There is an interesting article in the November 17th, 2008 (Vol. 18, No. 39) of the Wine Business Insider — “Winery Direct Sales Shipments Down But Order Sizes Up”. The article discusses research done by Stonebridge Research and New Vine Logistics and data from the Annual U.S. Wine Market report from Impact Databank. Here is a summary of the information:
||2006 to 2007
||2007 to 2008
|Bottles shipped change
|Delta in order volume
The volume of wine being shipped is still increasing despite a lower number of orders. So, fewer orders but larger wine volumes per order.
||2005 to 2006
||2006 to 2007
||2007 to 2008
|Industry Growth Rate
Last year’s overall increases in wine sales again were driven by table wine, which now accounts for 91.4 percent of the total U.S. wine market. Led by premium varietals, table wine grew 4.3 percent to reach 258 million 9-liter cases in 2007, this on the heels of a 3.7 percent increase in 2006. Much like it did in 2006, imported wines showed a larger percentage gain, at 7.6 percent, than the 3.1 percent gain registered by domestically produced table wine. Still, domestic table wine accounts for roughly two-thirds of the entire U.S. wine market.
Champagne and sparkling wine continued to bubble up last year, gaining 3.6 percent to end the year with more than 13.8 million cases, while the vermouth category and dessert and fortified wine sales volumes both declined slightly.
Wine club shipments are up slightly for the same 3 quarter period this year vs. 2007. Non-club shipments are down 11%. The data indicates that wine club members are supporting their favorite wineries. The people that do travel to a winery are more serious purchasers than in the past. The cost of fuel is helping to seperate dedicated customers from moderately interested customers.
As Marcia Mogelonsky, senior analyst at Chicago-based Mintel, pointed out, “Chocolate, cigarettes and alcohol again seem relatively recession-proof…People might be cutting back or switching to store brands, but they definitely aren’t giving up their small daily indulgences.” The economic slowdown has been drastic yet the wine industry shows that people are still will to spend money on some non-staples.
Alcohol is being consumed less at on-premise locations according to the Nielsen Company — see chart of alcohol purchases in bars and restaurants:
Alcohol purchases in Bars and Restaurants as of May 2008
Operators also report the following minor price-related changes in consumer behavior:
- 14% report that customers are ordering more well or house drinks.
- 13% report greater sales of beer on draft rather than in bottles.
- 9% say wine drinkers are increasingly opting for house varieties.
People are cutting back on costs — less dining out and less drinking in bars/clubs. Yet, the amount of wine being sold directly is still increasing. So, people must be enjoying more of their favorite wine at home which is a good overall trend for America — a small silver lining in the near perfect financial storm we are all trying to ride out.