Here we go! No one can say the world of winery DTC sales is boring. It's mid-June 2022: we’re still technically in the midst of a global pandemic, and now we’re also facing high inflation as demonstrated by rising costs of…everything. Record high fuel, airfare and hotel prices are impacting travel while the costs of goods that go into producing wine are also increasing. As we mentioned in the Q1 2022: DTC Wine Report and during our Report Review Webinar last week, while tasting room sales had been strong in Q1 2022, propping up overall winery DTC sales (mostly fueled by increasing pricing/decreased discounts), we are already seeing significant changes so far in Q2. Let's review what we're seeing:
Volume sales for overall wine DTC have declined quite significantly compared to last year, with bottles sold down -5% in May and so far in June.
Net sales (revenue) have dropped to a small growth of +3%, compared to +15% growth we had been experiencing in previous years. The +3% growth has been driven by increased pricing, rather than increased sales.
Growth in ecommerce sales has declined, but not quite to pre-Covid levels.
The biggest change has been in sales through the tasting room (POS) in May through mid-June -- down over 10% over a year ago.
What should we do? Here are a few resources and recommendations we hope you find useful as we navigate the days ahead.
1. Continue to Embrace Ecommerce
Remember the lessons learned and success achieved back in 2020. Although website sales have settled down, this is not the time to abandon your ecommerce efforts. In fact, according to our 2021 DTC Impact Report, the average order value (AOV) of an online order is almost 2.5 times greater than in the tasting room. Online sales are the best way to reduce your dependence on in-person visits and position your winery for financial stability.
Here's where to get started:
Ensure your website is optimized for search engine optimization (SEO). Buy meaningful keywords to ensure your winery website shows up when consumers are searching. If diving into SEO sounds daunting to you, we’ve got you covered with our Beginner’s Guide to SEO.
Design product bundles and promotions to appeal to new consumers. Offer a shipping discount if they provide contact information. Consider an online quiz to help them understand which of your wines they may enjoy and then offer smaller bundles (3 bottles are great!) so they can try your wines without spending a large amount of money. You can also consider offering gift cards online as a way for your loyal customers to support your business during these times.
Review your check out experience - is it simple and fast?
Repeat purchasers accounted for 89% of overall DTC sales in 2021 and much of that was driven by club members. Tasting rooms provide a great opportunity for trial and with lower tasting room visitation, new members become tough to acquire. On top of that, in times of economic uncertainty, wine club memberships may be canceled in an effort to save money.
Here's how you can stay in touch with your members:
Reach out often with content designed to keep them engaged with your winery. Instead of only sending promotional offers, expand to include content such as videos from your winemaker or viticulturist talking about what’s happening in the vineyards or discussing the making of a particular wine. These videos can be simply shot on an iPhone – they don’t need to be slick and produced.
Use your data to identify club members that may be at risk. Look at sales patterns or engage with an analytics company such as Enolytics to assist. Reach out to these members directly with special incentives that will keep them engaged. The LTV value of members is generally high enough to warrant some investment to retain them.
Work with your most loyal members to bring in their friends. Your best club members can be valuable influencers. Incentivize them to bring their friends to an event or even just to order some of your wines online.
3. Maximize Revenue by Marketing the Right Wines to the Right Consumers
Use your data to ensure you are offering your wines to those who are most likely to purchase. Many wineries are working with smaller vintages this year. That, along with the rising cost of goods underlines the importance of being able to sell wines for full price whenever possible. Segment your database to find those consumers. Do you have a limited amount available of a single-vineyard Sauvignon Blanc? Figure out who has bought this wine in the past and reach out to them directly by phone/text or email or both! Ensure they understand how special and exclusive this wine is and they’ll be grateful to be able to purchase -- and I always need to mention here, make sure you’re collecting consumer data!
Remember that wine country is an escape from daily life for your customers: being transported to your winery, if only in their imaginations, will be appreciated in the coming weeks. At the same time, be conscious of the news cycle. You don’t want to seem out of touch with reality.
WineDirect is here for you as we navigate these challenging times together. We are continuing to analyze the market and are committed to providing you with tips to continue to drive your DTC business. Stay tuned for our Q2 2022 DTC Report which we will be publishing with our friends at Enolytics in late July.
LEARN HOW WINEDIRECT CAN HELP YOU TAKE YOUR DTC SALES TO THE NEXT LEVEL.