Dr. James Sterns, Associate Professor, Department of Applied Economics, Oregon State University

The 2018 Direct to Consumer Wine Shipping Report, published collaboratively by the information technology company SOVOS and the trade publication Wines & Vines, has just been released and an overriding message within it is clear – Direct to Consumer (DtC) sales are growing rapidly in both volume and value of sales. The reported numbers are eye-catching: total U.S. consumer spending in 2017 on DtC wine shipments of $2.69 billion, with 5.78 million cases shipped. And reading further into the report, there are even more impressive quotes to be found:

  • “Oregon is clearly having its day. Due to larger than average harvests in 2013-2015, along with increased attention from investors, the trade, media and consumers, Oregon’s sales and shipments are flourishing.”
  • “Since 2012, the volume of wine shipments from Oregon wineries has increased by 214%, with the value of those shipments increasing by 227%…Oregon kept rolling in 2017, delivering the greatest DtC shipping increase of all six regions tracked.”
  • “As in past years, the small winery (5,000 to 49,999 cases) and very small winery (1,000 to 4,999 cases) categories drove the DtC shipping channel, accounting for 70% of the value of U.S. winery shipping.”
  • “By nearly every measure, the winery DtC shipping channel continues to outperform every other retail channel in the United States, be it grocery stores, independent fine wine shops or convenience stores.”
  • “…tasting rooms and wine club sales still drive the lion’s share of DtC growth…”

With news like that, Oregon wineries are obviously aware of and intent on continuing their efforts to sell more wine directly to the consuming public. But there remains an open question about at least one component of DtC marketing, and it’s a question that I have heard repeatedly in the past 18 months. It’s a sentiment shared by many Oregon winery owners and managers. Simply put, there’s a shared sense that, “we really don’t know that much about how to effectively manage our wine clubs.”

As part of a new OWRI initiative, my colleague Catherine Durham and I are studying how wine clubs throughout the state of Oregon are managed, and more importantly, what are the preferences and motivations of wine club members. This research is progressing through two phases – first, this past Fall we solicited responses to a questionnaire from Oregon wineries about how they manage their wine clubs.  These results are in and are helping to inform our next phase of research – sending questionnaires directly to wine club members, asking them about their participation in wine clubs. Our lines of inquiry are focusing on the following: What features and benefits of club membership do they value most?  When and why did they join the wine club, and what incentives will motivate them to stay in the club? How many clubs have they participated in, both historically and currently and what has motivated them to change or leave a club?

We know of at least one other recent project that asked similar questions. A study published by researchers at Sonoma State University was based on a small sample of 25 students majoring in wine business, which limits how much we can generalize the findings. And yet their study does help support our efforts, in part by identifying a set of common wine club attributes, which included wine club levels (ranging from one to six), ways to differentiate across wine club levels (most commonly by price points), allowing customized ordering, the number of shipments per year (ranging from one to six), the number of bottles per shipment, price range of bottles shipped, and associated tasting room benefits (such as allowing non-club members accompanying club members in a tasting room complimentary tastings and/or discounts). These are some of the specific topics that we plan to include in our club member questionnaire.

We hope to have the club member survey ready to use within the coming weeks. We will be completely dependent upon the cooperation of Oregon wineries and their wine club managers to distribute this questionnaire. In appreciation of the proprietary nature of club member lists, we are asking that the wineries distribute an email with a link to a web-based questionnaire to all of their club members. Results should be available by late spring.

If you have any questions or thoughts about this research, please contact me at your convenience. My email address is jasterns@oregonstate.edu and the direct line to my office is 541.737.1406.

Further reading:

“What are the Attributes of Winning Wine Clubs in Napa and Sonoma?” by Liz Thach. Posted online by Wine Business.com, at https://www.winebusiness.com/news/?go=getArticle&dataid=192707

“2018 Direct-to-Consumer Wine Shipping Report” published in collaboration with SOVOS and Wines & Vines, available online at https://www.shipcompliant.com/library/