Last year, the IWSR recommended brand owners ensure they have a clearly formulated Amazon strategy when planning for their distribution channel investments. As published in last year’s Global Ecommerce Strategic Study, IWSR analysts remarked that Amazon was rapidly expanding its own white label ranges, and drinks brand owners needed to be aware that their brand sales data on Amazon could also be helping to build their own competition.
We saw this come to fruition in October 2019, with Amazon announcing the launch of its own-label spirits brand, Tovess, which Amazon describes as being “dedicated to curating expertly distilled spirits from around the world, crafted to the highest quality standards.” The online retailer introduced the 41.5% abv Tovess Gin in the UK, with plans to extend the drinks range further “over the course of time.”
Over the past few years, Amazon has made increasingly larger gains in the spirits segment. The retailer’s ability to glean and analyse vast quantities of relevant customer data from its platform gives it a powerful product development tool. We’ve seen this in its foray in the whisky segment, for example, where it secured first release rights to the Johnnie Walker/Game of Thrones collaborative White Walker. The launch of Bowmore 19 year old marked the first time a spirit was bottled exclusively by Amazon as well.
The company’s push into beverage alcohol is reflected in very significant market shares in several countries – especially where local retailers have been slow to move into ecommerce. Premium products, such as spirits and wines, are a core focus for Amazon, who have dedicated category management teams that are staffed by ex-retailers.
The scale of Amazon’s ambitions is worth close examination. Their stated aim is “to be Earth’s most customer-centric company”, and their huge reserves of cash, and ability to raise capital, make them a formidable presence in the grocery arena. IWSR’s Chief Operations Officer of Research, Emily Neill, remarks, “Amazon’s launch of Tovess marks a new disruptive landscape for ecommerce, but most brand producers should already be aware of the risks. Brand owners now need to find their own ways of reaching their customers so that they are not solely dependent on Amazon as a distribution platform or as a source of customer data. Direct to Consumer channels provide opportunity here.”
Amazon’s choice to push gin as its first spirits product does not come as a surprise. IWSR data shows that of the spirits categories, gin overindexes in ecommerce. The UK market has been experiencing a gin renaissance in the past few years as well, giving Amazon a booming market to tap into.
For now, the real threat really only comes to producers’ ecommerce sales. But everyone in the industry will be keeping an eye on the retailing giant. Although Amazon doesn’t currently present a risk to the on-premise or traditional off-premise, a hypothetical Tovess expansion into bricks and mortar stores could create a very different beverage alcohol market landscape in the future.
Amazon, the ecommerce landscape for beverage alcohol, and insights into how drinks producers can best plan their ecommerce strategies, are explored in more detail in the IWSR’s 2019 version of the Global Ecommerce Strategic Study. Click here to learn more about the IWSR’s 2019 Global Ecommerce Strategic Study.
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