DTC, Direct-to-consumer wine sales are adapting

vigneron carrying a box of wine

Overall, direct-to-consumer (DTC) sales were reported to account for 18% of wine sales value and 5% of volume in 2020–21.

The Wine Australia’s Wine Direct-to-Consumer Survey 2021 reported that direct-to-consumer (DTC) sales grew strongly in 2020–21, up by 17% in value and 14% in volume compared to the previous financial year. By contrast, overall sales value for survey respondents grew by 1%, while volume declined by 5%.

Direct-to-consumer
channels
Volume Change
year-on-year
Value Change
year-on-year
Online44%23%
Wine Club16%10%
Database 11%15%
Cellar door5%22%
Own restaurant-11%6%
Other24%18%
Total TDC17%14%
Source: Wine Australia Wine Direct-to-Consumer Survey Report 2021

Within the different DTC channels, all increased in value and volume in 2020–21 except for events. Online and cellar door had the strongest value growth for survey respondents. Cellar door sales revenue grew by 22%, while online sales grew by 23%.

Across all DTC channels, the survey found that average retail sales value in 2020–21 was up 3% to AU$239 per 9-litre case including VAT (equivalent to US$19.92 per 750 ml bottle).

Apart from ‘own restaurant’, which is a very small segment, the highest average case value was for wine club (AU$262 per case) followed by cellar door (AU$254) and online (AU$210).

Cellar doors adapted to COVID-19 business conditions

One of the most striking findings of the survey was that the proportion of wineries charging for wine tastings increased from 54% in last year’s survey to 73% this year, and the average value for a tasting increased by more than 30%.

The share of seated tastings was also reported to have increased significantly, up from 44% in 2019–20 to 66% in 2020–21, while 71% of respondents reported that bookings were encouraged for all tastings (but not mandatory).

These changes illustrate how wineries have adapted their business models to suit the COVID-19 environment for business operations and have provided more tailored and more profitable experiences for visitors as a result. As one respondent noted: “Sit down tastings have been great to engage with customers on another level”.

Wine clubs and online sales saw increases in volume but erosion in average value

While cellar door sales improved, wine clubs were reported to have struggled. Although wine club sales revenue grew by 10% in 2020–21, wine clubs’ share of DTC sales declined from 21% to 19%. Responses showed the average 9-litre case value also declined (by 5%), and average value per member declined by 14% as a result of the reduced average case value combined with a slight reduction in average number of shipments per member.

An analysis of the club offers described in the survey showed that over 79% of respondents’ clubs/tiers provided free shipping on all orders, while 62% provided discounts of between 11 and 20% on shipments.

Online sales saw significant growth (44%) in sales volume, consistent with a broader consumer trend to purchase more online during the pandemic. However, sales value did not increase by as much, with a resultant decrease of 14% in average case value to $210 per 9-litre case. This is in contrast to last year’s survey result, when online volume increased by 50% and value by 49%, giving only a very small decrease in average value.

Note on interpretation: the Wine Direct-to-Consumer Survey Report 2021 provides important insight into how wineries have managed the first full year of “living with COVID”, but the sample size was small.