Recent DtC Report's Enlightening Details
First half of 2024 shows significant DtC Winery Shipping Trends; Oh yeah...and...
WineBusiness Analytics/Sovos ShipCompliant is the best source of winery DTC shipment information in the country. For the past decade, they have produced the influential and authoritative Direct To Consumer Winery Shipping Report. The report is read by thousands of people. It regularly is used by data and analysis firms, banks, and even in lawsuits addressing state shipping laws.
A few days ago WineBusiness Analytics/Sovos ShipCompliant announced that DtC shipments in June fell 15% by value and 21% by volume from June 2023. As far as I can tell from looking at past reports, these are not just the single largest year-over-year decline in the volume of wine shipped in June, but in fact, the only time in over a decade that June has seen a decline in the volume of winery DtC shipments in June.
Explaining the severe downturn, the report noted:
“Warm weather most likely depressed shipment activity in the month, part of the typical seasonal downturn, in tandem with a return to pre-pandemic levels of activity. The average bottle price for the month was its highest ever at $37.64.”
Was this unprecedented decline in the volume of winery DtC shipments in June a casualty of climate change? That is, were shipments that might normally have been sent to consumers in June delayed because it was just too warm to put them on delivery trucks lest they fry in the heat?
It’s important to note that June is traditionally one of the slowest months for winery-to-consumer shipments already due primarily to the hot weather. July is traditionally the slowest month of the year for shipments for the same reason. Shipments really only begin to pick up again in September when temperatures start to come down and wine club shipments start to pick up. If hot weather was the culprit in such a decline in shipments in June, we should see July, August, and especially September shipments be augmented by the delayed June shipments added into these months’ totals. It’s something to watch.
As suggested in the announcement, the year-over-year decrease in June shipments likely is part of a recalibration back to pre-pandemic activity. In June 2018, 363,000 cases of wine shipped in June. In 2019, 393,000 cases of wine shipped in June. The reported 331,000 cases of wine shipped from winery-to-consumer last month is a 17% decrease in the volume of shipments from 2019, the last year before COVID-19 scrambled wine sales in an unprecedented way.
During the six-month period from January to June 2024, the volume of DtC winery shipments dropped every one of those months from the same months in 2023, according to WineBusiness Analytics/Sovos ShipCompliant data.
One final thing to note about the report on June 2024 winery-to-consumer shipments: the average price per bottle shipped last month was $37.64, the highest-ever mark for June and 8% over the average price per bottle shipped in June 2023.
There is a lot of complexity of influence impacting the U.S. winery DtC shipping channel today. It’s very difficult to determine which influences are at play and to what extent. What is known is that the DtC channel is in contraction.
VINTAGE WINE ESTATES BANKRUPTCY
Speaking of contraction, Vintage Wine Estates has filed for Bankruptcy. The portfolio of brands under the Vintage Wine Estates banner number about 30, with many being very familiar. Among them:
B.R. COHN
CAMERON HUGHES
CARTLIDGE & BROWNE
CLOS PEGASE
COSENTINO WINERY
DELECTUS WINERY
FIRESTEED CELLARS
GIRARD WINERY
IF YOU SEE KAY
KUNDE
LAETITIA
LAYER CAKE
OWEN ROE
QUPE
SONOMA COAST VINEYARDS
SWANSON VINEYARDS
VIANSA
WINDSOR VINEYARDS
WINE SISTERHOOD
Many of these are very well-known brands with significant acreage holdings across major wine-growing regions. You can also make the case that many of these brands and wineries are historic in one way or another. B.R. Cohn was once considered the source of one of the greatest Sonoma County Cabernet Sauvignons. Cameron Hughes defined the modern American negotiant. Clos Pegase was the central figure in the story of American winery architecture gone big. Kunde was once among the most important wineries in Sonoma Valley. Windsor Vineyards was at one time the most important mail order/Telephone sales winery in the country.
Most if not all of these brands and wineries along with their estates and vineyards will be sold off. Cosentino has already been sold.
I think that the downward trend in the DtC wine channel and the recent bankruptcy filing of Vintage Wine Estates are reflections of the same swirl of economic conditions within the wine industry. I think there is enormous opportunity for wineries that have the right tools and attitude to slay the developing beast that is a new wine market reality. And I think this won’t be the last FERMENTATION newsletter that surveys a bit of carnage and correction.
A correction is definitely needed. Although it's going to be sad to see many wineries sold or go out of business (especially for the teams that work there), there are too many choices and people are spreading their $ across so many options. Back in the mid-80's, the wine aisle in supermarkets was maybe one side of an aisle, now it's 3 full aisles. It's another version of one wine company churning out new brands to try to attract every demo. As we've seen, many of those brands die on the vine (so to speak). Yes, we have a lot of other headwinds (people not drinking as much alcohol, new options like RTD's, gummies, etc.). And that's where we as a Wine Industry need to come together to do our own "Got Milk" campaign. End of screed...
Interesting. I admit I stop shipments to me in May, I pick up again in September- between tornado season and heat I don’t like the risk. But I am surprised by the drop every month in 2024.