Sales of Rioja to the on-premise trade (restaurants, bars and cafés) in Spain were hit hard during the first year of the pandemic, with AC Nielsen reporting a drop of 50%. This is especially significant because on-premise sales account for 60% of total sales of Rioja in Spain.
The off-premise channel was the big winner in 2020
It is by now a well-known fact that wineries attempted to make up for this shortfall by increasing sales to off-premise accounts (supermarkets, hypermarkets and traditional food and wine shops). Some were more successful than others. The wineries that benefitted most were large and medium-sized companies with a traditional presence in this channel.
Smaller wineries had problems selling to off premise
On the other hand, smaller wineries whose sales were skewed to the on-premise sector were unable to offset the drop in volume by transitioning to off-premise sales. To partially offset this shortfall, these wineries attempted to sell to new outlets such as wine clubs and direct sales via the internet.
2020 showed an important increase in direct-to-consumer sales
A study by the OEMV (the Spanish Wine Market Observatory) and Wine Intelligence (a think tank based in the UK) was recently summarized in Alimarket, a leading food and drinks trade publication in Spain. This study reveals that in the wine sector in Spain as whole, the weight of direct sales (in winery shops, wine clubs, online and telephone orders and online portals and marketplaces) grew from 5,7% in 2019 to 10,4% in 2020, an increase of 82,5%.
The study appeared before 2021 figures were made available but as the following data from Rioja show, it is likely that direct-to-consumer sales declined as on-premise accounts reopened.
To measure the impact of direct-to-consumer sales in Rioja, we conducted a survey of several wineries in Rioja. Due to the small sample size, the information received cannot be considered statistically significant. However, responses from the wineries consulted coincided to a large degree.
The survey questions:
Did your winery promote direct from winery sales via the internet at the beginning of the pandemic in 2020?
A few of the wineries already had an online sales presence in 2019 but all of them sold wine online in 2020.
Have you continued marketing and selling in this channel in 2021?
All the wineries continued selling online in 2021. Most responded however that their sales volume had decreased in 2021 compared to 2020.
Do you think that this direct-to-consumer sales channel will increase in 2022 and beyond?
Everyone agreed that online sales are now a part of the sales landscape in Rioja and will continue to grow in the future. Individually, wineries plan to invest in this channel.
Online sales as a percentage of your total sales.
Answers depended on the size of the winery. Larger wineries showed a smaller percentage of online sales with respect to total sales. These ranged from zero (no online presence) to 1% in 2019.
2020 showed an increase, with respondents reporting a range between 0,5% (larger wineries) to 4% (small companies) of total sales.
In 2021, online sales as a percentage of the total decreased for all respondents except one. The range of online sales as a percentage of total sales ranged from 0,35% to 4%.
Tom Perry, Inside Rioja
(Photo credit: Tom Perry)