Tasting Room and Wine Club Survey 2016 Washington State Overview

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Eugene Miles
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1 Tasting Room and Wine Club Survey 2016 Washington State Overview

2 2016 Tasting Room Survey Results Overview Enclosed, please find our charted analysis of the tasting room survey which gathered data based on the 2015 calendar year. Responses totaled 68 for Washington State, although every question was not answered by every respondent. The purpose of the survey was to determine trends in tasting room and wine club practices and procedures. Please note that the findings of this survey are meant to offer a general picture of tasting room and wine club activity. Results that were deemed to be grossly inaccurate with intent or in error were either removed or excluded from the analytics in order to present accurate data. Detailed analysis of the findings can be found in the July 2016 edition of Wine Business Monthly. 2

3 Production Level Participation 1-2,500 35% 2,501-5,000 23% 5,001-10,000 14% 10,001-25,000 14% 25,001-50,000 6% 50, ,000 6% 100, ,000 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 3

4 Number of Years Winery and Tasting Room Has Been Open Winery Tasting Room < 5 years 11% <5 Years 27% 5-9 years 28% 5-9 Years 33% years 34% Years 22% years years 6% 11% Years 8% years 5% Years 3% years 5% Years 2% > 35 years 2% Years 5% 0% 10% 20% 30% 40% 0% 5% 10% 15% 20% 25% 30% 35% 4

5 Average Retail Bottle Price (Range) > $69 2% $60 - $69 3% $50 - $59 3% $40 - $49 14% $30 - $39 37% $20 - $29 32% $15 - $19 6% <$15 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 5

6 Direct-to-Consumer Channel Overview 6

7 Percent of Total Revenue from DtC Sales 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average: 61% 7

8 Percent of Total Revenue from DtC Sales by Production Size 1-2,500 74% 2,501-5,000 71% 5,001-10,000 60% 10,001-25,000 30% 25,001-50,000 39% 50, ,000 28% 0% 10% 20% 30% 40% 50% 60% 70% 80% 8

9 Composition of Direct-to-Consumer Sales Web/Mail/Phone 6% Other Direct Sales 6% Events 7% Visitor Center/Tasting Room 45% Wine Club/Allocation Subscribers 36% 9

10 Tasting Room Model and Visitation 10

11 50% 45% 40% Direct Sales Demographics 45.9% 40.3% 35% 30% 32.5% 32.3% 25% 20% 16.7% 15% 10% 12.5% 9.2% 10.7% 5% 0% Average of Millennial (21-37 year olds) Average of Gen X (38-49 year olds) Average of Boomers (50-67 year olds) Average of Matures (68+) Washington Overall Source: Silicon Valley Bank 2015 Annual Wine Conditions Survey 11

12 Public vs By Appointment 8% 92% By appointment only Open to the public 12

13 Average Number of Monthly Visitors per Winery Average:

14 Average Number of Monthly Visitors per Winery by Production Size 1-2, ,501-5, ,001-10, ,001-25,000 1,406 25,001-50,000 1,964 50, , ,000 1,500 2,000 2,500 14

15 Three Year Trend of Average Monthly Visitors per Winery 30% 27% 25% 20% 17% 15% 14% 10% 5% 0%

16 Washington State: Tasting Room Service Style and Average Purchase by Style Tasting Room Service Style $ Average Purchase by Tasting Room Service Style 16% $ $ % $ % 15% $60.00 $63.28 $48.78 $61.74 $40.00 $20.00 Seated Tasting Casual or Group Seated Tasting Private or Formal Tasting bar Seated Tasting bar Standing $- Seated Tasting Casual or Group Seated Tasting Private or Formal Tasting bar Seated Tasting bar Standing 16

17 Tasting Fees and Reimbursement 17

18 60% Average Tasting Fee 50% 51% 40% 41% 30% 27% 27% 20% 10% 0% 12% 12% 8% 8% 2% 4% 2% 4% 4% $5 $10 $12 $15 $ Traditional Tasting Reserve Tasting 18

19 Use of Tasting Fee Reimbursement 10% 90% No Yes 19

20 Popularity of Tasting Fee Reimbursement Methods 60% 57% 50% 40% 30% 29% 20% 14% 10% 0% Minimum Dollar Purchase Minimum Bottle Purchase Join the Wine Club Note: Respondents could select multiple options 20

21 Tasting Room Staffing and Compensation 21

22 Two Year Trend of Ability to Find Competent Tasting Room Staff 60% 50% 40% 30% 20% 10% 0% Very easy Not that hard Doable with some effort Difficult Almost impossible % 25% 55% 11% 5% % 20% 57% 18% 3% 22

23 Average Hourly Starting Wage of Tasting Room Staff 30% 28% 25% 20% 16% 15% 14% 12% 10% 11% 5% 4% 5% 4% 4% 2% 2% 0% > $10 $10 $11 $11.50 $12 $12.50 $13 $13.50 $14 $

24 Tipping of Tasting Room Staff Permitted 34% 66% No Yes 24

25 Use of Wine Sales and Wine Club Incentives Use of Wine Sales Incentives Use of Wine Club Incentives 38% 42% 58% 62% No Yes No Yes 25

26 Popularity of Incentive Methods Popularity of Wine Sales Incentives Popularity of Wine Club Incentives 20% 18% 70% 18% 60% 60% 16% 14% 14% 50% 12% 40% 10% 8% 6% 9% 30% 20% 4% 10% 9% 2% 0% Commissions Bonus for Reach Individual Goals Bonus for Reaching Team Goals 0% Payment for New Club Member Sign Ups 0% Residuals Paid for Club Retention 2% Payment for Contact Data Capture Payment for Exceeding Team Goals Note: Respondents could select multiple options 26

27 Tasting Room Conversion and Purchases 27

28 Percent of Visitors who Purchase 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average: 71% 28

29 $140 Average Tasting Room Purchase $120 $100 $80 $60 $40 $20 $- Average: $

30 Change in Dollars and Cases Sold in the Tasting Room from 2014 to % 100% 80% 60% 40% 20% 0% -20% -40% -60% Cases Sold Dollars Sold 30

31 Wine Club Conversion and Growth 31

32 Types of Memberships 100% 90% 88% 80% 70% 60% 50% 40% 35% 30% 28% 20% 10% 0% Wine Club Allocated Mailing List Both Silicon Valley Bank and Wine Business Monthly 2013 Tasting Room Survey 32

33 Conversion* of Tasting Room Visitor to Wine Club (Excludes wineries <5 years old) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average: 6% *Conversion = Number of new wine club members in 2015 divided by the number of total visitors in

34 New Wine Club Member Growth* Rate (Excludes Wineries <5 years old) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average: 26% *New Wine Club Growth = new club members in 2015, divided by base membership level at the beginning of

35 Wine Club Attrition Rate* (Excludes Wineries <5 years old) 70% 60% 50% 40% 30% 20% 10% 0% Average: 12% *Attrition Rate = Number of wine club members lost during 2015, divided by number of wine club members at the beginning of

36 Net Wine Club Growth* Rate (Excludes Wineries < 5 years old) 100% 80% 60% 40% 20% 0% -20% -40% -60% Average: 14% *Net Wine Club Growth = new club members in 2015, less lost club members in 2015, divided by base membership level at the beginning of

37 Three Year Trend of Net Wine Club Growth 30% 27% 25% 20% 17% 15% 14% 10% 5% 0% Silicon Valley Bank and Wine Business Monthly 2013 Tasting Room Survey 37

38 Wine Club Member Revenue and Tenure 38

39 Total Annual Revenue* per Member $2,500 $2,000 $1,500 $1,000 $500 $- Average: $499 *Total Annual Revenue = annual wine club shipments + annual additional member purchases 39

40 Use of Rewards or Loyalty Programs for Wine Club Members 22% 78% No Yes 40

41 Average Length of Membership in Months Average: 32 Months 41

42 Shipment Options 60% 50% 51% 40% 30% 28% 20% 17% 10% 4% 0% Fully Allocated Complete Choice Some Choice No Choice Silicon Valley Bank and Wine Business Monthly 2013 Tasting Room Survey 42

43 Average Lifetime Value Per Member $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- Average: $1,345 Silicon Valley Bank and Wine Business Monthly 2013 Tasting Room Survey 43

44 2016 Tasting Room Survey Results Overview Mark Freund

Napa County: Wine Business Update

Napa County: Wine Business Update JUNE 21 ST 2017 ROB MCMILLAN, EVP & FOUNDER SILICON VALLEY BANK WINE DIVISION Rob McMillan - Curriculum Vitae Subject matter expert cited in CNBC, LA Times, PBS, Barron