In contrast to just about every other product, Americans are ordering a lower percentage of wine on the Internet from wineries than they did before the pandemic.

This tidbit came from Silicon Valley Bank's annual Direct-to-Consumer wine survey, which was released on Tuesday. But maybe it's not the main finding you want to hear. Rob McMillan, executive vice president of Silicon Valley Bank's Wine Division, said that by far the question most people asked before the webinar was, "are things good or bad for wine?"

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The answer to that is, "mixed." DTC wine sales are down by volume, but up by value for wines between $20 and $79.

DTC sales, which include tasting room and wine club sales as well as internet orders, are incredibly important to most wineries. The survey revealed that DTC is responsible for 72 percent of the average winery's sales, compared to just 17 percent in retail stores and 11 percent in restaurants. (This does not represent wine sales for the whole industry because enormous, retail-store-focused producers like Gallo and Treasury sell as much wine in a day as a small winery does in a year.)

Thus it matters immensely to most wineries how DTC sales are going. And it's a little shocking that internet sales make up only eight percent of all DTC, while wine clubs and tasting room sales each account for 39 percent (the rest is phone sales, on-site events, etc.)

"Everybody has been talking about digital sales for so long," McMillan said. "But we seem to be going back to what we knew."

Crunching the numbers

The number of visitors to wineries is up in some regions, notably Virginia, Oregon, and non-West Coast states. But the number of visitors to Napa County wineries is down a dramatic 37 percent from 2016 numbers, and 32 percent in Sonoma County over the same period.

An obvious reason is tasting-room fees. In 2016 the average tasting room fee, across all of the US, was $16 for a regular tasting and $34 for a reserve tasting. Last year the average nationwide was $38 regular and $72 reserve. But in Napa County, the average fee is now $75 for a regular tasting and $138 for reserve. For Sonoma County, the numbers are $43 regular, $81 reserve. No other region comes close; the next-most-expensive region is Oregon ($33 regular, $61 reserve.)

And it's not just tasting room fees. The average hotel room in Napa County cost $470 a night in 2022, up from $327 in 2019, according to the Napa Valley Register. Also, tipping is now suggested at two thirds of wineries; only 21 percent allowed it 10 years ago. The average winery in the US sells $209 worth of wine to the average visitor; surely it's higher in Napa Valley. A 20 percent tip is not an insignificant expense.

Moreover, do you remember wineries waiving the tasting fee if you bought a bottle? Fewer than a third of wineries do that now.

"The cumulative impact on the customer who visits you is that everything is more expensive," said MJ Dale, founder and CEO of Customer Vineyard. "It's not just the tasting room fee. It's the cost of the hotel room nearby. It's the cost of the bottles. It's tipping. You put that together and the cost of a visit is significantly higher in most regions."

Wineries still pester you incessantly to join their wine club, and no wonder, as the average wine club member will spend $2700 over their lifetime. But only 10 percent of visitors to wineries join the club, and no wonder, as club discounts are down to an average of 17 percent, and only 16 percent of wineries offer their club members free shipping. The average person stays in the average wine club for just 32 months.

The region that showed the most alarming drops in this year's report was Paso Robles. Paso has long been hailed as one of the most fun California wine regions to visit, where winery principals can often be found in the tasting room. But it had the largest overall drop – 6.5 percent – in DTC volume sales. Visitation is down 18 percent from 2016 despite reasonable-for-California tasting fees ($30 standard, $44 reserve, both less than one-third of Napa) and higher-than average club discounts (22 percent). Paso wineries lost 27 percent of their club members last year alone, the highest of the regions surveyed; it is the only region surveyed where wine club growth is going backwards because more people are quitting than joining.

Dale said that wineries are using the wrong social media for marketing. More than 70 percent use Instagram and Facebook; the third-most-used platform is Youtube at just 13 percent.

"Most of your customers are on LinkedIn, because that's where the affluent people are," Dale said.

This may not be good news, but McMillan said the numbers will get better next year because there will be a "market correction in the number of wineries."

"The last two years, there have been fewer wineries," McMillan told Wine-Searcher after the webinar. "It's not so much consolidation as it is more hobby wineries that drift away."

One thing that can be said about the DTC wine market in 2024: it's no place for hobbyists.

To view on Wine-Searcher, please click here.