Falling Shipping Volumes

I started my reading this morning with a Wine Business report, on falling direct to consumer shipping volume.

It’s an interesting thing because in this space we tend to think of all the new things that are happening in the wine club business. Firstleaf is killing it, they’re new. But for every story like Firstleaf, there’s a story like Cameron Hughes, which didn’t make it, although the name and email list continue.

If you read through the article, I don’t expect you to do so, it’s pretty wine geeky after all, you’ll note that in the 13 years of the report being issued, this is the first ever drop. In fact most years have included double digit gains. So what happened?

The good news: much like the real estate market, this is probably just the business cycle. At the height of the pandemic, people bought wine online out of necessity. Frankly shipping costs and purchasing experience make buying wine online, not perfect for every consumer from every winery. Covid-19 pushed those sales along more quickly than they would gone otherwise. We can see some evidence of this guess on my part by seeing that although volume is down 10%, total sales are down under 2%. So the wine being sold online is more expensive than it was last year. From a winery perspective, they also had a lot of product they couldn’t sell in their normal channels like a tasting room, so they discounted prices, ate shipping charges and attempted to stay in business.

So what’s the take away? You might not find the name brand winery discounts you did a year or two ago. That’s ok. We are moving to a more healthy wine market.