Wine bottles

Napa County continues to lead the American wine industry in the value of its direct-to-consumer marketing.

“Napa is still king when it comes to price per bottle,” said Kent Nowlin, general manager of Sovos ShipCompliant, speaking at an industry conference last week.

The forthcoming annual DTC Wine Shipping Report shows that the average bottle shipped by Napa County producers in 2016 was worth about $62, around 60 percent above the industry average of $38.69. According to the report, the region shipped more than 1.5 million cases of wine directly to consumers in 2016.

Direct-to-consumer sales are generally those that occur outside the traditional distributorship and store networks, via mailing lists, wine clubs, the Internet and carry-out purchases at a tasting room. The total potentially surpassed the $1 billion mark in DTC sales from Napa wineries for the second consecutive year.

Winemakers say the DTC market is increasingly important to their livelihood since the number of distributorships has declined while the number of wineries across the world has exploded, making it harder for vintners to secure precious shelf space in stores and on wine lists.

Wine marketers and producers gathered Thursday at the 10th annual Direct to Consumer Wine Symposium, a summit for the direct wine marketing and sales industry held this week in Concord, to discuss the state of the industry.

Overall, the DTC industry saw its largest growth to date last year, with more than 5 million cases shipped for a total value of $2.3 billion. Both statistics were “major milestones,” Nowlin said.

The DTC market has exploded in recent years as more states have allowed alcohol producers to ship directly to homes, bypassing the traditional distributorships.

Pennsylvania, one of the largest but most restrictive states, finally agreed to allow direct shipments last August, after years of tightly controlling wine sales through a chain of state-run stores.

In little more than five months since the law took effect, more than 800 wineries across the country have been licensed by the Pennsylvania Liquor Control Board to ship wine into the state. Licensed wineries with a foothold in Pennsylvania range from from Romulus, New York to Walla Walla, Washington and even include Volcano Winery in Hawaii and Trump Winery in Charlottesville, Virginia. But as of this week, more than one third of the registered wineries are based in Napa Valley.

St. Supery Estate Vineyards and Winery received its license to ship into Pennsylvania on Dec. 29, said CEO Emma Swain. “We had people ready to get their orders shipped that day.”

Included among the more than 270 Napa Valley wineries now registered to ship in Pennsylvania are hallmarks like Stags Leap, Schramsberg, Opus One, and Screaming Eagle, as well as producers running the gamut of size and price from Angwin to the Carneros region.

“Direct shipping is crucial to our business and engaging with those who have visited the winery by providing wines they would not otherwise be able to receive enables us to be a profitable agricultural based business,” Swain also wrote in an email this week.

Also speaking at the DTC Symposium, Steve Gross, Vice President of State Relations at Wine Institute, offered a review of the changes to state laws affecting direct shipping in 2016, noting that the Pennsylvania law caught him off guard.

“I’ve been doing this for 30 years,” Gross told attendees. “If you had told me from the start that Pennsylvania was going to open, I would have been surprised.”

Passage of the Pennsylvania law came as perhaps last year’s most significant victory for the DTC industry, Gross said. The law, which made Pennsylvania the 44th state to allow direct shipments, lets wine buyers receive up to 36 cases of wine per year from a licensed winery.

“This is going to open up a big avenue into what was the largest remaining population state that was still hanging on with their prohibitive shipping,” Gross said, pointing out that prior to the law a little more than 90 percent of the U.S. population could receive direct shipments. With Pennsylvania opened, Gross said, nearly 95 percent of the population can now have wine delivered to them.

Despite having only five months’ worth of shipping data for Pennsylvania, Nowlin said during his presentation that the state currently ranks 23rd among destination states for directly shipped wine. “We’re expecting this actually next year to be in the top ten,” Nowlin said.

“This just goes to show,” he added, “regulatory changes definitely affect the DTC shipping model.”

The DTC Wine Shipping Report will be issued later this month, featuring the complete data compiled by Wines and Vines and Sovos ShipCompliant for the past year.

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Wine Reporter / Copy Editor

Henry Lutz covers the local wine industry. He has been a reporter and copy editor for the Register since 2016.