Tasting Rooms and Direct-to-Consumer Sales in the United States

Tasting Rooms and Direct-to-Consumer Sales in the United States

See, swirl, sniff, sip and savor—every wine enthusiast is familiar with the five famous S’s of wine tasting. For more insight into the world of wine tasting, one must revisit the history and evolution of tasting rooms and direct-to-consumer sales in the United States.

The first evidence of winemaking dates back to over 9,000 years ago in China. The history of winemaking is gaining more attention due to the central role it plays in determining wine quality.^[1] While some people see wine tasting as fun or leisure activity, there is more to wine tasting than meets the eye.

Wine tasting follows a scientific approach, which has greatly evolved since the 1300s. Fast-forward to the 1980s, and wine tasting has gained much more popularity. By the ‘80s, tastings were no longer limited to sommeliers, merchants, wine producers, and other industry experts.

Today there are many virtual wine tasting events hosted all over the world. Consequently, the evolution of wine tasting has influenced the direct-to-consumer sales of wine in the US. 

The economics of tasting rooms and direct-to-consumer sales

Whether tasting rooms are an essential part of a winery is not up for debate. Tasting rooms have evolved from simply opening their doors to guests for complimentary wine during social events. Now they serve as points of revenue. Guests often need to pay for tastings in addition to sign-up fees that come with joining the winery’s membership club.

More recently, wineries started offering their tasting rooms as event venues for birthdays, weddings, and other private parties. These activities are a great way to market the tasting room and the winery as a whole.

With tasting rooms sprouting up in various states, there has been a remarkable growth in wine’s direct-to-consumer sales in the United States. This sales model is profitable for wineries as it lets them cut off the middle man from their distribution chain. By conveniently selling high-priced bottles directly to consumers, wineries can make more profit per bottle than they would from wholesale operations.

Recent survey findings show that at least 59% of wineries in the US charge tasting fees for samples of wine. Because of this, tasting rooms have become a significant contributor to winery sales. These rooms make for at least 43% of sales in Oregon, Washington, and California, and over 68% in other states. These statistics provide a crucial testimony to how tasting rooms serve as profit centers. They also show how tasting rooms help build outreach to larger markets through direct-to-consumer sales.

More on direct-to-consumer sales in the United States

During the past decade, wine consumption in the US almost doubled. The US now takes second place (just behind France) on the list of countries with the most wine consumption. With over 50 states having a commercial winery (or wine industry), the US will soon take first place.

Thanks to California’s climate, wine production in this state accounts for over 90% of the wine in the country. Earlier in 2016, the US made the list of top four highest producers of wine alongside Italy, France, and Spain. Furthermore, some reports have shown that 3.59 billion liters of wine were consumed in the same year (2016), which is around 11.1 liters per person.^[2][3]

During the pandemic, when bars and restaurants were put under lock and key, consumers resorted to purchasing wines directly from wineries.

Wineries also witnessed an increase in online orders while some consumers bought their wines at retail outlets. This is direct-to-consumer sales in action. Wineries across the US are mostly content with this lucrative sales model as it prevents retailers and wholesalers from nibbling on their profit margin.

A recent report published in 2022 by Liza Zimmerman analyzed shipments of wine from over 1,100 US wineries. A total of 40 million shipments in 2020 reported that even though commercial wine production was interrupted by the pandemic, the industry still recorded enormous gains from the stay-at-home orders at the time. ^[4]

The figures speak for themselves

According to Liza Zimmerman’s report, direct-to-consumer sales went as high as 27% compared to lower figures recorded in the previous years. While wineries shipped over 8 million wine cases to their customers, one would expect the profit values would follow suit and hit all-time high figures. However, that was not the case because more consumers turned to modestly priced wine brands. This caused a drop of 9.5%, or an equivalent of $36.83 per bottle shipped in 2020.

Though a 27% growth in wine production during the pandemic might seem like an outstanding accomplishment, it translates to a decrease in customer visits to wineries and tasting rooms. Nonetheless, this made way for online sales to soar, allowing digital marketing and online tastings to take center stage.

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On this Day

November 24, 1713 — The prominent Franciscan missionary Junipero Serra was born on this day. He was named the Apostle of California due to his missionary work in North America. In 1769, Serra established the first vineyard and winery in California. Almost a century later, Charles Krug established California’s first commercial winery in St. Helena in 1861.

1966 — After separating from Charles Krug in 1965, Robert Mondavi established his winery in Oakville, California in 1966.

Want to know more about wine? Check out these books!

References

1. “The History Of Wine Tasting • Tasting IN.” 2022. Tasting IN. https://tastingin.com/the-history-of-wine-tasting/.
2. “A Brief History Of American Winemaking”. 2022. Theconversation.Com. https://theconversation.com/amp/a-brief-history-of-american-winemaking-97150.
3. “Vintage America: A Brief History Of Wine In America”. 2022. Eater. https://www.eater.com/2011/1/3/6703783/vintage-america-a-brief-history-of-wine-in-america.
4. Zimmerman, Liza. 2022. “A Closer Look At The Direct-To-Consumer Wine Shipping Market”. Forbes. https://www.forbes.com/sites/lizazimmerman/2021/01/25/a-closer-look-at-the-direct-to-consumer-wine-shipping-market/?sh=70a44eec56eb.

PHOTO ATTRIBUTION:

By Mick Stephenson mixpix 20:28, 2 April 2007 (UTC) – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=1883875