The Potential Inflationary Impact on Winery Shipments to Consumers

What will inflation do to the domestic wine industry?

The $4.2 billion in 2021 winery-to-consumer shipments described in the recent ShipCompliant-Wines & Vines Analytics DtC Report is a pretty shiny number. In fact, that $4.2 billion represents 12% of all off-premise sales of domestic wines. Another shiny figure. But it isn’t the most interesting revelation in the annual report. That comes at the very end of the report under the heading of “Conclusions and Forecasts”.

“Inflationary pressures have hit the U.S. economy in a way that we have not seen in decades and to which the wine industry is not immune. Most economists say that higher prices will be with us for at least a good part of 2022. Increased costs of raw materials, glass, corks and shipping materials and services are bound to increase winery costs, which are likely to be passed on to the consumer. How consumers respond will most certainly have an impact on DtC shipments.”

The inflation rate seen in 2021 is the highest in four decades. The most important impact of rising prices is the obvious reduction in consumer buying power. The normal reaction to rising prices is to buy now, rather than wait for prices to increase further. Shipcompliant/Wines & Vines is right to highlight the potential impact of inflation on DtC shipments in 2022. However, there are a number of factors that play into this emphasis in the recent report.