Drum It Up! Steel Drum Industry News, Trends, and Issues

Selling Wine in the “Delivery Economy”

June 11th, 2019 by Jon Stein

Filed under: Skolnik Newsletter, Wine

Instacart. UberEats. Grubhub. Zifty. Postmates, Amazon Fresh….

Apps like these have added convenience to everyday retail experiences, outsourcing third-party delivery beyond pizza and Chinese takeout, to grocery stores and local restaurants. Meanwhile, ready-to-cook meal delivery companies including Blue Apron and Hello Fresh are thriving as customers become more accustomed to ordering products of every type remotely. Larry Cormier, general manager, of ShipCompliant by Sovos writes about this trend in the “Wine Industry Advisor”: “The “delivery economy” has upended consumer expectations for seamless at-home consumption. Younger buyers, particularly Millennials, now anticipate that businesses will cater to their desire for on-demand delivery options – and that trend is being felt by the wine industry, too.

In 2018, wine drinkers overall spent a record $3 billion on direct shipments from wineries, a 50 percent increase since 2015, according to the 2019 Direct-to-Consumer Wine Shipping Report from Sovos and Wines Vines Analytics.” Larry goes on to observe that: “All of this increased demand for home wine delivery has introduced new competitive threats. In many states, wineries face new pressure from independent wine clubs, meal delivery companies, grocery stores and online liquor stores all seeking to uncork this growing trend. And with a Supreme Court decision expected this summer that could loosen regulations restricting interstate wine shipments, the competitive landscape for direct wine sales could soon get a lot more crowded.” Larry urges wineries to invest in the digital experience: “Whereas older generations may have looked to a particular critic or publication for recommendations on wine, Millennials want to hear directly from the label. They want the story behind the vineyard, the founders, the wine-making process, and the type of grape in front of them. They want to hear from producers and sommeliers about what makes their soon-to-be-favorite bottle of wine special. The good news is most wineries are already experienced in telling their stories.”

In the past, tasting rooms and wine clubs, often tied to smaller wineries, were responsible for much of the direct-to-consumer channel’s organic growth. The challenge is simply translating that experience to a wider audience who might not have the time or money to visit Napa Valley, for example. Larry notes that: “Social media, notably Instagram, is the most obvious way wineries can extend the tasting room experience online. It is a direct line of communication with consumers to tell the sort of behind-the-scenes story that can forge a lasting, personal connection.” With a strong economy, 2018 saw the largest average price-per-bottle increase since 2011 for the direct-to-consumer channel. Customers were also more willing to open their wallets for wines priced at $100 or more, which increased by 18 percent in volume compared to 2017.

In summary, Larry writes that: “The “delivery economy” is pushing up consumer expectations for what they’re buying, especially for high-end purchases, and that extends to packaging and labeling decisions. To stand out not just against other vineyards but also wine clubs and meal delivery companies, producers need to get creative with the stories they are telling from cart to home. Last year, 10 percent of all domestic off-premise retail wine sales were shipped directly to consumers. As this channel continues to grow, another way wineries can stand out and create personalized experiences is by changing up their product offerings to direct customers. By investing now to cater to their buying preferences for convenience and personalized experiences, wine producers can capture a larger share of the Millennial market and the growing direct-to-consumer market.”

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