Each year, the teams at Silicon Valley Bank and Wine Business Monthly conduct a survey of the direct-to-consumer (DTC) wine industry and the results for 2017 are in. Here are five takeaways we got from watching their videocast:
1. Wine Club vs. Tasting Room Revenue
In more developed wine regions like Napa or Sonoma, wine clubs make up about 45% of DTC sales while tasting room accounts for 30%. In less developed regions like New York or Virginia, wine club sales are 10-20% and tasting room sales are 60-70% of total. The hypothesis here is that as an area matures, more and more sales are driven by recurring purchases from out-of-state visitors, whereas in newer markets, sales are predominantly driven by the local community. The challenge for wineries in up and coming regions is to switch that dynamic and drive more wine club sign ups.
In addition to wine clubs and tasting room revenue, our own data shows that among the top 20% of wineries, ecommerce makes up a much larger percentage of sales than among the bottom 80%. You can learn more about that in our eBook on How to Break Into the Top 20% of Wineries.
According to the survey, gross wine club growth was 30% on average, but club attrition was a whopping 16%. Considering that it is much cheaper to retain an existing customer than it is to attract new ones, this statistic suggests that wineries should focus more resources on retention strategies. Which brings me to the next point:
4. Giving Wine Club Members a Choice Increases Conversion and Retention
In past years, we've seen evidence that offering your club members a choice in their club shipments increases their membership length by 3-4 months. This year's survey found that offering customers a choice meaningfully increased conversion rates from 4% (no choice) to 6% (full choice). This is in line with the growing club trend from providers like Blue Apron, Dollar Shave Club and others that allow seemingly endless custom and personalization.
According to Liz Mercer of WISE Academy, only about 20% of wineries are asking for an email address in the tasting room. Considering that the top 20% of wineries have an email list four times as large as the bottom 80%, and that the tasting room is one of the easiest places to get new contacts for your list, this is a no brainer. And if you're wondering how much an email address is worth to your winery, download our DTC Checklist which includes an easy calculator.
Get more tips on how to grow DTC sales with our free eBook: