Direct-to-consumer (DTC) wine sales reached an estimated $1 billion in 2018–19, driven by year-on-year value growth of 9 per cent – the strongest among domestic wine sales channels.
DTC accounted for an estimated 17 per cent of total Australian wine sales value, significantly over-indexing in value compared with its volume share of 3 per cent, according to the Cellar Door and Direct-to-Consumer report 2019, published today by Wine Australia.
Based on survey responses, the smaller the wine business, the greater its reliance on DTC for sales revenue. For wineries producing under 5000 cases, DTC represented more than half their revenue.
‘The survey indicates DTC is driving solid growth in revenue, particularly for Australia’s 1500 or more wine businesses that produce under 5000 cases’, Wine Australia CEO Andreas Clark said.
‘The growth of the channel is consistent with the wine sector’s increasing focus on premiumisation and value growth.’
Chart: DTC 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 per cent of DTC revenue – up from 44 per cent 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 per cent to 52 per cent, while the proportion reimbursing fees based on a purchase or wine club sign-up also decreased significantly – from 85 per cent to 70 per cent.
Growing Wine Tourism facilitator Robin Shaw of Wine Tourism Australia said, ‘Wine businesses are offering tasting experiences that have value in their own right that appeal to travellers – especially international visitors – who are seeking more immersive experiences.
‘We are promoting this in the Growing Wine Tourism workshops that we are running for Wine Australia, because it offers wineries an opportunity to 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 per cent.
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.’
The full report is available from www.wineaustralia.com/market-insights/cellar-door-and-direct-to-consumer-survey-report.