- A new Rabobank report released this week found alcohol brands and retailers are losing billions in online sales, even though U.S. e-commerce sales of alcohol hit $2.6 billion last year. Wine took the top spot in 2019 with $2.2 billion in online sales, spirits came in second at $230 million, and beer was third with $155 million.
- Bourcard Nesin, a beverage analyst and author of the report, said industry leaders need to look at how much value is being missed, how often younger generations use online shopping channels, and how much this use is influencing how consumers behave in stores.
- Supermarkets are where most alcohol sales are taking place. However, since more than 10% of all grocery is projected to be available online during the next four years, the report said grocers who don't have an e-commerce strategy for alcohol will lose the opportunity for $3.7 billion in sales by 2023.
As more legacy alcohol brands have fallen out of fashion, e-commerce could help bring sales and demand back up. This new report said the annual value of missed sales opportunities needs to be considered when it comes to the online alcohol market, and it suggests beverage firms consider that when determining how much money to put into their digital efforts.
But companies shouldn't look only at today's online sales when deciding how much to invest in e-commerce. Other factors impacting sales include a brand's online presence, which the report said plays a crucial part in attracting sales in other channels. More of an investment in online channels and marketing could help boost these brands.
The four channels for alcohol e-commerce are online grocery, alcohol marketplaces such as Drizly and Minibar, direct-to-consumer online wine, and online liquor stores. The latter posted the highest annual sales in 2019 at $1.1 billion. Direct-to-consumer came next with $950 million, followed by online grocery at $295 million, and alcohol marketplaces with $265 million. Online grocery showed the highest growth rate, increasing 115% last year compared to 2018, the report said.
Alcohol makers who don't create seamless online buying experiences and provide enough content and product information are in danger of losing a big chunk of revenue as consumers shift to more food and beverage spending online. Although booze is a fast-growing grocery category, the report said its share of online sales is almost 90% lower than in-store sales — so manufacturers and retailers looking for growth need to make sure they're part of this process instead of allowing e-commerce to come between brands and consumers.
Sean Dunn, head of digital at Astound Commerce, wrote in an opinion piece for Food Dive that wine and spirits brands have lagged behind in e-commerce due to a patchwork of state laws restricting direct shipping to consumers. Along with verifying customer IDs, other challenges include shipping high-value liquid items, controlling temperature and needing specialized couriers. Dunn suggests brands take a page from the online wine community Vivino, which uses two-way communication to connect with consumers and gather data, and to also engage in behavioral marketing and personalized services.
Alcohol manufacturers such as Molson Coors have recently launched e-commerce platforms for their products and are partnering with delivery firms for online ordering, delivery and pickup. Amazon was an early mover in the alcohol delivery game in 2015, and last year Instacart expanded same-day delivery to 14 states and the District of Columbia.
Meanwhile, more states have relaxed their alcohol shipping policies or are considering doing so, especially for wine. According to Spirited Magazine, this past July Connecticut became the 15th state to allow consumers to receive wine shipments from retailers, wine stores, clubs and auction houses.
With those kinds of policy changes increasingly coming into play, more alcohol companies may get behind DTC online sales and start reaping the rewards the Rabobank report says are waiting for them.