid-19 lockdowns, a lot of new customers ordered wine direct for the first time, and they tended to be younger and looking for cheaper wines. Of course, those customers are the future of the wine industry. And online wine sales now represent 10.1 percent of all retail sales of domestic wine in the US, according to Jon Moramarco, managing partner of bw166.

"Of the $3.7 billion in direct sales I'd say $300,000 were people who had not bought DTC before," Cormier said. "They were focused on lower-priced varietals. Some of that was the timing of the boom. In summer people were buying lighter varietals: rosé and Sauvignon Blanc and things like that."

Cabernet is still the most-ordered varietal in the US, making up 15.5 percent of the total number of bottles, with an average price of $62.03 (though last year that price was 13.1 percent higher). Red blends are second (14.1 percent of sales at an average of $41.34) followed by Pinot Noir (13.7 percent, $43.02) and Chardonnay (9.5 percent, $31.02.) Direct sales have been kind to Zinfandel, which has struggled in retail stores for the last several years; Zinfandel finished fifth at 5.8 percent with an average bottle price of $28.22.

Napa on the slide?

Cabernet's surprising weakness factored into a below-average performance for Napa County overall: sales increased 15.9 percent by volume, but nationally the average was an increase of 27 percent. Last year Sonoma County passed Napa to become the largest source nationally of direct-shipped wines. Napa still accounts for nearly a quarter of all direct-wine sales by volume and 42.9 percent by value. But in 2020, its stars online were rosé (up 44.6 percent by volume), white blends (44 percent) and Sauvignon Blanc.

"For a long time we've been looking for an onramp for millennials," Cormier said. "If that onramp is buying a couple bottles of rosé, or joining a club, that's good. Cabernet still makes up most of the DTC market, especially from a value perspective. Napa is still the gorilla in terms of value. But they're losing market share. It's been going down every year."

Here are some other interesting points from the report, which is compiled by analyzing data from direct shipments from more than 1100 wineries nationwide:

• Non-West Coast states outperformed the West Coast, as people who couldn't visit local tasting rooms chose to support them by ordering;
• On the West Coast, the best growth was in non-famous regions called "rest of California", an amorphous collection that includes Mendocino and Lake Counties and Livermore Valley. The second-best region for growth was Washington;
• Shipments of wines under $30 were up 41.6 percent while wines over $100 fell 2 percent;
• The average price of a bottle ordered online dropped 9.5 percent to $36.83, the largest drop in a decade;
• California residents ordered four times as much wine as Texas, the second-biggest state for direct sales. New York, Florida and Washington were next in most bottles ordered.

Here's a little good news for wineries. Recently in Rob McMillan's annual State of the Wine Industry presentation he predicted that when December sales figures came out, wine would take a beating from the absence of holiday celebrations and parties. That did not happen, at least in direct sales.

"We saw steady growth in November and even more in December," Cormier said. "Some of the lack of celebrations were offset by gift-giving. We saw a lot of people giving wine to their employees or their partners."

In past years those gifts would most likely have been Cabernet. Now, anything goes.