Every year, we make a point of attending several industry events and combing through industry reports to take stock of what has been happening in the wine industry over the past year and what it predicted for the next. (For example, you can see our past analyses on the 2017 and 2019 SVB Wine Report, and our notes on the 2018 and 2019 Wine Industry Financial Symposium and WIN Expo.)
2020 was, of course, a year that no one could have predicted. But as the saying goes, “Necessity is the mother of invention,” and we saw wineries and industry partners doing some amazing things. Here is a summary of what we learned through January’s events and reports.
The SVB Wine Report Predicts a Spike in Demand and Sustained Online Sales
Many consumers have postponed important events, celebrations, and travel with the pandemic. The SVB State of the US Wine Industry 2021 report predicts that, as people slowly emerge from lockdown, we will see demand for wine begin to spike.
That said, it’s not as if wine was hurting during the pandemic. As SVB EVP Rob McMillan himself told the reporters at wine-searcher, “Wine is recession-proof and maybe somewhat pandemic-resistant as well. People do want their wine.”
The real change that happened was that many more sales shifted to online. The report found that, in the weeks following shelter-in-place orders, the average family winery “saw its internet sales rise from less than 1 percent…to more than 10 percent of total sales.” The report further predicts that many consumers will continue online wine buying in a post-COVID world. (Interestingly, wine club sales were down, by about 5 percent.) Phone sales and video sales, which were barely in our consciousness in 2019, emerged as viable sales channels in 2020.
DTCWS Goes Digital, and it Fits the Theme
Most of the events we make a habit of attending, like the DTC Wine Symposium (DTCWS), have gone digital. While there’s nothing like an in-person experience, we did notice that registrations were much higher this year—perhaps going digital made the DTCWS more accessible to a wider audience!
That in itself reinforces one of the main themes running through the DTCWS, which was that digital strategy will be the key to winery success in 2021. Even when tasting rooms are fully open up again, wineries that kept in touch with consumers through digital marketing, and sold to them via eCommerce, will be the ones that remain top-of-mind.
There was also quite a bit of discussion about subscription models vs. traditional wine clubs. It was clear that the more successful wine clubs were making things simpler for customers while still finding ways to “stand out” from the competition.
DTC Wine Benefited from It All
The Sovos 2021 DTC Wine Shipping Report was singing a similar tune when it came to DTC wine sales. It reported a whopping 27 percent year-over-year increase in shipment volume, which is the largest increase since the report started 11 years ago.
It also predicted that wineries with strong eCommerce strategies could see online sales making up 20 percent of total within five years’ time.
What Did We Take Away From It All?
- Tasting rooms will come back, but the wineries that will really thrive are the ones that have been investing in the customer relationships all during this time.
- Growth in wine sales is no longer with the generation of Baby Boomers; it’s with those 40 and under. These consumers are digitally savvy and not afraid to order online. But the wine industry will need new branding and messaging to appeal to these consumers.
- It’s OK to try new things in the digital space. EVERYONE has been outside of their comfort zone, but that might just mean it’s a ripe time to try something new, too. (Who would have thought 18 months ago that virtual tastings would be hits and wine sales by phone would get additional focus?)
- It’s not just time to try new things, but to take a hard look at older practices, too. The traditional fixed wine clubs, for example, could potentially benefit from being more flexible in the composition and the delivery frequencing. The “one size fits all” format may have run its course.
Naturally, all of these things—larger online sales, revamped wine clubs, customization to build brand equity, new sales channels— will require having a good fulfillment and shipping partner who understands these opportunities (and the challenges that sometimes come with them). If you do not have that piece of the puzzle yet, please reach out to us.