In 2020, direct shipping by US wineries changed immensely as thousands of new customers used the Internet for the first time to order wine. Sales volume went way up, and average prices went way down – the new customers ordered cheaper wine. The question was, what would happen when the world reopened in 2021?
Now we have the answer, and it's one wineries will like: direct sales volume was up slightly in 2021, thus maintaining the big volume bump of 2020 and creating another biggest-year-ever. Many of the new customers of 2020 continued to buy wine direct in 2021, according to winery surveys. And the average price of all bottles bought direct shot back up to a new high of $41.16, overcoming a 9.5 percent drop in 2020 that now looks like a situational blip.
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All of this data comes from the annual report issued Thursday by Sovos ShipCompliant and Wines Vines Analytics.
Winners in direct shipping in 2021 include Napa Valley, Oregon, Cabernet Sauvignon and Pinot Noir. Losers include Washington, rosé, Pinot Gris and every state outside the West Coast.
If you were wondering how yesterday's State of the Industry report from Silicon Valley Bank could show 2021 as such a great year for wineries despite no overall industry growth – 29 percent reported their best year ever, and 74 percent reported that it was good, very good or best ever – look no further than the success of direct shipping. Last year was absolutely great for the smallest wineries (fewer than 1000 cases per year) that ship: up 18.4 percent in value because of much higher bottle prices. Wineries under 5000 cases per year sold 56.3 percent of all wines ordered direct in 2021.
Meanwhile, 2021 was a retrenchment year for wineries that produce more than 500,000 cases. The big companies cut their average bottle price by 17.3 percent in 2020 and could not bring it back up in 2021, with an increase of only 4.5 percent. That said, the big wineries largely stayed out of direct shipping until about five years ago, but now they account for 18.7 percent of all wines shipped direct.
Sales growth was most robust for the most expensive wines; the growth figures were highest for wines over $80. Growth was the same as last year for wines between $40 and $80. Consumers bought fewer wines under $30 direct in 2021 than they did in 2020.
Napa Valley had a huge year in 2021, selling more than 2.1 million cases direct, and now accounts for 25.6 percent of all wines sold direct by volume, and 45 percent by value. The average bottle price was $72 for all Napa wines, a new high, and $114 for Napa Cabernet Sauvignon. Surprisingly, Cabernet accounts for only 30 percent of wines ordered from Napa, with red blends, Chardonnay, Pinot Noir and Sauvignon Blanc rounding out the valley's top five varietals.
Sonoma County wasn't quite as successful, though it remains the country's volume leader, accounting for 31.7 percent of all wines shipped direct, but only 21.6 percent by value. Unlike Napa, Sonoma only gained back about half of the 10.3 percent drop in average bottle price from 2020; the average Sonoma wine ordered direct cost $28. The reason seems to be an increase in shipping cheap rosé. Sonoma County sells 35.6 percent of all rosé sold directly in the U.S., but the average Sonoma rosé bottle price actually dropped 22.5 percent.
Let's not overstate Oregon's success: It still makes up just under 7 percent of all US wine shipments by both value and volume. But the Beaver State had a nice year in 2021, with sales up 12.9 percent by volume and 18.7 percent by value, outperforming every region other than Napa. The average bottle price for Oregon wine was $42.45. Pinot Noir was obviously the main variety but consumers have begun to notice the great Chardonnays being made there; Chardonnay is now more than 10 percent of total bottles bought.
Washington's woes might be related to a tumultuous year at the state's largest winery, Chateau Ste. Michelle, that culminated in its sale to a private equity firm in July. Washington wineries' direct sales volume went down 2.9 percent.
Outside the West Coast, wineries lost direct sales in 2021, perhaps because customers could go back to visiting their local wineries and buying at tasting rooms. Non-West Coast wineries dropped 9.5 percent in sales volume.
Throughout the US, the top five shipped varietals remained the same: Cabernet, Chardonnay, Pinot Noir, red blends and Zinfandel. Those five make up 59 percent of all wines ordered direct in the US.
There was a small change in the ranking of the states that order the most wine: Floridians bought 8 percent more wine direct in 2021 than before, moving them past Washington state to be the number 4 shipping destination after California, Texas and New York.
How important is the California market? Californians ordered more wine direct in 2021 than Texas, New York, Florida and Washington combined.
