The dramatic shift to online shopping that emerged in the United States during the 2020 pandemic altered many of the dynamics in the alcohol market, one that is most pronounced in the wine market. According to Nielsen data, the year before Covid-19 online sales of wine in the US lagged behind all major markets sitting at 5%, compared with mid-teens in Europe and 30% in China. The lockdowns poured gasoline on those numbers, and the segment saw a 234% increase in 2020.
One of the biggest winners of this behavior change was the direct-to-consumer (DTC) sales that wineries were ideally positioned to exploit. Relaxed liquor laws meant the lion’s share of DTC sales of alcohol went to wine. Forty-four states allow wine compared to just eleven for beer. Wine has a 14% value share in the total drinks market but a 40% value share online, according to a recent IWSR Drinks Market Analysis. That paired nicely with their ability to directly engage with customers online through virtual tastings, product reviews, and wine clubs, allowing consumers to discover new products.
“Wine is exceptionally well placed to take advantage of the burgeoning move towards online purchases. Having relaxed its online buying and shipping laws for alcohol during the pandemic, the US is set to drive wine’s eCommerce growth, as will Brazil, China, the UK, and Australia,” says Daniel Mettyear, research director for wine at IWSR.
That is excellent news for Sonoma County vintners, who now account for 33% of the entire DTC channel volume, one that is approaching nine million cases this year according to the latest data from Wine Vines Analytics/Sovos ShipComplaint. In the latest data over the last twelve months through September, Sonoma County wineries saw a 16% increase in shipment volume compared to the same time a year prior. That continues a trend that has seen its volume growth numbers be almost double that of nearby Napa County.
While Sonoma County is growing, it still lags behind Napa County in overall dollars, with Napa DTC shipment value at $1.75 billion compared to Sonoma at $896 million while the Central Coast of California comes in third at $432 million. Even though the dollar value rose 16.5% in 2020 compared to 2019, the average bottle price in DTC sales fell to $36.62. That is due to the enormous influx of new buyers to the space looking for lower-priced options, something that doesn’t affect the wineries as much due to their ability to retain more of the profits by cutting out fees paid to distributorships.
So, while the overall liquor industry continues to bounce back from 2020 with the on-premise channel returning to normal, the wine industry is poised to remain the leader of the DTC market. Perhaps the biggest winner of them all will be Sonoma County, long the little sibling to its bigger and better-known neighbor to the south. If the DTC numbers say anything, it’s that consumers are looking for their wines more and more each day.