This is against a backdrop where overall wine sales across the industry grew 1%.
According to Wine Australia’s Wine Direct-to-Consumer Survey Report 2021, online and cellar door sales have had the strongest value growth of the DTC channels in 2020–21. The survey showed cellar door sales revenue grew by 22%, while online sales grew by 23%. However, there was a drop in the average case value for online sales (down 14%), whereas the average value per case for cellar door sales increased by 16%.
DTC sales now account, on average, for 18% of a winery’s income: with the channel most important for smaller wineries.
Adapting business models
Across all DTC channels, the average retail sales value for survey respondents in 2020–21 was up 3% to $239 per case.
Rachel Triggs, Wine Australia General Manager, Corporate Affairs and Regulation, said that this was a positive response given the difficult conditions for businesses in 2020–21.
“The report suggests that - in regions not significantly impacted by COVID-19 restrictions - cellar doors performed well this year. Wineries reported adapting their business models to suit COVID-19 conditions, providing more tailored experiences for visitors that improved profitability.”
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 was reported to have increased by more than 30%. The share of seated tastings also increased significantly, up from 44% in 2019–20 to 66% in 2020–21, and 71% of respondents said that bookings were encouraged for all tastings (although not mandatory).
Wine club sales revenue has also grown, although the sector now takes a slightly smaller share of the category: revenues grew 10% while clubs’ share of DTC declined from 21% to 19%. The average 9-litre case value also declined – down 5% to $262 – while average value per member declined by 14% as a result of the reduced average case value combined with a slight reduction in shipments per member.
In general, a decline in average case value indicates reduced profitability – unless the cost of the product also reduces. “The survey found that more than 60% of respondents were offering discounts of 11–20% on wine club orders, which suggests that this channel is very competitive”, noted Triggs.
Over 2,000 Australian wineries are surveyed in the annual survey, as well as wineries in South Africa and New Zealand to offer international comparison. But Triggs highlights that the survey is only part of the picture: given that different regions have had very different experiences with COVID-19.
“The survey has given us an important insight into how some wineries have managed the first full year of ‘living with COVID-19’, but the sample is small, and there are a wide range of experiences across the country that are not reflected in overall averages”, she said.
“The important thing for wineries is to measure their own performance regularly, so they know which channels are doing well and where investment will be most beneficial.”