Why You Should Launch a Wine Club
Wine is a competitive business—there are lots of wineries producing great wines. So what sets yours apart and why would someone choose your wine over the next one? Knowing the answers to these questions will help you build a successful wine club. Let’s look at some of the data supporting why you should start a wine club.
Wine Clubs = More Profits
In 2021, consumers spent over $4 billion on direct-to-consumer wine shipments and wineries shipped over 8.5 million cases of wine. For the first time, in 2020, wine club sales surpassed tasting room sales—club sales accounted for 36 percent of Direct-To-Consumer (DTC) sales while tasting rooms dropped to 28 percent. Obviously, some of that was due to COVID-19 closures but we’re seeing signs of those trends continuing on.
That new member ensures revenue with each release, offering a steady cash flow. It’s a guaranteed allocation each release, giving you peace of mind that a certain number of cases will sell. That means spending less time finding distributors or selling to restaurants and wine shops. Instead, you can focus on building a unique experience for your club members.
Boost Profit Margins with DTC
In 2010, premium wineries started focusing more of their attention on wine clubs and DTC channels in reaction to continuing distributor consolidation, and that effort is still paying off. Driven by the increasing popularity of DTC sales, wine clubs are flourishing and make up about 10 percent of the average winery’s total revenue in 2021. Customers are enjoying the benefits of feeling connected to the winery and getting access to an exclusive product.
DTC eliminates intermediaries, so you earn more profit on each bottle you sell. As you cater to your wine club members, your profits have a chance to stay strong via repeat purchases, private events, allocations, etc.
One final profit reality to consider—the average time a member remains in a wine club in major wine regions is 32 months. That’s a great customer lifetime value. You can get a lot more out of the unique experience you offer a customer than a single wine visit and a couple of bottles sold. With no wine club, you might expect that you’ll get $100 out of each tasting room visit or wine release. Imagine increasing that by 10x. With a wine club, a visit has the potential to lead to a membership which is 2+ years of continued business.
Enjoy Sustained Growth
While growth rates vary by region, winery club memberships continue to grow in most regions every year. According to Silicon Valley Banks 2021 report across the country, the net average wine club growth rate is 21 percent. What’s more, conversion rates for turning visitors into wine club members are now 8.7 percent at a winery and 5.7 percent in urban areas. With tastings rooms back in swing, you can sign up wine club members right on your property—and turn an occasional visitor into a repeat customer.
Impressive growth to be sure—and signs point to continued expansion.
Naturally, with the highest-priced bottles, Napa Valley accounts for the largest revenue per wine club member. But the national average is still pretty hefty, meaning there’s still money to be paid outside California. Seize the market opportunity by positioning your wine club as a more personal alternative to traditional wine-buying methods and begin to expand your distribution to profitable states.
Most states permit DTC shipping. And, according to the 2021 DTC Wine Shipping Report, California, Washington, Texas, New York, and Florida are the top five destinations for DTC wine. By simply starting to sell into these states you have the opportunity to increase your revenue significantly.
Next Steps
Launching a wine club may seem simple at first, but it can quickly grow to be unmanageable if you don’t take the right first steps. There are questions to answer like—How should you structure your club? How will you differentiate your club from your competitors’? What will you do to retain customers? What do you have to do to be compliant?
We’ll take a look at these questions and many others in future posts. In the meantime, if you would like to be notified when we publish new articles, subscribe to our blog.
