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Behind the Scenes of the 2023 Direct-to-Consumer Wine Survey Report

Every year, Rob McMillan, executive vice president and founder of Silicon Valley Bank’s Wine Division, releases the much-anticipated Direct-to-Consumer Wine Survey Report. Ahead of this year’s edition—the first to be unveiled after the bank’s acquisition by First Citizens Bank—we caught up with McMillan to discuss what didn’t make the report.

It’s a tantalizing peek into the current wine landscape and a fascinating prelude to the full report, which is set to drop on August 16.

Different Revenue Streams

Direct-to-consumer sales are hot in 2023, McMillan says. These have been on a long-term growth path for the past decade, and represent about 70% of total sales for premium products. “The growth in the wine category, and direct-to-consumer—it’s fascinating, when you go back over time and look at where we were,” he says.

In the 1990s, wine clubs, organized by individual wineries, played only a minor role in total sales for premium wineries. Over the past decade, however, wineries increased their average member retention from 24 months to nearly three years, a signal that they’re relying on them more for financial solvency. “The club now is a greater revenue-generator than the tasting room,” McMillan notes. “This is pretty much a first, in this period of time.”

Another notable change, McMillan says, is the industry-wide embrace of the tasting room fee. Fees in tasting rooms are a relatively new phenomenon, despite the fact that being charged to taste through a flight now feels like a ubiquitous—and established—phenomenon.

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“If we go back just 10 years ago, I think it was 77 percent of the respondents to our survey said that they were charging tasting fees,” McMillan says, meaning that almost a quarter of wineries were charging no fees at all. In the decades preceding that, wine tastings were often complimentary.

Digital memberships are also on the rise, a specific result of the pandemic, McMillan says. As a bonus, this reliance on digital—as opposed to analog—communication has made memberships easier to track and easier to quantify.

“About 17% of club members are generated by digital means,” McMillan says. Counterintuitively, not only younger people are using digital technology to subscribe online. In fact, the largest growth area was consumers older than 60. “During Covid, one of the big changes we discovered is e-commerce, as a whole, was the growth rate was a lot larger with the Boomer population. Because, you know, now you couldn’t go out.”

The Under-60 Problem

McMillan did concede one major low note for the industry. In last year’s report, he and a few other analysts included a survey question asking what people would prefer to bring to a party: beer, wine, spirits or hard seltzer.

“It was fascinating… I think it was 50 percent of everyone that was 60 and above said ‘wine,’” McMillan says. “Because, in my generation, it was, OK, you’re going to a party. ‘Hey, what should I bring?’ ‘Oh, nothing, just bring yourself. We have it all covered.’ Well, you bring a host gift. You bring a bottle of wine,’” McMillan says.

This time around, surveyed consumers under 60 were far less committed to wine. About 30% said they would bring it to a gathering—about equal to spirits, beer and spiked seltzer. It’s an indication, McMillan says, that wine is no longer the only premium beverage deemed an appropriate host gift. The industry, he cautions, must figure out how to better market to younger drinkers.

“It’s pretty obvious that we’re just not marketing toward that consumer,” McMillan says of younger generations. He has hope, however, that the under-60 set will eventually come around to wine. “It’s what the younger consumers want; they just don’t know it.”

As for what the actual report contains, we’ll just have to wait and see. Registration for a panel discussion about the 2023 SVB Annual Direct-to-Consumer Wine Survey Report is now open.