The Role of E-commerce in U.S. Beverage Sales

As trading conditions continue to normalize, the US ecommerce market for alcoholic drinks is moving into a time of slower growth. This is because consumer demand is changing from a pandemic necessity to novelty and convenience.Higher-value alcohol purchases also work well through this channel. Wine has a bigger online presence because it already has a direct-to-consumer (D2C) presence, but spirits and beer are both projected to gain share over the next few years.However, because of the ongoing economic problems, online shoppers are also becoming more price conscious. They are prioritizing deals and lower prices over faster delivery times more and more."The US online alcohol market grew steadily but more slowly, by 1% [by value] in 2022. The total number of people who bought alcohol online also went down slightly year-over-year," says Guy Wolfe, Head of Ecommerce Insights, IWSR. "Online alcohol sales have leveled off after big increases during the pandemic as the on-trade recovers and customers return to more normal buying habits."

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As things settle down, ecommerce is still expected to do better than the US total beverage alcohol market. IWSR predicts that online alcohol sales will grow at a value CAGR of +7% from 2023 to 2027, while the total beverage alcohol market is expected to grow at a value CAGR of +1% during the same time period. In that case, ecommerce's TBA share would rise from 3.2% in 2022 to 3.9% in 2027.Although the number of people who buy booze online has gone down over the past few years (14% said they had shopped online in the last six months in 2023, down from 18% in 2022), IWSR consumer research shows that the US market still has a lot of room to grow.Wolfe says, "It's not a surprise that recruitment has slowed down since the pandemic, especially among Baby Boomers. This shows that the channel is becoming more mature." But there is still room for growth, since one in four people who buy things online have been brought in by new people in the last two years. Also, the number of times people shop online has continued to rise.Millennials who spend a lotMen, Millennials, people with better incomes, and people who have tried a lot of different kinds of alcohol are more likely to buy alcohol online in the US. Also, 60% of people who buy alcohol online now spend more than they would in a store, which is up from 20% in 2022.IWSR study also shows that 67% of Millennials say they spend more online than in stores, which is a much higher percentage than the rest of the sample, Wolfe says. "This means they are important for both volume and value growth. As a result, it is important for any online strategy to make sure that marketing plans and product offerings are tailored to appeal to this group."

But at the same time, people are becoming more price aware when they shop online

Deals and lower prices are now almost as important to them as quick delivery times. The cost of delivery is another big reason why people don't buy drink online regularly.Marten Lodewijks, Director of Consulting – North America, IWSR, says, "As economic pressures make online shoppers more price conscious, competitive and clear online pricing strategies are becoming more important." "Faster delivery isn't as important to customers anymore, and it's important to keep delivery fees low."As people change how they behave online, site loyalty also changes. More people are staying loyal to their favorite brands instead of sites. One group that doesn't follow this rule is Boomers, who are very likely to only buy booze from one store. Gen Z, on the other hand, is more likely to shop at different online stores depending on the event.Do research before you buy over online shopping sitesMore than four out of five people who answered spend at least some time researching before buying a drink online. This is more than any other type of shopping. People who shop online a lot are more likely to spend a lot of time researching goods online. This means they are involved consumers and not just buying things on a whim. For most people, studying before buying means getting more information about a product, finding something new and interesting, and getting the best deal possible.Beer and liquor to cut into wine's shareThanks to the wide acceptance and use of D2C, wine comes out as the most mature category in US ecommerce.

Lodewijks says, "Beer, cider, and RTDs under-index online because they are easy to find in physical channels, especially convenience." "Wine has a bigger online presence because it already has a D2C presence.

But over the next few years, both spirits and beer, cider, and RTDs will slowly take away from wine's market share

Also, growth from the non-alcohol groups is much faster than growth from traditional products in all liquor categories. Researchers at IWSR, led by Adam Rogers, say that goods without alcohol can be shipped anywhere in the US without any problems."No alcohol's share of sales in direct-to-consumer (D2C) channels is growing faster than in other types of channels." So, brand owners can use versions without alcohol to make their brand more well-known and to open up new markets in states where they aren't presently present.Wine hits its peakIn the US, online wine sales peaked at 6.6% of all wine sales in 2021 and are now expected to stay around 6.1%. Rogers says that since the pandemic, it has been hard for the wine business to grow, even online, because people are more interested in other products.After seeing big growth during the pandemic in 2020, D2C wine has slowed down with two years of volume drops in a row. Recent drops are because fewer brands priced less than $30 USD are being shipped, but growth is still happening for wines priced $100 and up.And Rogers says, "This shows a situation in which inflation disproportionately affects people with lower incomes while having little effect on those with higher incomes."