Ecommerce alcohol sales have always tended to be more suited to premium product purchases. While beer lends itself well to the convenience of online shopping, given it is a heavy and 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 generally under-traded online. In the Covid-19 environment that we now live in, though, beer demand online has escalated.
Prior to Covid-19, most online sales of beer stemmed from omnichannel retailers, normally as part of a consumer’s weekly grocery shop. As countries locked down, demand in these omnichannel retailers exploded and there was simply not enough capacity to meet the surge in 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.
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 (DTC) 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.
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.
“As brewers look to refine their online presence, it is important to remember that strategies will differ based on the channel of distribution,” notes Richard Corbett, IWSR’s Head of Beer. “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 (DTC). One size does not fit all, and brewers need to deploy brands in their portfolio in different ways.” Corbett adds.
In many countries, most sales of beer online 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 we will see more brewers sharing their expertise with these omnichannel retailers to work together to plot the consumer journey to best present their beers. Today there is still a limited canvas for players to sell their beers in this channel.
Amazon provides more of a canvas to story tell 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 grocers space through Amazon Fresh, and more recently Ultra Fresh, we can expect more beer to be sold. The launch of Amazon’s own wine range, Compass Road, and their gin brand, Tovess, could be a precursor to selling their own beer as well, but it will be challenging for Amazon to build a beer brand alone, and they will likely continue to be reliant on partner brands.
Amazon’s accelerating speed of delivery is also likely to impact on some operators who are alcohol specific in the on demand channel. 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.
It is on the specialist online sites that beer drinkers tend to browse. Although not as widespread as specialist online wines and spirits sites, they are influential for brewers. These sites are where the beer purists and aficionados tend to spend their time and will provide the pointers to the future trends in the market. It is important to be represented in this channel and specialist retailers are also a valuable tool for data collection. Both Heineken (Beer Wulf) and AB InBev (Beer Hawk) have invested in specialist online sites, both for intelligence gathering as well as to promote their brands to the influencers that use the sites.
Trading beers direct to consumers 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 needs to be harnessed to ensure consumers can easily navigate to the shop and email 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 Direct to Consumer shop is the very minimal online presence that brewers need to have. 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,” advises Corbett.
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