Direct-to-consumer wine sales hit $1billion, as wineries seek to reclaim profits
Direct-to-consumer wine sales have hit $1 billion in Australia according to the just released Cellar Door and Direct-to-Consumer report 2019, as wine producers seek to reclaim profits lost to distributors and retailers over the last decade.
Direct-to-consumer sales now account for more than half the revenue of wineries producing under 5000 cases.
Wine industry veteran Dean Taylor, named one of the 50 Stars of Wine and TOP 50 People in Ecommerce says “The industry is reaching the end of a 15-year global wine glut which has weighed heavily on the profitability of most Australian grape growers and wine producers. However, the emergence of China as a major wine export market has soaked up most of the production excess and supply is starting to tighten right up.”
“For the first time in almost two decades, many wineries have the luxury of choosing which channels they want to sell their products through and its no surprise they are opting for the most profitable ones.”
Mr Taylor has described the direct-to-consumer market as a $1 billion “sleeping giant” that is allowing wine producers to claw back the margin lost to retailers over the last decade.
Emerging technology and marketing platforms are enabling Australia’s 2,500 wineries to connect directly with consumers very cost-effectively.”
“The only thing holding back the direct-to-consumer market from growing even faster is the existing supply chain, which is not only inefficient and expensive, but incapable of meeting the needs of modern consumers who expect deliveries to be completed in less than two days and preferably for free.” One study reported that 95% of online shoppers would consider shopping at another site if shipping options available at one site weren’t suitable for their needs. Another found that 80% of shoppers want same-day shipping, while 61% want their packages delivered within 1-3 hours from ordering.
Taylor, whose 20 years in the wine industry have spanned wine production through to storage, distribution, marketing, trading and both traditional and online wine retail, set out to solve this problem with his latest venture WINEDEPOT.
The platform has launched in partnership with Australia Post to help wineries meet modern consumer demands, offering same-day or next-day delivery of wine, up to 60% cheaper than existing solutions.
“People are no longer willing to wait weeks for an order to arrive. They want deliveries on-demand and with free shipping – a shift which we are facilitating for an industry in need of a shake up,” says Taylor.
Chiara Bailey, owner of Brown Hill Estate located in Margaret River, Western Australia says “As a boutique limited production winery, direct-to-consumer sales make up the majority of our total sales. These are largely driven by cellar door tastings and mailing list sign-ups. While many of our customers order by the case to stock up, the actual cost of shipping wine to them strips away a lot of our profitability.
“Unfortunately customers located on the east coast need to wait up to 10 days to have their orders delivered, which we know is way too long for most people these days. I’m sure that we are losing customers who are looking to quickly grab their favourite bottle for dinner with friends or a night out.
“With WINEDEPOT, we’ll be able to substantially reduce our freight costs and provide a much higher service level for those customers as well, reducing the delivery time for our small-production wines to same or next day and offering an evening or Saturday delivery service. We’re confident that the improvement in service level will allow us to grow our direct-to-consumer sales.”
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