Published on Dec 9, 2019

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Winemakers producing up to 5,000 cases of wine a year are selling more than half their wine direct to the consumer.

The figures, from a new report published by Wine Australia, reflect long-term changes in the way Australians are buying their wine. The smaller the wine producer, the greater the direct-to-consumer sales as a proportion of their revenue.

Direct-to-consumer is the fastest-growing way that wine is sold – at 9% year on year – and now represents 17% of total sales of Australian wine by value. This includes via their own website, cellar doors, wine club/database, their own restaurant and events. But, when measured by volume, it’s only 3%. This no doubt reflects the fact that large-volume, lower-priced wines are overwhelmingly sold through the big-box retailers.

The total value of direct-to-consumer (DTC) wine sales in 2018-19 was over $1 billion, according to the report, Cellar Door and Direct-to-Consumer report 2019.

Based on survey responses, the smaller the wine business, the greater its reliance on DTC for sales revenue.

“The survey indicates DTC is driving solid growth in revenue, particularly for Australia’s 1500 or more wine businesses that produce under 5000 case,” Wine Australia Chief Executive Andreas Clark said.

“The growth of the channel is consistent with the wine sector’s increasing focus on premiumisation and value growth.”

ChartDTC share of total wine sales revenue in 2018–19 by winery size (production)

 

Cellar door at the heart of DTC

Cellar door sales accounted for 53% of DTC revenue – up from 44% in 2018.

“We found that cellar door operations are becoming more diverse and high value,” Mr Clark said.

“Most wineries are offering various food options, winery and vineyard tours, while many also have other facilities or services, such as galleries, accommodation and hosting weddings.”

A big change since the survey was conducted last year was in the approach to wine tastings, with the proportion of wineries charging for wine tastings increasing from 29% to 52%. The proportion reimbursing fees based on a purchase or wine club sign-up also decreased significantly – from 85% to 70%.

Wine Tourism Australia facilitator Robin Shaw said wine businesses were offering tasting experiences that had value in their own right that appeal to travellers – especially international visitors – who are seeking more immersive experiences.

This was promoted in a Growing Wine Tourism workshop held in the Hunter Valley in November, which helped wineries develop a new source of revenue, recoup the cost of tastings and provide offerings that distinguish them from other cellar doors.

One area where the survey identified potential to improve was in conversion rates from visitors to wine club members. The average number of visitors per winery was estimated at just over 17,600 per annum, while the average number of wine club sign-ups was 572 – a conversion rate of just 3%.

The report also covers wine clubs, customer communication methods and software options for customer management and point of sale.

Mr Clark encouraged all wine businesses with an investment in DTC to read the report and compare their own key metrics with the sector benchmarks.

“Knowing your key statistics enables you to measure your performance, set targets and assess the success of your strategies. Most of these metrics are simple to collect and provide very powerful insights.”

Read the full report.

Read the original media release.