DtC Wine Shipping—In Decline, Back To Normal Or Something Else?
The 2024 DtC Wine Shipping Report is released and it's revealing
The Direct-to-Consumer Winery Shipping Report has been produced annually since 2011 and has become one of the most important reports depicting the health of the American wine market. The 2024 Report, released on Tuesday, is very revealing.
Over the past two decades, direct wine shipments from wineries to consumers have become the engine driving winery expansion in every single state. It has been the engine responsible for the profitability of nearly every winery under 25,000 cases. It has been the engine that has allowed consumers to expand their access to and exposure to hundreds of thousands of unique wines that would never have been produced had direct-to-consumer shipping not been legalized in virtually every state.
It’s for all these reasons that the recently released 2024 SOVOS Direct-to-Consumer Wine Shipping Report deserves your attention.
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DOWNLOAD THE DTC SHIPPING REPORT HERE
[Sovos-ShipCompliant will be holding a webinar to discuss the findings of the report on Wednesday, February 7th at 10 am PST. CLICK TO REGISTER]
(Disclosure: I worked with the SOVOS/WINEBUSINESS ANALYTICS team that produced the 2024 DtC Shipping Report as well as working on the past 10 versions of the report.)
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The top-line finding is this: The volume of DtC wine shipments declined by 6% from 2023. The dollar value of those shipments was flat. The average price per bottle shipped increased (again) by 7% over 2024. This was the second year in a row and the only time in the history of this report that the volume of wine shipments declined.
Why are shipments from winery to consumer declining?
The key to answering this question is understanding what winery shipments represent. They represent a purchase made with discretionary income. When consumers have access to more discretionary income, they will be more likely to buy luxury products like expensive wines. When consumers have less discretionary income, they will buy fewer luxury wines.
The thoughtful reader will now be asking the obvious question: What about the impact of the Pandemic on direct shipment? This is a good question. In 2020 the DtC report showed a remarkable 27% increase in the volume of shipments from winery to consumer as folks staying at home increased their online purchases and wine shipments. In 2021 volume of shipments remained relatively flat from the Pandemic year. In 2022 volume of shipments fell by 10% from the previous year. And, as mentioned above, in 2023 the volume of shipments fell by another 6.5% from the year before.
Again, the thoughtful reader, trying to filter out the Pandemic effect will ask, “Well, what is the difference in the volume of shipments from 2019 BP (Before Pandemic) to 2023, three years after the Pandemic? The answer is an 8% increase in the volume of shipments from 2019 to 2023.
Is this good or bad?
Looking at past DtC shipping reports going back to 2011 and through 2019, the average annual change in the volume of shipments is a HEFTY 10.5%. If we imagine there was no Pandemic Effect and we applied a 10.5% increase in the volume of shipments for each year from 2020-2023, the total volume of shipments in 2023 would have come out to 11.5 million cases. This is a 38% increase over the 7.1 million cases of wine that were actually shipped in 2023.
If we imagined that there was no Pandemic Effect and the average annual increase in the volume of shipments from 2019 through 2023 was a mere 5%, 2023 would still come in 11% under that much reduced year-over-year increase.