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.
2. The Value of Seated Tastings
Once again, this year's survey reinforced the finding that seating tastings convert at higher rates - and higher values - for wine purchases and club sign ups. This doesn't mean everyone should move to an appointment-only model, but at the very least you should consider testing out a seated option to see how it works for you.
3. Wine Club Growth is High — But So Is Attrition
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. At WineDirect and Vin65, we believe that flexible clubs are the way of the future and our tools make it easy to implement and manage a user-choice club model.
5. Always Be Collecting .... Data
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.