White Paper

How Alcohol Brands

Can Tap the eCommerce
Opportunity
Selling alcohol online represents a huge opportunity,
one that’s barely been tapped to date.

By Keith Anderson
SVP, Strategy & Insights at Profitero

Contributors
Danny Brager Sheldon Kail Nick Rellas
SVP, Beverage Alcohol Practice, Director of Customer Solutions, Co-Founder and CEO,
Nielsen MillerCoors Drizly.com
HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

In the US alone, consumers spend more than USD230 billion annually on alcoholic
beverages, according to the US Department of Commerce. While today just a tiny
Contents portion of alcohol sales is conducted online, the category is poised for spirited
• Size of the Prize: Big growth in the coming years.
and Getting Bigger
Plenty of factors point to increasing demand for alcohol sales online. Perhaps the
• Making a Case for
biggest impetus is the ongoing shift in retail sales from brick-and-mortar to digital.
Alcohol Online
A growing roster of stores with click-and-collect programs and the emergence of
• So Who’s Buying mobile apps that offer instant gratification through on-demand delivery are certain
Alcohol Online? to drive more alcohol sales online.

• Unique Hurdles Can

Cause a Hangover “For the US, alcohol is a much less developed ‘online’ category
compared to many others, but one that’s growing fast and certainly
• Navigating US Online
Alcohol Models
has the interest of the industry, and a growing number of consumers.
Alcohol is not as easy to do online as other categories, especially in
• Keeping Tabs on Online
the US, given the much more significant regulations that govern the
Alcohol Around the Globe PAG E
sale of alcohol as compared to other categories.”
• Last Call: 10 Ways Alcohol Danny Brager, SVP, Beverage Alcohol Practice at Nielsen
01
Brands Can Play Online
An expanding population of drinking-age consumers provides another boon. It’s
hard to overlook the coming of age of 75+ million millennials – and that’s only in
the US. The youngest millennials turned 21 in 2015. These tech-savvy consumers
Inside You’ll Learn expect to buy beer, wine and spirits over the Internet or with the tap of a smartphone
just as they do any other product.
• Key Factors Driving Online
Sales Growth
In contrast to most other consumer goods, however, some unique challenges are
• Unique Hurdles Facing inherent to the alcohol category. Age-gating, for example, is a huge obstacle to
eCommerce Alcohol Sales selling alcohol online. And in the US, a legally mandated tiered distribution system
and laws restricting delivery of alcohol across state lines present barriers for a
• Online Delivery Models in
category ready to soar online.
The US and Globally

• 10 Ways Alcohol Brands Nonetheless, alcohol sales growth via the web looks inevitable. eCommerce is
Can Play Online making an impact on just about every industry imaginable, and alcohol looks set to
be the next sector to be disrupted by the continued shift to digital.

As consumer demand increases, online models evolve and efforts to sell alcohol
online expand, alcohol brands that address and meet changing consumer needs,
wants & shopping patterns will be best positioned to tap the online
alcohol opportunity.
HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Size of the Prize: Big Making a Case for

and Getting Bigger Alcohol Online
Little wonder everyone’s scrambling to figure out According to Nielsen’s Global Connected Commerce
how to sell alcohol online. The size of the prize study from September 2016 – which surveyed more
is significant. Some industry observers say it than 30,000 respondents with online access in 63
could explode to anywhere from USD7-15 billion in the countries – the average percentage of consumers that bought
next few years. alcohol online across all countries surveyed was just 8%,
making it one of the least-shopped categories online.
MillerCoors estimates that about 5% of the US beer industry
could be going through online channels by 2020, according to Nielsen’s SVP Beverage Alcohol Practice Danny Brager said,
Sheldon Kail, Director Customer Solutions. “But it could be a “When you look across 18 different categories, like fashion,
lot more than that too,” said Kail. “It all depends on how fast travel, furniture, beauty, packaged groceries, fresh groceries,
things happen, that is, retailer online capability roll-out and and others, beverage/alcohol online penetration is at the
consumer adoption.” bottom. The data says that alcohol – in general globally and
specifically in the US – is a relatively immature category online
MillerCoors points to data from the UK that shows as many as relative to other categories.
34% of beer consumers routinely buy beer online compared
with about 4% in the US. “The UK is much more developed “Additionally, of those that buy alcohol online in the US, the data
online than we are in the States,” said Kail. “That’s another shows that, on average, 17% of these shoppers say they buy
reason why we think it’s going to grow here. We just started. alcohol more often online than in stores, while a significantly
The UK has been doing it for years.” larger 45% say they buy it more often in stores than online.
The remaining 38% say they buy alcohol almost equally in PAG E
Indeed, Europe and the UK are much further along the life- stores and online.” 02
cycle than the US – not just as it pertains to buying alcohol
online, but online grocery shopping in general. Some of What it means: Plenty of runway remains to grow online
Europe’s largest retailers, including Metro (Germany), Tesco alcohol sales in the years ahead.
(UK) and Sainsbury’s (UK), are recognized as early adopters of
the click-and-collect grocery model, which offers curbside or Factors that will drive future online alcohol sales include:
drive-through order pickup at the store or another designated
location. In contrast, click-and-collect is just now beginning to Continued Migration From In-Store to Online Shopping
take root in America. Consumers are becoming increasingly comfortable with
shopping online and using the Internet as their “go-to”
shopping source not only to buy products, but also conduct
research, check prices, read reviews and more. A fifth of
US shoppers bought groceries online last year, up from
16% in 2015, according to Nielsen data. These numbers will
only get bigger. Online grocery is gaining traction due in
part to the expansion of retailer click-and-collect and home
delivery services, not to mention Amazon’s growing grocery
penetration. Nielsen data shows that more than half of online
grocery shoppers in the US use Amazon’s Prime delivery
service for groceries, while just 22% use traditional grocery’s
burgeoning offers, like Kroger ClickList and Walmart’s Grocery
Pickup programs.
(Continued on page 03)

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Emergence of Online Alcohol Models

A host of online alcohol platforms –
e.g., Drizly (2012 launch) and Minibar (2014 launch) in the
US – have come on board in recent years, transforming the
way consumers can shop for and order alcohol. For example,
Drizly operates an alcohol marketplace allowing consumers to
browse the inventory of multiple local stores simultaneously
and then select the best mix of product, price and availability
that suits their needs, often receiving their order within the
hour. Drizly currently operates in more than 40 markets
across the US and Canada.

Online Attributes that Favor Alcohol-Buying

Attributes of online shopping that bode well for alcohol
include the convenience component, ease of click-and-collect
pickup and home delivery models, price competition between
retailers operating in marketplaces, the ability to compare
products, and consumer access to an “endless aisle” of *Note: Base = consumers who buy
online; ** Represents the average
products, particularly wine. across 60 countries. Source: Nielsen
Global Connected Commerce study.

Finding “Challenger” Brands Online

The growth of “challenger” brands, such as craft beers,
coming online at breakneck speed, is propelling online alcohol
sales. Craft beers – which often have a larger-than-life digital PAG E
presence and offer a unique, experiential component sought 03
by millennials and other well-heeled consumers – have beer
aficionados around the globe scouring the web in search of
the latest specialty brew.

Millions of Millennials Can Now Drink

In 2015, the last of the millennials turned 21, the legal drinking
age in the US. And millennials have huge spending power to
tap, an estimated USD3.8 trillion, according to Pew Internet/
Javelin research. This tech-savvy generation has grown up
with computers, the Internet, smartphones and mobile apps –
and will want to buy alcohol online just as they do many
other products.

Event-Driven Online Alcohol Sales

Mixing big events, like the Super Bowl, World Cup or March
Madness, with alcohol isn’t new. But more recently, a host of
drink-worthy “events” - driven in large part by television and
social media sharing - have cropped up: red-carpet events,
awards shows, even The Bachelor viewing parties. In fact, a
collection of wines inspired by the reality TV show launched
last December and can be purchased online through Amazon
Wine, BachelorWines.com and other sites.

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

So Who’s Buying Alcohol “The online alcohol consumer is in line

Online? with what we would have expected:
younger, higher income, more urban.
Drizly said the typical user for its app and website
Higher income might relate to a
service is “urban-based with an average age in the
number of factors – online prices may
low 30’s, they skew slightly male (~60%), two-thirds
often be higher, some consumers go
are millennials, they drink ~40% wine and are comfortable
online to purchase as gifts, and in the case at least for
using technology to shop outside of the physical retailer.”
wine, while the average price of a bottle of wine bought
in-store is about US10, if I am buying from say a Wine.
Nick Rellas, Co-Founder and CEO, went on to explain,
com, the average price for a bottle is in the US30 range.
“However, as we continue to build up our marketplace shopping
And if I am buying from a wine club, I am typically buying
experience, we are broadening our view of who that target
products that are at a significantly higher price point than
customer is. As an example, the consumer who wants a large
the typical assortment found in a grocery store.”
whiskey selection that he/she can pick up on their walk home
from work is very different from the suburban parent who
Danny Brager
wants to schedule a wine delivery for dinner after the
SVP, Beverage Alcohol Practice, Nielsen
kids go to bed.”

Kail of MillerCoors, remarking on who buys alcohol online,

said it really plays across all demographics because all
demographics are interested in grocery shopping online. “But
on average, the online beer shopper is younger, more in that
35-45 age range, they also tend to have more income than
PAG E
the average beer shopper. And when they shop online they
tend to buy a lot more, almost double what they’d buy in the 04
store,” Kail said.

Source: Nielsen study, online survey conducted by The Harris Poll, Nov 9-11, 2016 among 2,060 adults aged 21+

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Unique Hurdles Can Cause “Drizly has clearly demonstrated that

a Hangover in the alcohol industry, there is room
for technology and innovation within
Selling and delivering alcohol through the web can
the current framework of the three-tier
be a regulatory nightmare – at least in the US.
distribution system. In effect, Drizly is
Some antiquated laws (dating back to the 1933
an online portal to find products that
repeal of Prohibition) are prohibitive, presenting a barrier
are sold and delivered by retailers, distributed through
to online alcohol sales.
the three tiers, and experienced by the consumers in a
marketplace. With Drizly’s solution, retailers can engage
Coupled with age-gating and cold chain-related issues, there
in eCommerce with consumers, and the three-tier system
are a sobering number of obstacles to deal with before alcohol
does not prevent them from doing so.
brands, retailers and online purveyors can sell alcohol online.
“Consumers in some markets are even starting to use
Three-Tier Distribution System
Drizly to access information about inventories of products
America’s three-tiered distribution system originated when
that may be less popular or not routinely in stock at their
the US Constitution’s 21st Amendment repealing Prohibition
local retailer. Organizing and surfacing such information
became law. The three-tier system requires a middleman (i.e.,
for consumers is more efficient and likely more accurate
distributor or wholesaler) for alcohol distribution. This means
if the information is centralized at the wholesale tier rather
that alcohol producers can’t sell directly to retailers (including
than at individual suppliers. The three-tier framework
liquor stores, bars and restaurants) nor can they pay them to
makes this efficiency in information sharing and search
market or promote their products in any way, e.g., by paying
for eCommerce experiences possible.”
for shelf space or furnishing coolers. Alcohol brands also can’t
sell directly to consumers, only state licensed retailers can.
Nick Rellas, PAG E
Consequently, tiered distribution prevents alcohol brands from
operating their own eCommerce sites.
Co-Founder & CEO, Drizly 05
In an increasingly global marketplace, some international
companies have voiced concerns that the US tiered system is
not only inefficient, but violates free trade agreements – that
it’s easier for American brands to penetrate foreign markets

(Continued on page 06)

Source: Nielsen study, online survey conducted by The Harris Poll, Nov 9-11, 2016 among 2,060 adults aged 21+

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

than it is for foreign brands to penetrate the US. The tiered their online customers. For example, Amazon Wine states:
system also makes it impossible for international alcohol “Adult Signature Required: You must be at least 21 years of
brands to sell direct-to-consumers online. age to purchase wine. Adult signature is required on delivery.”
The same holds true for any home delivery of alcohol. Law
Shipping Restrictions and Regulations requires that an adult of legal drinking age be present to sign
As part of the 21st Amendment, individual states were for the product upon receipt.
given the authority to regulate the production, importation,
distribution, sale and consumption of alcohol beverages within Age-gating also presents problems for online grocery click-
their own borders. Individual state laws still hold today, which and-collect models. Customers can’t pay for beer or liquor
mean alcohol companies must navigate at least 50 different before an ID is verified. So, instead appropriate steps must
regulatory frameworks in the US. be put in place to verify age at the drive-through or curbside.
Age-gating also limits or prohibits use of alternative delivery
Retailers, bars and restaurants that sell alcohol must be options like off-site lockers (e.g., Amazon Lockers). Drizly has
licensed by the state and obey all state (and sometimes, worked to solve this challenge by developing a proprietary
individual municipality) laws regarding the distribution, sale mobile ID verification system that allows drivers to verify age
and shipping of alcoholic beverages. State-by-state laws at the door just as it would be verified at the checkout counter.
extend to selling alcohol online too. Some states restrict the
amount and type of alcohol that a consumer can have shipped Temperature Control
to their state, posing a barrier to online alcohol sales. Temperature – i.e., keeping beer ice cold – is of particular
concern for instant gratification models. Keeping wine “fresh”
Age-Gating and at the right temperature is also important. Amazon Wine
Unlike other CPG products, age-gating is an issue with actually uses the following statement on its site: “Weather
selling alcohol online. The same age restrictions for buying Related Delays: The seller may delay shipment if the
alcohol in stores (e.g., 21 years in the US) also apply online. temperature at the shipping or delivery address is not between PAG E
Consequently, sellers must take steps to verify the age of 45°F and 80°F. 06

Navigating US Online “Often online models playing in this

Alcohol Models space differ based on the occasion
that people are buying for. For
Three fundamental ways to shop for alcohol online
instance, shoppers might go to
have emerged in the US, each with its own set
one site for gift-giving occasions –
of pros and cons that can be compared on a few
birthdays, anniversaries, Christmas/
simple, yet critically important, shopping attributes: selection,
New Years – where delivery in a
price and also convenience.
couple of days works, and/or they’re searching for
something special. But there are other occasions where
National Model
consumers might not be seeking anything really unique,
Where consumers order from a national player, like Wine.com
but want their alcohol ‘right now.’ This is where a Minibar
or Amazon Wine. Conceivably, anyone in the country can buy
or Drizly works because it’s an immediate consumption
wine online this way as regulated by states that allow cross-
occasion that might not have been planned for, or not
state-line shipping.
enough alcohol was bought for a certain occasion like
the Super Bowl, where the consumer can’t wait for two or
These national models win on selection. The endless aisle
three days. And for some consumers being able to order
wine selection makes a Wine.com or Amazon Wine an
online as part of a larger grocery shopping trip might be
interesting option because they have infinitely more items
convenient. So the online model needs to be sensitive to
than any single store can carry.
the consumer, and their drinking occasion(s).”

Nielsen’s Brager said, “Having no boundaries or walls online Danny Brager

presents an opportunity for consumers to shop from a much SVP Beverage Alcohol Practice, Nielsen
broader product assortment than they would find in a typical

(Continued on page 07)

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

store. For example, I might find 14,000 wine choices on a

single day at Wine.com, or several thousand on Amazon.
com in contrast to an average liquor store that might make
available 1,000 wine items. Shopping online is great for the
variety seeker.”

Key drawbacks, however, of the national model are lack of

convenience and immediate consumption. Also, it is primarily
restricted to wine and not available in all states. If you don’t
mind waiting, this option is great because delivery might take
a few days. Source: Drizly.com

Marketplace Model
Where consumers have the choice between on-demand
delivery, shipping, in-store pickup, and the option to buy
from multiple retailers. A marketplace’s goals are to offer Drizly offers a marketplace
consumers the widest selection of products available at for consumers to learn about
competing prices.
products and ultimately select
Retailers fulfilling product compete on price, selection where to buy based on speed,
and service to win consumer business. Additionally, quality and price, in some cases
marketplaces give consumers the ability to shop for
products that aren’t currently in their local liquor stores but choosing between a faster
are scheduled for delivery the next day. If a product is in delivery and a more affordable PAG E
the distributor’s warehouse, customers are able to buy that
price that would be shipped 07
product from retailers.
the following day.
Drizly is one of the few true marketplace providers today,
giving the customer the choice between a more immediate
delivery after selecting among retail options in the area and
alternative methods such as in-store pickup or next-day
delivery for greater selection. As is true about the national and
on-demand models, the marketplace model is currently not
available in every state.

Online Grocery Model

Where consumers use an online grocer like Amazon Fresh,
FreshDirect, Peapod or any one of a number of retailer-specific
models (e.g., Kroger ClickList, Walmart’s Grocery Pickup, and
H-E-B Curbside to name a few) cropping up across the nation.

The online grocery model outweighs the national model on the

convenience factor. If Amazon Fresh or Peapod carry alcohol
in your area, they’ll deliver it tonight so you can have a bottle
of wine or beer by dinner time. A key drawback, however, is the
selection, which usually isn’t any bigger than your local grocer
or liquor store.
(Continued on page 08)

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 HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Local On-Demand Model

Where consumers use online marketplace platforms or apps “Most of the alcohol being done online
– like Minibar, Thirstie and a host of other newcomers – that right now in the US is through third-
partner with local liquor stores for the legal sale and delivery party delivery apps, like Drizly, Saucey,
of beer, wine and spirits on a market-by-market basis. At Minibar and Klink. What they do is act
present, it’s these on-demand apps that seem to be fueling the as a go-between for the consumer
online alcohol movement in the US. and partnering retailer of that app.
Consumers go on one of these websites
The reason the on-demand players are so appealing is that or apps and see a menu of beer, wine and liquor items.
they’re the closest thing to instant gratification among the They place an order and it’s funneled through to the
available online alcohol options. Ordering from Amazon Wine partnering retailer, usually a liquor store, for fulfillment.
or Wine.com will take a couple of days, so it’s not an option And that store will deliver it in about an hour.
for “what am I drinking with dinner tonight?” If you’re going to
“Our expectation though is that most of the growth in
order from FreshDirect or Peapod for dinner tonight, you might
alcohol online [in the US] is going to come from large-
be able to add a 6-pack of beer to tonight’s delivery.
format retailers. Grocery and mass are investing heavily
in online in general. The primary idea is to capture a
The on-demand alcohol platform unquestionably wins on
grocery stock-up and obviously alcohol and beer would
convenience. If you’re running low on alcohol at a party, these
be included in that stock-up trip. So as [retailers] expand
services enable you to restock within an hour.
the number of stores and the geography that has online
grocery ordering capabilities, beer’s going to grow
But you’ll pay for it. On-demand services aren’t cheap. Many
with that. We also think that pure play retailers such as
on-demand providers have minimum purchase requirements
Amazon, FreshDirect and Peapod will drive a lot of
and delivery fees. Another concession: the selection is not
online beer growth.”
any bigger than your local liquor store. In fact, the selection PAG E
sometimes is your local liquor store. Sheldon Kail, 08
Director Customer Solutions, MillerCoors
Don’t expect Amazon to sit idly on the sidelines of the on-
demand space. Amazon recently announced it is rolling out
free beer and wine 2-hour delivery and $7.99 1-hour delivery
for Prime Now members, starting in Cincinnati and
Columbus, Ohio.

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Selected U.S. On-Demand Alcohol Delivery Platforms

Company Launch About / Attributes

-“Original” alcohol on-demand platform.
-Provides a marketplace of selection across retailers.
Drizly 2012 -Offers on-demand, in-store pickup, and intrastate shipping.
-Serves more than 40 markets across US and Canada.
-https://drizly.com/

-Miami, Washington DC, Dallas, Ann Arbor (UofM).

Klink 2013 -Delivery fee of $3.87 or less; no fee in Dallas, $15 minimum.
-https://klinkdelivery.com/

-Wine, beer & spirits delivered at the push of a button.

Saucey 2013 -Serving LA, SF, SD, SAC, and CHI.
-https://saucey.com/

-Originated in Austin, TX
-Sends order confirmation and follow-up “on its way” by text.
BrewDrop 2014 -Acquired by Delivery.com in 2016, which offers online alcohol
delivery in 14 cities, including NYC, LA, Chic, San Fran and DC.

-Partners with local liquor stores.

Minibar 2014 -33 markets and growing with 30-60 minute delivery.
-https://minibardelivery.com/

-Partners with 100s of licensed retail partners in 10 markets.

PAG E

09
-Offers on-demand delivery in less than an hour.
Thirstie 2014 -Also ships in US and Canada using same retail partners.
-https://thirstie.com/

-15 cities; 200+ merchants; 15,000+ products.

-Markets: NYC, LA, San Fran, San Diego, Santa Clara, Miami, Buffalo,
Swill 2014 Washington DC, Chicago, Las Vegas, Dallas, New Jersey.
-https://getswill.com/

-Tagline: “Your personal shopping assistant for liquor”

-Sends text 1x/week with drink recommendation;
DrinkEasy 2015 reply “Hell Yes!” to auto-order.
-Ships to most US states in 3-5 days.
-https://drinkeasy.co/

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HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Wine and Alcoholic Beverages: Online Shoppers* Who

Say They Shop More Often Online Or In-Store

PAG E

10

*NOTE: Base = Consumers who buy online

Source: Nielsen Global Connected Commerce study

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Keeping Tabs on Online Alcohol

Around The Globe
Fewer laws surrounding the distribution of alcohol, EeBria: The “Etsy Of Alcohol”
along with less restrictive age regulations, translate Launched in 2013, startup EeBria initially began as a direct-
to a higher level of online alcohol activity globally to-consumer digital platform, selling craft beers from small
than what the US has so far witnessed. brewers to the consumer. It since has launched EeBria Trade,
a wholesaler selling small craft beers to pubs throughout the
And unlike in the US where most online grocery models are UK. EeBria is on record as saying it plans to expand to other
in their infancy, click-and-collect is a well-established and countries to become a world-wide marketplace.
accepted form of grocery shopping across Europe and the
UK. The most popular way to buy alcohol online is via big Deliveroo/Heineken Tie-Up
supermarkets as part of the consumer’s main grocery shop. Heineken provides a good example of a leading beer brand
going direct-to-consumer by teaming with UK meal delivery
Pernod Ricard, for example, works with Amazon and leading service Deliveroo. Heineken created a new brand Brew House
grocers Asda and Tesco to push its digital sales agenda. for the Deliveroo app, which enables consumers to buy drinks
Some remarks made during the company’s 2015/2016 at the same time they place meal orders. The Deliveroo/
half-year results roundtable discussion by CEO Alexandre Heineken partnership could very well portend a delivery model
Ricard, as published by British trade publication Marketing to come in other markets.
Week, point to alcohol’s eCommerce advancements in the
UK and the potential for continued global growth. Ricard said Discounters Launch Online Wine Services
that online accounts for 5% of company sales in the UK, but Discounter Lidl has a successful online wine service in
just 2% globally, and that eCommerce is the brand’s fastest Germany and is now expanding into other markets. Last year PAG E
growing channel, growing at a 20% pace. it launched online wine sales in Belgium. Don’t count out a 11
Lidl wine offer in the UK, where Lidl brick-and-mortar stores
Other alcohol brands around the globe likely are experiencing have quickly ramped up in recent years. Meanwhile, discount
similar kinds of results. In fact, beer ranks among the top rival Aldi launched its online Wine Cellar offer in the UK in 2016,
15 online CPG categories in France, according to data from letting shoppers mix and match from more than a hundred
Nielsen’s January 2017 Global Connected Commerce different wines.
report. It’s a high-growth category too. Online beer sales in
France tallied US102 million between September 2015 and Pernod Ricard Trials IoT
August 2016, representing a 27.6% increase over the Pernod Ricard is testing a connected cocktail maker dubbed
previous 12 months. Opn in Paris and several other European markets in a quest
to increase its share of the at-home drinking market. Opn
Some global initiatives that should be on everyone’s includes a tray of cartridges filled with Pernod Ricard brands,
radar screen: suggests cocktails based on available alcohol amounts
and makes personalized product recommendations. Trials
Amazon and BrewDog reportedly have featured at-home alcohol delivery by a third-
Amazon UK is becoming an increasingly important venue party service provider in less than an hour. The potential to
for craft beer. Profitero’s Amazon FastMovers report shows apply IoT technology to bolster online alcohol sales could
that BrewDog owned nine products on Amazon UK’s Top 100 prove quite beneficial to Pernod Ricard (as well as other
Beer Best Sellers list in January 2017. What’s more, BrewDog alcohol brands). According to Profitero’s FastMovers report
dominated competitive labels by a fairly wide margin: five for Beer, Wine and Spirits on Amazon France, Pernod Ricard
items each for fellow craft brew Beer Hawk and big brands brands consistently ranked highly in the category’s Top 100
Heineken and Stella Artois made Amazon UK’s Best sellers list. Best Sellers list between July and Nov 2016.
US beer brands should take heed with BrewDog establishing
(Continued on page 12)
a US beachhead in Columbus, OH in 2016. The craft beer
brand’s success selling through Amazon UK is one to watch,
especially if – or more likely when – the US market becomes
more open to peddling alcohol online.

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Amazon Japan, a Popular Choice Best-Selling Beer Brands on Amazon UK

Amazon Japan started selling alcohol online in 2014.
Previously, it offered alcohol only through individual Jan 2017 Jan 2016
merchandisers. In addition to thousands of variations of sake Brand No. of Products Brand No. of Products
and shochu, Amazon offers beer, wine and spirits as well. Brewdog 9 Brewdog 6
Amazon is known to have the largest online booze selection in Beer Hawk 5 Badger 5
Japan – all told about 150,000 different alcoholic beverages Heineken 5 BrewDog 5
are available. Of note in Profitero’s January 2017 Amazon Stella Artois 5 Beer Hawk 4
Japan FastMovers report for Beer, Wine & Spirits, products by Fosters 4 Carlsberg 4
locally based Suntory dominate the New Arrivals and Movers Guinness 4 Mad About 4
Up list. But interestingly, the #1 new arrival and top mover is
US import Jack Daniel’s Tennessee Honey whiskey. Likely
reasons: It’s Prime eligible, has lots of third-party sellers, and a UK Beer - Amazon Best Selling Product Benchmarks
substantial number of product reviews and images.
Jan 2016 Jan 2016
China, a Hotbed of Online Activity Avg. Tenure (days) 19 18
Selling alcohol online in China is big and getting bigger.
No. of New Arrivals 34 32
According to Nielsen’s survey, 55% of drinkers in China say
Avg. Star Rating 4.6 4.6
they purchase alcohol online. Jiuxian.com, the country’s
largest alcohol-only eCommerce player, has undergone Avg. # of Reviews 16 18
numerous rounds of equity financing in recent years to fund Avg. Price (GBP) 15.04 17.59
explosive expansion. Trade journal The Drinks Business
% Prime Pantry Eligible 43% 34%
reports that online retailer, Tmall.com, tripled its online alcohol
sales in China between 2013 and 2016. PAG E

12
But it’s some online wine figures that are most staggering.
The Drinks Business reports that about half of China’s wine Amazon Japan BWS - Top 5 New Arrivals, Jan 2017
sales are now done online. Internet Retailer has reported Prime No. of 3P Avg. Star Avg. # of Avg. # of

that sales of imported wines on Amazon China grew 550% in Brand Eligible Sellers Rating Reviews Images

2015. And just last fall, leading online retailer Alibaba inked a Jack Daniel’s Tennessee Honey 700 mL Yes 29 4.3 58 8

deal with Italy’s Prime Minister that could raise the share of The Premium Malt’s Master’s Dream 305 mL 0 5.0 1 3
x4 bottles set w/ Valentine Chocolates
imported Italian wines from 6% of Alibaba’s wine sales to 60%
Suntory Kinmugi 350 mL x 6 cans 0 4.2 146 1
in the coming years.
Suntory Whiskey Chita 700 mL Yes 40 4.0 81 5

Asahishuzou Dassai Junmai Yes 15 4.1 61 2

Daiginjo “50” Sake 720 mL

Source: Profitero Amazon FastMovers

www.profitero.com
HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

Last Call: 10 Ways Alcohol “Just like with any category, we’ve got to
Brands Can Play Online ensure we get our online brand content
right. We’ve got to make sure we’re well
Consumer demand for buying alcohol online is
represented on the site, that our items
clearly on a growth curve. More retailers will explore,
are searchable and that we receive
experiment with and expand online alcohol offers.
good reviews. We know that online beer
And technology platforms and services will continue to
shoppers are looking for inspirational content for beer
emerge and evolve at a rapid pace.
before they shop online and in-store.”

The key question becomes: What can alcohol brands do to Sheldon Kail
influence shopper behavior and engage with online retailers Director Customer Solutions, MillerCoors
and technology platforms?

1. Implement a Digital Branding Strategy 4. Support Traditional Retailers’ Online Efforts

Follow the path taken by many a CPG brand whose products As grocers like Kroger, Meijer, Walmart and more build their
have already moved online. It’s imperative that alcohol brands online offers, supplier support in helping them move up the
take control of their product content strategy. Topping this learning curve will be crucial. But keep in mind that there’s a
list is ensuring consistent, accurate and detailed product bit more at stake when working within the US liquor industry’s
content across eCommerce channels. Breweries, wineries tiered distribution laws. “MillerCoors works closely with
and distilleries must put their best foot forward to optimize traditional retailers to provide solutions that drive online beer
the appearance of their products on eCommerce sites like adoption. We not only can provide basic images, but we can
Amazon, grocery retail sites, on-demand mobile apps, as well provide video content and enriched media to elevate the
as their own websites. credibility of these retailers as a destination for beer both
PAG E
online and in-store,” said Kail.
2. Supply Stellar Online Content 13
Whether it’s sharing the story behind the bottle, drink recipes 5. Have an Amazon Strategy
or party planning tips, online consumers want relevant content Half of all CPG sales growth between now and 2018 will come
at their fingertips. Providing stellar content is where alcohol from eCommerce, with Amazon driving the majority of online
brands can excel. A prime example is Thirstie, which initially growth. Having an Amazon strategy must be at the center of
teamed with VEEV Spirits to launch its Branded Partnership every supplier’s eCommerce strategy. Amazon is not only the
Program in 2015. As stated on its website: “We provide brands biggest US online store, it’s also where shoppers of traditional
with a direct connection to our consumers through custom stores go to compare products, deals and prices and read
advertising programs. We partner with you to create engaging, reviews. Amazon Wine is well-regarded and recognized as a
integrated, multi-platform campaigns. Our editorial platform purveyor of vast wine collections. Amazon already delivers in
‘Stories’ combines timely and relevant content to consumers a handful of markets through its Prime Now service. It’s likely
during their purchase journey, enabling liquor brands to not only a matter of time until Amazon figures out a way to disrupt
only educate target consumers about their product but also the alcohol industry much like it’s done with many other retail
sell directly when purchase intent is highest.” categories. Keep a close watch on what it’s doing in the UK,
Japan and other markets.
3. Partner with Digital Disruptors that Matter (Continued on page 14)
Alcohol apps, like Drizly, are getting seed money and fueling
online alcohol growth in a big way. Alcohol brands must
figure out ways to collaborate with these up-and-coming
technology platforms. Kail said, “Because they’re not licensed
retailers but technology firms, a company like MillerCoors
can invest in these platforms to improve brand placement
and offer promotions to drive consideration and purchase for
their brands.” Drizly provides extensive shopper analytics and
custom insights to brands and their parent companies.

www.profitero.com
HOW ALCOH OL B RAN D S CAN TAP T H E ECOMMERCE OPPORTUNITY

6. Consider Creative Partnerships

Alcohol brands might want to take a page from the UK’s
“We help suppliers better understand
Deliveroo/Heineken tie-up. Finding ways to tie an online
who their customers are behaviorally,
alcohol purchase into a restaurant or meal delivery service
e.g. basket mix, and demographically.
could provide incremental growth opportunities and online
We offer suppliers insight tools to
learning experiences. MillerCoors’ Kail said, “There’s other
provide them access to real time
delivery apps that are starting to think about this, some of the
trends and data on the categories they
food players like UberEATS, DoorDash and Grubhub. They’re
participate in. On content, as Drizly
trying to think about how to get beer in the meal occasion
strives to be the most reliable source of information in
delivery and we’ll try to partner with them.”
the industry, we invite suppliers to collaborate with us to
ensure accurate & up to date product listings, descriptions,
7. Engage Consumers Through Digital Initiatives
and photos. The alcohol eCommerce channel is still in
The use of the Internet as a sales and marketing tool is
its infancy and suppliers can help grow this channel by
becoming widespread in the alcoholic beverage industry.
raising consumer awareness through direct mail, out-
A key way alcohol brands can influence online sales is by
of-home, and digital experiences with Drizly. With Drizly,
developing digital agendas, including online and mobile
suppliers have a direct response channel they otherwise
marketing efforts, which encourage consumer engagement.
would not have.”
Finding ways to pair experiential marketing with digital
programs should be a core focus to build better consumer Nick Rellas
engagement. Just like a brewer wants to be part of bar-room Co-Founder & CEO, Drizly
talk, so too should they strive to be part of many social
media conversations.
brand could be the next BrewDog. What’s more, US legislation
8. Launch an ECommerce Hub finally appears to be easing somewhat in a move intended PAG E
Where allowed (barring any legal restrictions like in the to let craft breweries sell directly to consumers and deliver 14
US), alcohol brands should consider operating their own across state lines.
eCommerce hubs. One such example is the “Discover the
House” exclusive online hub recently launched by Pernod 10. Monitor Online Alcohol Activity
Ricard to expand its eCommerce offering in the luxury market. Online is rapidly evolving, which makes it even more critical
to keep tabs on what moves competitive brands are making,
9. Watch Out For “Challenger” Brands how retail models are evolving, and what’s happening on
Don’t overlook small-brand activity around the globe. The craft Amazon. Do homework to identify new product arrivals and
beer industry is growing gangbusters. Look at what BrewDog understand what brands sell best online. Monitor trends in
has done to quickly ramp up as a leading UK brand. And pack size, pricing and promotions. These are just the kinds of
consumers are flocking to Amazon to buy it. Any “challenger” benchmarks and analytics that will keep alcohol brands a step
ahead of the competition and make a good online partner.

Conclusion
Selling alcohol online represents a sizable and yet untapped
opportunity. Despite some unique obstacles, alcohol sales
growth via the web is inevitable. Many signs point to a
About the Author
consumer who is clearly ready to shop for alcohol online. And Keith Anderson is SVP, Strategy
retailers, brands and technology companies are exploring and & Insights at Profitero, where he
experimenting with a host of online platforms and delivery helps global companies gain a deeper
mechanisms to make buying alcohol online easier and more understanding of their online presence
accessible. Alcohol brands have plenty of opportunities to to optimize online and in-store sales. Anderson has
influence shopper behavior and engage with online retailers advised leading retailers and CPG companies including
and technology platforms. Those that do could be rewarded. Walmart, Target, Best Buy, P&G, Unilever and Coca Cola.
Those that don’t could find themselves nursing a big hangover.

Download our Amazon FastMovers

Alcohol Special Report

www.profitero.com
About Profitero For Additional Information,
Profitero monitors what shoppers see and buy online,
Contact Profitero Today At:
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across 45 countries for retailers and consumer www.profitero.com

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