Sunday, May 7, 2017

SVB Annual DtC Benchmarks

Direct to Consumer sales now represent 60% of the average winery's revenue, but the real growth in direct sales has only taken place over the past decade, dramatically accelerating in the past 5 years. While it might seem like wineries have been doing this for a long time, it's difficult for me to say direct sales have been a professional discipline.

In 2013 I published one of my more popular posts addressing the problem the industry faced in finding good Direct to Consumer Managers. Since it was a new discipline, it wasn't possible to find experienced managers. That is starting to evolve with time, but we are still scratching and clawing our way to direct sales success, learning from each other as we go and playing a little bit of follow the leader. Some of that is good and some not so good which underscores the importance of data.

Without DtC benchmarks, we will all flail in the dark taking blind shots with strategy and tactics. One strategy that I've seen evolve has been the use of by appointment tasting. 

Once dominated only by Napa with a smattering of Sonoma wineries, that form of tasting venue is expanding to other regions as owners rethink the cost of staffing and allocation of overhead to keep the doors open for random passers by.

And what about those passers by? Who are they? Are they made of club members bringing in new converts, or locals spending the day at your winery but never intending to buy wine. The questions about visitation are endless and the decision to go with by-appointment isn't right for everyone either.

One critical benchmark is the conversion rate, which is the number of tasting room visitors successfully converted to wine club members, divided by total tasting room visitors. The trend for average conversion rate has been pretty steady at 6% on average but digging a little more into the data, we've discovered that conversion rates are much higher and they are growing in private tastings versus public. (click on chart above for larger view)

      DtC Live Annual Videocast

Each year we start the DtC survey in February and spend hundreds of person hours pulling the data apart. creating charts and graphs for the respondents and participating AVA's. We give all the data back to the respondents and AVA's for their use, charging nothing for our efforts.

This year we had a record response rate of 1,179 wineries with growing participation from non-west Coast regions including Virginia, NY, Texas, Illinois, and even British Columbia Canada which had a monster jump this year, up to 4% of total responses. It adds up to an exciting opportunity to advance our collective learning for those who participate and tune into the live telecast. (Click on above chart for better view.)


Our Direct to Consumer telecast is easily one of the most important and watched broadcasts annually for reasons which are probably obvious to you by now. 

I hope your winery will join us collectively from your conference room where you can broadcast this in a team-based interactive manner. Lots do that already and make it a bonding event over brunch or popcorn. If you can't pull everyone together though, you can still watch from the road, at your desk, or in your PJs from bed if you want (... nobody will notice except me. I will be able to see everyone.)

Please register for this year's live telecast, Wednesday May 17th where we will discuss some of the current survey findings with:

  • Rob McMillan, EVP and Founder, Premium Wine Division, Silicon Valley Bank
  • Liz Mercer, Owner of Mercer Hospitality Consulting, 
  • Mary Jo Dale, Marketing Director of Vinventions 
  • Cyril Penn, Editor in Chief of Wine Business Monthly.

Sign Up Here: [LINK]