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February 2015 Wines&Vines 15 C oncord, Calif.—Wine shipments from U.S. wineries to consumers across the country hit all-time highs in value and volume in 2014, according to the 2015 Direct to Consumer Wine Ship- ping Report created by ShipCom- pliant and Wines & Vines. The value of these DtC shipments sur- passed $1.8 billion, more than 15% above the 2013 total. Volume grew almost as quickly, reaching 3.9 million cases. An increasing thirst for wine in general and the removal of previ- ously stubborn legal barriers to in- terstate shipment coincided with a stronger economy, creating a happy synergy in this relatively small but high-margin market for wine. "It's clear that the DtC channel continues to far outperform the traditional sales channels for wine," the report states. Domestic table wine sales in retail stores grew by just 4.3%, according to Nielsen, as noted in the report. Jeff Carroll, vice president of compliance for Boulder, Colo.- based legal compliance provider ShipCompliant, presented the re- port Jan. 15 at the Direct to Con- s u m e r Wi n e S y m p o s i u m i n Concord. A copy of the report has been inserted as a supplement in this issue of Wines & Vines. ShipCompliant and Wines & Vines have collaborated to model the DtC shipment market since 2009 and have a large database from which to generate the trend details in the new report. The big- gest and most positive trend for the thousands of wineries that ship direct to U.S. consumers is the overall growth in sales. Dollar growth in 2012 and 2013 was very good, but not more than 10%, so the 2014 perfor- mance was at least 50% better in terms of growth. To cap it off, the average bottle price rose 1.6% to $38.40 during the same period after a slight dip last year. "This recovery in the average bottle price is an important indicator of the overall channel's strength," the report states. Success varied, however, based on winery size, geography and varietals or types of wine sold. In a trend that is consistent with re- ports that retailers have driven down margins on their biggest selling wine brands, the two cat- egories of largest wineries—from 50,000 to 499,999 cases and 500,000 cases up—reduced prices to get shipment growth. These brands often come from the same large wine producers. Small wineries that produce from 5,000 to 49,999 cases, in con- trast, took a 9.5% increase in aver- age bottle price while pushing volume up 7.4%. Their sales buoyed by 17.6%. Limited-production win- eries (less than 1,000 cases) were in the only size category that lost volume, value and price. Oregon and Pinot Noir both trended up in 2014, the data showed. Direct shipments from Oregon wineries exploded by 45% in volume and 53% in value. Since Pinot Noir is Oregon's biggest sell- ing varietal, there's an obvious tie to the performance of Pinot Noir in general, which enjoyed 22% growth in shipments and 9% in price per bottle. "Of the $244 million additional dollars that were spent on shipped wine in 2014 over 2013, $81 mil- lion (or a third of that increase) was accounted for by new Pinot N o i r s h i p m e n t s , " n o t e s t h e report. Cabernet Sauvignon remained king of the hill in sales, with 30.1% of the value, one-year growth of 20.4%, and the highest average bottle price by varietal of $66.32. Pinot Noir was second and red blends were third, but with nearly flat dollar growth. Consumers in five states—Cali- fornia, Texas, New York, Florida and Illinois—bought 60% of DtC shipments in 2014. Demand in Oregon and Colorado increased significantly. Montana and North Dakota saw dramatic increases from small bases after their ship- ping laws were eased. For 2015, many wineries are welcoming the arrival of Massa- chusetts to the direct-shipping market. With a population of 6.6 million and the beginning of legal direct shipping, the state could spend $29 million on wine ship- ments in the first year, according to the report. —Jim Gordon DtC growth by region Source: ShipCompliant/Wines & Vines Model wine industry news tOP stORY DtC Shipments Grow 15% in 2014 as Oregon Wines Surge California rainfall—season to Date Season to Date Average to Date Percent of Average to Date Lodi 8.5 7.3 116% Monterey 3.5 3.4 103% Napa 13.5 16.2 83% Sonoma 16.9 13.0 130% rainfall season to Date—perCent of average 0 50% 100% 150% Rainfall season July 2014-June 2015, rainfall data in inches through Jan. 15. Source: winebusiness.com, California Irrigation Management Information System Lodi Monterey Napa Sonoma Washington Oregon Rest of US Rest of CA Sonoma Napa -10% 0 10% 20% 30% 40% 50% n = Percentage change in volume n = Percentage change in bottle price DtC shipment volume Source: ShipCompliant/Wines & Vines Model Cases (Millions) 2010 2011 2012 2013 2014 4.0 3.5 3.0 2.5 2.0 +9.3% +7.7% +9.3% +13.6%