Off-trade

Escalating online beer sales – some key considerations

While beer lends itself well to the convenience of online shopping, given it's a heavy clunky item to bring back from a shopping trip, its status as a more casual purchasing decision (coupled with the lower margins it offers online retailers) means that it has under-traded online generally.

 

"In markets around the world one of the legacies of Covid-19 will be a consumer now proficient in buying their refreshment on the web."

“In markets around the world one of the legacies of Covid-19 will be a consumer now proficient in buying their refreshment on the web.”

Indeed e-commerce alcohol sales have always tended to be more suited to premium product purchases.

But in the current Covid-19 environment beer demand online has escalated according to a new report from IWSR.

Prior to the pandemic most online beer sales stemmed from omnichannel retailers, normally part of a consumer’s weekly grocery shop. As countries locked down, however, demand via omnichannel retailers exploded. There was suddenly simply not enough capacity to meet the surge in general orders.

Retailers opted to ration and prioritise the delivery slots and a mass of exiled consumers looked to seek out their beer from other online channels, states IWSR, pointing out that, “In markets around the world one of the legacies of Covid-19 will be a consumer now proficient in buying their refreshment on the web.

“The Direct To Consumer channel in particular has expanded briskly this year in the beer sector. It has not just kept many smaller brewers trading during the pandemic but in the longer term it will provide immunity to any sudden upheaval in the future as well.”

 

Different strategies

Investment in a website and online shop for small- and medium-sized brewers provides several key advantages – control of the conversation and brand image with the consumer, an ability to market the entire brand range with a wider variety of case sizes and – crucially – access to customer data that can help drive product innovation and sales strategy, believes IWSR.

“As brewers look to refine their online presence, it’s important to remember that strategies will differ based on the channel of distribution,” notes IWSR’s Head of Beer Richard Corbett, “There are five main channels for trading beer online to consumers: omnichannel retailers which incorporate the big grocers; marketplaces which are dominated by Amazon (although not in the US); on-demand sites; specialist online players and Direct To Consumer sites. One size does not fit all and brewers need to deploy brands in their portfolio in different ways,” he adds.

In many countries most online beer sales stem from the omnichannel retailers. The online shelves generally replicate those of the grocery stores and that means the big volume brands owned by the major players have the most visibility.

Competition is intense and with only some exceptions this channel is a closed shop for many small-scale producers. In the future it seems likely that more brewers will share their expertise with these omnichannel retailers to work together to plot the consumer journey to best present their beers. Today there’s still a limited canvas for players to sell their beers in this channel.

 

Amazon into beer?

IWSR reports that Amazon provides more of a canvas to storytell and generally any third-party player can sell through the marketplace. Historically Amazon tends to have a spirits brand bias but as the company increasingly encroaches into the grocer’s space through Amazon Fresh and more recently Ultra Fresh, expectations are that more beer can be sold.

The launch of Amazon’s own wine range, Compass Road and its gin brand, Tovess, could be a precursor to selling its own beer as well but it will be challenging for Amazon to build a beer brand alone and it will likely continue to be reliant on partner brands.

Amazon’s accelerating speed of delivery is also likely to impact on some operators who’re alcohol specific in the on-demand channel, reports the market analyst. With the exception perhaps of US on-demand site Drizly, brands sold in this channel again tend to be the well-known pillar brands of the majors. Drinkers wanting beer quickly are not likely to browse much before they buy and will opt for what they know.

 

Specialist sites

Beer drinkers tend to browse on the specialist online sites. Although not as widespread as specialist online wines and spirits sites, they’re influential for brewers. These sites are where the beer purists and aficionados tend to spend their time and will provide pointers to future trends in the market. It’s important to be represented in this channel and specialist retailers are also a valuable tool for data collection, believes IWSR.

Both Heineken (Beer Wulf) and AB InBev (Beer Hawk) have invested in specialist online sites, both for intelligence gathering and to promote their brands to the influencers that use the sites.

 

DTC

Trading beers Direct To Consumer means that brand owners don’t have to compete for shelf space, negotiate with retailers or give up (some) control over the conversation with the consumer. Setting up an online shop is the easy part however and success in driving traffic to the site will determine how fruitful the investment will be.

Well-placed adverts and social media need to be harnessed to ensure consumers can easily navigate to the shop and e-mail databases need to be build up to interact and inform your audience. The transaction needs to be straightforward to encourage consumers to buy and of course to come back.

“A DTC shop is the very minimal online presence that brewers need to have,” advises Richard Corbett, “In the post Covid-19 era many believe that online shopping is now five years ahead of where it was expected to be. Where possible, brewers need to cultivate as-diverse-a range of availability as is achievable in the digital space.”

In markets around the world one of the legacies of Covid-19 will be a consumer now proficient in buying beverage alcohol online.

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