It’s no secret that the pandemic has pushed the needle on alcohol sales across the world, forcing retailers to migrate to digital and omnichannel formats almost overnight. The International WSR reported the largest gain in sales volumes across the US since 2002, with an accelerated adoption rate for online purchases of alcoholic beverages. The lockdown forced an increase in home consumption with 44% of shoppers buying alcohol online at the peak of the pandemic, compared to 19% the year before. These channel shifts are not going to rebound to pre-COVID patterns and ISWR estimates that by 2024, the total alcohol eCommerce value across 10 global markets (including the US) will exceed $40 billion. We explore how alcohol eCommerce brands and retailers can use these developments to their advantage and build a resilient eCommerce growth model.
Alcohol Retail in the New Normal
The US is expected to overtake China to become the world’s largest online alcohol market by the end of 2022, and eCommerce can no longer be treated as a developing niche by market players. Despite the post-vaccination re-opening euphoria sweeping across the country, consumer behavior will see some lasting changes in this category. Enamored by the value and convenience that online platforms like Drizly, Vivino, and ReserveBar now offer, people are not likely to abandon their online carts anytime soon. Moreover, supermarkets and traditional retailers can still command the market if they pivot to digital channels and provide superior services to customers. Almost half of all online alcohol consumers have purchased something from an online grocery website or application compared to a third who order from on-demand delivery apps such as Drizly or Minibar.
Let’s examine some of the buying patterns our data experts are tracking in alcohol markets:
Localized eCommerce boosts Same Day and 2-Hour Delivery
Emerging digital players are disrupting the game by offering unparalleled convenience and speed to alcohol buyers. With the recent Uber-Drizly deal, the 2-hour delivery window is expected to expand to urban areas beyond West Coast cities as more shoppers seek on-demand services. Alcohol marketing on eCommerce platforms will need to become much more dynamic and responsive, especially for incumbents like supermarkets and grocery chains. Smart capabilities such as geo-targeted pricing and promotions, lean delivery partners, and locally optimized assortments will help retailers and DTC brands win a bigger share of the market.
Premiumization is Here to Stay
eCommerce purchases tend to be higher in value. Contrary to what the uncertain economic climate might suggest, online consumers have discovered an appetite for new and premium spirits that they wouldn’t have splurged on in bars and restaurants. Smaller and emerging brands also stand to gain from the online format owing to fewer restrictions in terms of range and space. Depending on the category, the average unit price has increased by 1.5-3.5%. Alcohol brands and retailers have more room to play with online assortments and offer a wider range of upscale selections.
New Flavors for At-Home Bars
Hard Seltzers, Ready-to-Drink (RTD) cocktails, premium Mexican Tequila and Mezcal dominate as US shoppers continue to expand their palate and sharpen their bartending skills in 2022. Artisanal flavors, upscale ingredients, and sustainable packaging will help pave the way for product innovation and merchandising strategy. Consumers are increasingly seeking interesting mixology alternatives for their at-home cocktails signaling an upward trend for certain categories. Getting your product mix right is the key to incremental sales in eCommerce arenas. Tap into evolving consumer tastes with smart digital shelf management solutions if you don’t want to miss out on these product trends.
5 Steps to Win the Online Alcohol Shopper
- Own the Data
You need unfettered access to quality data from all your channels to ensure that you are leveraging insights from every touchpoint in the buyer journey. Having an online catalog or a DTC marketplace is not enough. Even on digital and omnichannel, consumers demand the same seamless brand experience they are used to at their favorite bars and tasting rooms.
- Own the Competition’s Data
Get an edge over the market with informed competitive decisions, especially if you are new to the digital sphere. It’s not easy to beat established players if your business is constantly playing catch-up. Partner with solutions that can help you integrate market movements into your pricing and promotions strategy. Alcohol marketing on digital channels will need a personalized approach to trump the competition.
- Play the Long Game
Don’t underestimate the demands of your new customers because soon they will influence the buying behaviors of your existing customers. Keep testing campaigns that appeal to your new audience and diversify your revenue channels as much as possible. This includes preparing for re-opened markets and on-premise sales. Predictive analytics can help you plan for an expected demand surge in Q3 and beyond.
- Stay on Top of Regulations
Online alcohol sales come with added challenges. Enforcing regulatory practices is tricky given the variation in state frameworks, tax policies, and consumption caps. If you’re partnering with delivery apps and online marketplaces, enforcing pricing and product practices becomes easier if you have integrated monitoring solutions across all your retail channels.
- Color Outside the Box a Little
Your customers are not buying alcohol in isolation. Adding premium Mexican Tequila to a grocery cart or ordering Sake with your Sushi takeout is becoming increasingly normalized. You need to be ready to serve your customers wherever and whenever they can order. Managing a wide range of strategic partnerships with dining, grocery, and on-demand service platforms calls for tailor-made margins, responsive demand forecasting, and shortened innovation cycles that only omnichannel data can enable.
Regret-Free Retail Moves to Combat Uncertainty
Invest in Convenient Product Formats
Certain lifestyle changes such as work-from-home, at-home mixology, tight-knit group gatherings, and gifting trends will stick around in the post-pandemic world. Alcohol brands and retailers now have the opportunity to reinvent the way consumers imbibe. Channel-agnostic innovation in product and packaging will prove to be a worthy investment for any retailer.
Partner with AI-Machine Learning Experts
Avoid blindspots with reliable data on your alcohol eCommerce sales. No matter what channel or price-points you offer, AI-leveraged analytics can help you unlock consumer and market insights so you can move away from demand ‘planning’ to demand ‘sensing and responding’.
Adopt a “Less but Better” Mindset
Mindful consumption, a long-term consumer trend, will ultimately shape the market outlook for alcohol eCommerce. Brands and alcohol retailers will benefit from incorporating this mantra into their strategic decision-making process. It could mean a more streamlined product mix, limited offerings in premium quality, or reduced delivery times. Ultimately, businesses that can identify and execute a data-driven strategic focus will win the alcohol market.
Our Guide to Navigating the Future of Alcohol eCommerce
If your alcohol eCommerce business is having a hard time transitioning to digital channels, we come bearing good news! You don’t need massive tech budgets and data teams to digitize your retail operations. We can be your strategic partner and help you set up dynamic pricing and product planning suite across all your retail channels with minimum effort. Our cloud-based SaaS platforms and scalable APIs are loved and used by leading business teams operating across a wide range of retail categories and geographies. Enabling access to quality data is the first step towards empowering your retail teams to succeed in a post-COVID alcohol market. We take great pains to deliver real-time, clean, and accurate data insights on an easy-to-use, unified dashboard with comprehensive reporting capabilities and timely notifications so you do not miss out on any price or product opportunities.
Thanks to our AI-driven granular insights, brands and retailers have access to smart analytical tools to create engaging consumer experiences, personalized offerings, and competitive pricing and promotions for their valued customers. So if you want to know how your brand can use such data-driven insights and become a market leader, book a free demo or drop us an email!