Silicon Valley Bank recently released its 2024 Direct-to-Consumer Wine Survey Report, compiled from survey data from 499 wineries. The report highlights a slew of challenges facing the wine industry, including downward trends in DTC wine sales, the diversification of alcoholic (and nonalcoholic) beverage options, and younger consumers, who are drinking less wine than older generations.

But there are some glimmers, too. Wineries selling between $30 and $80, for instance, reported increasing sales. And tasting room visitation is up from late last year and is expected to rise throughout the summer.

Despite headwinds, we see abundant opportunity for wineries to adopt strategies that will maximize customer acquisition and retention efforts.

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The e-commerce opportunity.

According to the survey, DTC sales (tasting room + wine club + e-commerce) account for 72% of the average winery’s sales (and are generally higher for smaller wineries).

Tasting room and wine club sales are neck-and-neck as a percentage of total DTC sales at 39% apiece. E-commerce sales, which skyrocketed during COVID lockdowns, have come back closer to pre-COVID levels, at just 8% last year – at a time when e-commerce sales across the board continue to rise.

E-commerce is, pardon the pun, low hanging fruit. Wineries should maintain a robust e-commerce presence and offer customers an easy way to buy online. To drive e-commerce sales, wineries need to have a focus on SEO (Search Engine Optimization) – a well-maintained, SEO-friendly website will improve a winery’s position in search results and help customers more easily find them.

Tasting room troubles.

Tasting room purchases have increased by more than 200% since 2012, but in 2023, seven of nine regions surveyed reported a decline in average purchase.

Average tasting fees have increased significantly since 2014, from an average of $14 and $26 for standard and reserve tastings, respectively, to $38 and $72 just last year. Two-thirds of wineries surveyed offer walk-in and by-appointment tastings, 27% offer tastings exclusively by appointment, and 8% are walk-in only. The number of wineries requiring appointments for tastings has more than doubled in the past five years.

While average tasting room purchases have increased since 2012, tasting room traffic is down. Tasting rooms play a crucial role in a winery’s sales. To entice visitors, wineries should consider a variable fee structure, which would lower tasting room fees at off-peak times, and contemplate relaxing reservation policies.

Wine club membership – the churn’s the concern.

Club member attrition, also known as “churn”, is up significantly in all regions over the past ten or so years. Excluding wineries with less than five years’ experience, churn averages 19.0%, while club growth rates average 4.2%. One region, Paso Robles, is seeing negative growth.

The tasting room remains the most successful way to acquire new club members. 70% of total sales are reliant on traffic through the tasting room, with 8-10% of visitors joining a club. On average, wine club revenue per member was up 7.4% in 2023 vs 2022, but average club member annual lifetime value in 2023 but has largely flattened (and is down from 2020).

To combat churn and increase annual lifetime value, wineries should put a higher value on flexibility – allowing members to pause their memberships, making a more concerted effort to ask members what they want instead of locking them into a shipment they may not be as happy with, and offering free shipping, now less prevalent than it once was.

Success with email marketing.

Email is the most widely used digital marketing channel, with 86% of respondents using it. 26% of respondents use email monthly, 20% bi-weekly, and 17% weekly. Wineries are seeing strong open rates and click-through rates, ranging 35-58% and 11-31% respectively (as measured by retail bottle price).

Given this success, wineries should be looking for ways to further improve performance. Data enhancement, appending demographic and psychographic data attributes to their files, is one way to improve engagement and acquisition efforts – think gaining customer birthdays and emailing them a special offer on their big day, for one. Wineries should not be afraid to ask customers for email addresses at any touchpoint, offline or online.

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Looking ahead, it’s clear that the wine industry is facing challenges. The survey’s findings should not be seen as gloom-and-doom, but rather, a roadmap to success. Now is the ideal time for wineries to embrace new customer acquisition and retention strategies.