Grocery Retailers Start Delivering Wine and Beer, Sales Set to Boom

by | Apr 5, 2018 | Business Feature

Investment firm Rabobank reports that grocery retailers are increasing their delivery of beer and wine to consumers. Grocery retailers have been struggling to keep up with competitors, such as Amazon and Walmart, which are offering lower prices and home delivery for food items.

Costco has also started to offer delivery to members in large cities.

The investment firm claims that grocery channels account for just 5% of all online alcohol sales, but expects the trend not to last for long.

Rabobank claims that grocers will compete with the traditional online liquor store, mimicking reports from Nielsen. Nielsen claims that by 2025, online grocery will hit 14% of total sales. Online grocery sales account for just 2.5% of total sales. The increase in online sales will be spurred by the likes of Amazon and Instacart, which offer grocery delivery to consumers.

Grocery delivery sales are in high demand, with Google searches for the term “grocery delivery” increasing 250% since 2012. “Alcohol delivery” searches have increased 500% during the same time period.

The report claims that alcohol sales will catch up or surpass grocery sales overall.

Europe’s online alcohol sales were spurred by Amazon, where sales grew by 96% and 230% in the UK in 2017. The trend is expected to be followed in the United States. The UK is a prime example because 34% of beer drinkers claim that they buy their beer online regularly.

The report claims that 44% of wine sales and 25% beer sales occur at brick-and-mortar grocery stores in the United States. Consumer behavior changes, with a move towards purchasing online rather than going to brick-and-mortar stores.

Tighter restrictions in certain states on beer and wine sales may make it difficult for online retailers to fulfill consumer needs in several states.

Wine tasting rooms remain a main driver of online wine sales. The top 20% of wineries are responsible for 90% of online wine sales, with the average wine order being $363. Licensed wineries are starting to offer direct-to-consumer sales, with many receiving tens of millions in equity funding to expand their operations in the United States.

Online alcohol sales swelled to $1.7 billion in 2017, with small totals driving sales. Growth in the online channels is surpassing growth in brick-and-mortar sales. Food Dive reports that online liquor sales are forecasted to grow to $7 billion to $15 billion over the next few years.

Amazon has already started offering alcohol sales in the United States through its Prime Now service. Consumers in select cities can order these goods online, with sales coming from Portland and Columbus. Retailers are required to adhere to local restrictions and minimum age laws when selling liquor online.

Wine sales are expected to benefit the most from the trend, as consumers pair wine with food items at checkout.

Distilleries and breweries are already starting to shift their resources to e-commerce divisions and mobile development to offer additional channels for consumers to buy their products. Brick-and-mortar stores will need to enhance their consumer experience to be able to compete with the growing threat of online sales.

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