Washington wine shipments rise 3% in the third quarter

A Tentative Turnaround

• Shipments of packaged wines by Washington wineries grew by 3% in the third quarter relative to the same period in 2019
• The modest year-over-year advance is a welcomed development following a steep, pandemic-induced contraction during the first six months of the year
• The 3Q rebound was mainly driven by a solid increase in out-of-state shipments from large wineries such as Ste. Michelle Wine Estates and Precept Brands
• Shipments to in-state distributors and direct-to-consumer sales/shipments remain weak – both channels were down sharply for the quarter
• Year to date, the Washington wine industry’s shipments have contracted by 9%
• Both the large and small winery components of the industry have suffered substantial losses in 2020 – nonetheless, there have been a number of strong performers in both categories

Looking Ahead

• The near-to mid-term outlook for the Washington wine industry remains murky and will depend heavily on the trajectory of the pandemic and economy
• Given the onset of winter weather and rising Covid-19 case counts, weakness in the on-premise and tasting room channels is likely to persist at least through the spring
• The off-premise market continues to look stronger, though the expansion in both wine sales and the broader economy has moderated in recent months
• The Washington wine industry’s growth prospects are also contingent to a large extent on the performance of Ste. Michelle, which accounts for six of every ten cases sold
• Ste. Michelle has experienced a steep decline in volume and profitability in recent years – all eyes will be watching for signs of a turnaround under the company’s new CEO, David Dearie

Visit our website at www.VinEconomics.com to learn more about Vintage Economics and our analysis of the Washington wine industry.

Chris Bitter

Vintage Economics

Bitter@VinEconomics.com

206-981-6885