What 1.3M transactions tell us about Direct to Consumer sales trends

The Direct to Consumer Report 2024 shows that while growth in wine sales in the Direct to Consumer (DTC) channel in Australia is slowing in line with a maturing business cycle, a softening economy and increasing competition and fragmentation, the DTC sales remain more resilient than wholesale where depletions and average spend have seen downward pressure this year.

This market bulletin examines the key insights from the report that was funded by Wine Australia and produced in collaboration with Wine Direct, Enolytics and Georgia Rasmussen Consulting.

About the report

The Direct to Consumer Report 2024 is based on data from over 1.3 million customer transactions from approximately 90 wineries Australia wide. The transactional data source is Wine Direct, and the data queries have been generated via their partnership with Enolytics. 

The report breaks down the key Direct to Consumer (DTC) channel trends for Australian wineries, in the face of increasing fragmentation, growing competition, a softening economy and changing demographics. It also highlights key areas of focus and opportunity in the context of the trends that are highlighted.

This year has, in line with other markets, been marked by challenges and uncertainties, with a number of inflection points effecting both the DTC channel and the wine category more broadly. The overarching narrative reveals a maturing DTC market in Australia, with variable results and slowing growth rates across some key DTC channels. However, most key areas are still in growth, albeit slowing. The DTC channel remains more resilient than wholesale where depletions and average spend have seen downward pressure this year.

Key takeaways from the report 

• Both net sales and cases sold show growth in 23–24 at 4 per cent and 2 per cent, respectively.
• Cellar door and subscription wine clubs continue to be the main drivers of the DTC sales. 
• There was an increase in average orders per customer and average annual spend per customer, but a decrease in unique customers, indicating that wineries are selling more to a smaller group of customers. This is driven through improved communication plans.
• Recommended retail pricing has increased marginally in line with inflation, but so has discounting, as wine club members contribute more of the sales mix and by definition attract a higher “club” discount.
• Average order values remain steady.
• Subscription wine club growth rates are slowing for wineries who have operated in the channel for a number of years, and attrition is increasing as expected with the age of the club. 
• Males and females demonstrate different preferences in their wine purchasing in both spend and variety/colour.
• Boomers and Gen X contribute 77 percent of DTC sales volume.
• Annual cellar door traffic is not measured in the DTC data, however, anecdotally (some) wineries are reporting softer visitation in the past 12 months, which has potentially effected conversion through the cellar door to a subscription wine club and loyalty list.

Turning the trends into action 

Looking forward, some of the key areas of focus and opportunity include:

• The subscription wine club model remains valuable. The data in the report demonstrates that these customers are more loyal than others. They spend more and purchase more frequently, generating a higher lifetime value on average than any other customer type.
• It is also important to continue monitoring for changes in channel preference by demographic, coupled with increasing attrition rates as the subscription model matures further. Other loyalty programs will become useful to transition customers who are cancelling from the traditional subscription model. The numbers will tell this story over the next 3 to 5 years. Wineries may consider running a dual strategy to capture all options.
• Continue to focus on driving traffic to wineries, with the point of difference in cellar doors being in the experiences offered and regional immersion. This is wineries main point of differentiation over metropolitan retail DTC and remains the single strongest avenue for customer acquisition.
• Hone sales techniques in the cellar door context to maximise traffic conversion to sale and importantly club and list.
• Manage communication plans to optimise channel opportunities - conversion rates, average order values, customer behaviour through targeting and demographic changes/wine preferences.
• Activate all channels, including outbound telemarketing.

Overall, wineries that invest in the channel (technology, analytics, resourcing) and analyse their customer data, understanding customer activity quadrants and are personalising offers by quadrant, with an overlay of gender, average spend, and other relevant criteria are extracting additional growth and extending the lifetime value of their customers. This is key to future growth in the DTC channel.