Reflexions on the state of Direct-to-Consumer in the small-production wine market

I’m often in touch with winegrowers, mostly small-size, family-owned operations, from one to a handful of persons working on the operation. I like to talk “wine” with them, but I also like to understand their businesses.

On that note, I’m very intrigued, not to say shocked, by how the US and EU landscape feels different. In the US, the business commercial and marketing dimensions are way more understood as core components of the activity, just as important as the farming or winemaking dimensions. In Europe, it’s not rare to have the impression that communication, marketing, and selling come as an afterthought. We make Wine first, then try to sell it using the status quo of the trade!

This is especially true when it comes to selling “direct to consumer” through digital channels.

In the US, even talking with tiny, underground, up-and-coming growers in lesser-known regions in the US, there’s a good chance you’ll end up subscribing to an email newsletter that will send you very well-targeted messages inviting you to purchase very exclusive cuvees, pre-buy some members-only special wines, become a member and get perks for that, and you’ll like it. And obviously, if you try the service, you’ll experience that it’s a rather well-oiled process and “business as usual” while remaining a small, human-centered, artisanal business.

The “digital side” of the business works hand-in-hand with the physical, on-premise side of it and the DTC market is significant, even if 2023 was clearly challenging. If curious, check out Sovos’ report on the state of the market here?, surely 2023 was not that great, but I know a lot of European producers who would happily take the $45 average bottle price to compensate the slowing market… And it feels that DTC contributes a lot to making the life of a winemaker more pleasant and remunerative...

In Europe, it’s an all different story. In fact, you’ll find a lot of wineries without even a website. You’ll also see some e-commerce sites, yes, even for small wineries. Plus a lot of inferior, outdated websites without commerce or ways to capture customers. Most importantly, when e-commerce there is, it very often feels like something not working or also outdated: not all wines present, old vintages, out-of-stock etc. If you ask the producers, “We gave it a try, but it’s not really working…” and e-commerce as much as direct-to-consumer through physical channels, including via tasting rooms, does not seem so developed. Producers stick to their legacy channels.

The romantic side apart, I’m quite convinced that sales and marketing should not be afterthoughts and that DTC and Digital are essential parts of the mix that are coming with many opportunities to strengthen a winery’s business in the world we live in. There’s nothing wrong with it, and it will not alter any of the creativity and originality of the Wine. I see this very similar to the Art business: great artists must also be great businessmen or women...

I also strongly believe that selling direct by no means would hurt your “traditional” wholesale distribution?as I mentioned in this article?I wrote a while back. Distributors should thank producers working the market to build their brand and have relations with customers. They’ll sell wines from these producers because of that.

So, why that rift between the US and Europe? And will this change??

I’m truly curious to hear opinions on that. In these days, where the wine business is far from thriving and losing traction in many segments, it might be a good idea to explore the route and not follow the status quo.

Some suggestions:

• I’m actually wrong, European wineries have no problem selling their wines no matter what, so this is not a real problem to solve??
• European compliance and shipping complexity don’t help (the EU is not as simple as one may think, if you don’t know how to work excise taxes in Europe, it surely is not as bad as the US, but there is still much to be improved in terms of ease of trade).
• There’s not yet the right turnkey solution to facilitate the operation. The US has seen a bunch of software/service/logistic players facilitating the work here, such as?Offset,?Commerce 7?or even?WineDirect; maybe the point is to really find that combo of SaaS and Logistic integrated into a single offering in Europe?
• Are the buyers uneducated and not ready to buy remote or subscribe to clubs? Do we miss a marketing story here, and who should tell it??

I would love to discuss this with anyone interested in the topic; feel free to comment or reach out to discuss!