Remember that happy talk about how this time was different, how premiumization would avoid a decline in alcohol beverage sales? That may be true for a winery shipping wines valued at $100 a bottle or more, but for every one else – and especially for those selling below $50 – 2022 will go down as a year of misery.
For the first time, direct to consumer wine shipments saw both volume and value decrease..
Total wine DtC shipment volume fell 10.3%, or 876,848 cases, from 2021 and value eased 1.6% ($66 million).
That's according to the just-released Sovos ShipCompliant and Wines Vines Analytics annual direct-to-consumer wine shipping report, which noted that the average price per bottle shipped has climbed 10.9% since 2019, reflecting inflationary pressures up and down the supply chain.
A significant part of the 10.3% drop in DtC wine volume can be attributed to wine consumers buying wines priced below $50 a bottle, the report says. This may reflect the fact that many consumers who came into the DtC wine channel during the 2020 pandemic have resumed buying their wine at their local package store.
Volume of wines priced below $50, which occupy 70% of the DtC shipping channel, fell 14.5% from 2021. Those priced above $50 saw a mere 1% increase.
"No winery, regardless of region or size, appears to have avoided the effects of a retreat from consumer wine spending in the shipping channel," the report says. "Nearly every type of wine and every varietal was impacted." To be sure, there were a few states where consumers upped their shipments of wine.
Still, it isn't all bad news: DtC shipments represented 12% of total off-premise sales of U.S. domestic wines. "This percentage is roughly the same as 2021, which marked the largest ever percentage of domestic off-premise sales recorded by the DtC shipping channel."
Prior to 2019, the DtC shipping channel outperformed nearly every sector of the wine industry as more states permitted wineris to ship direct to their consumers.
The average price per bottle of wine shipped jumps 9.7% to $45.16. The report noted that the average price per bottle shipped has risen 10.9% since 2019 as wineries reacted to increased costs of
energy, goods, services and borrowing, and
removed pandemic-related shipping discounts
that made lower priced wines more appealing
Wines priced over $100 saw their volume rise 7.8% on top of a 34.3 surge in 2021. "Buyers
of high-priced wines are likely better equipped
to withstand the impact of inflation and
increasing costs of living," the report notes.
Volume of wines with an average price per bottle under $30 fell 17.5%. In 2020, these low-priced wines saw an "unmatched increase in shipments," the report says.
Napa County was the only region that saw a gain in the value of shipments (3.2%) over 2021. But Napa wineries shipped a lot less wine that in 2021, and the price per bottle rose 13.8% last year. "The average price of a bottle of wine shipped from a Napa winery is now $82.39, a figure far exceeding any other region," the report says. The average price per bottle shipped from a Napa winery has increased nearly 30% since 2020. But that has come with a price: the volume of shipments out of Napa wineries since 2020 has decreased 5.6%.
The impact of inflation was clearly seen not only in higher bottle prices in 2022, but also in consumers cutting back on lower-priced wines.
Looking ahead, the report concludes that if inflation remains far higher than historical averages, and if interest rates continue to rise, "the wine industry and its DtC wine shipping channel will continue to be impacted by slower consumer spending and the high costs of goods, services and debt."
"None of that," it adds, "is good news for wineries that rely on DtC sales and shipments."
The most expensive wines are, and will continue to be, best positioned to expand or maintain shipments, the report says. It anticipates a continued increase in average prices of DtC-shipped wine; with the Baby Boomer generation not dominating the wine marketplace as it used to, "the more than 11,000 U.S. wineries are competing for a population of wine drinkers less interested in
wine than older generations. We expect this dynamic to further squeeze the DtC shipping channel, if not overall wine sales in general." And finally, it cautions that even if the five states that still either ban or severely limit wine shipments to consumers open, you shouldn't expect a volume bump. Each of the five states has low population and low wine consumption."