Issue link: http://read.dmtmag.com/i/299589
w w w. v w m m e d i a . c o m M a y - J u n e 2 014 | V I N E YA R D & W I N E RY M A N A G E M E N T 9 7 from the industry. Overall, 72% of respondents' sales volume in 2012 flowed through the three-tier distri- bution system, compared with 82% in the 2009 report. The wholesale channel (direct sales to retailers and restaurant accounts) accounted for another 12%. The DTC channel – which improved economic climate com- pared with the data reported in 2009, largely due to an improving economy and increased demand for wine. However, more than 40% of survey participants reported experi- encing increased production costs, price erosion and the accompanying gross margin compression. These responses are consistent with gen- eral industry data on the increasing costs of grapes and other produc- tion items and the difficulty winer- ies experience when they increase their prices, particularly in the three- tier distribution channel. FUTURE GROWTH STRATEGIES Survey participants were also asked to share their future strate- gies – specifically, which actions they plan to take in the next three years. Almost 70% of participants said they plan to expand their use of social media. This isn't surpris- ing given the emphasis on mak- ing deeper connections with wine consumers via Facebook and Twit- ter; it's part of the increased focus on DTC sales among wineries of all sizes. Nearly a third of participants are focusing on selling wine in emerging markets (such as China), and a third are focusing on buying a vineyard. For the past several years there has been a growing interest in sell- ing wine into emerging markets – a new and potentially lucrative sales channel. Given the high concentra- tion of family-owned and -operated wineries, approximately 25% of respondents said they planned to develop a succession plan. includes tasting room, wine club, mailing list, and online sales – accounted for 12% of total sales among 2013 survey participants, particularly smaller producers. This indicates a significant gain com- pared with the results of the 2009 survey, at which time the DTC channel accounted for only 6% of total sales. These survey results show that many small producers are now generating greater than 75% of their sales through direct channels. Overall, nearly 50% of respondents reported being more focused on increasing DTC sales in 2013, with an even greater focus going forward. ECONOMIC IMPACT Survey respondents were asked how current economic conditions h a v e i m p a c t e d t h e i r b u s i n e s s . The overall sentiment was of an + The 2013 Wine Industry Financial Benchmarking Report was designed to allow wineries and grape- growers to compare their business performance against their competition. + The direct-to-consumer channel accounted for 12% of total sales among 2013 survey participants, com- pared to 6% of participants in 2009. + More than 40% of survey participants reported expe- riencing increased produc- tion costs, price erosion and gross margin compression. + Almost 70% of participants said they plan to expand their use of social media. AT A GLANCE The direct-to-consumer channel accounted for 12% of sales among 2013 survey par- ticipants, up from 6% in 2009. Sixty-six percent of survey participants said they plan to expand their use of social media.