While consumers are becoming more comfortable using smartphones and computers to buy groceries, they also are increasingly using the same technology to help them skip trips to the liquor store, according to data from e-commerce analytics firm Slice Intelligence.
Online alcohol sales of beer, liquor and wine grew 32.7% in 2017, according to Slice. By far the most popular kind of adult beverage bought on the web is wine, which represented more than 65% of online alcohol sales during the 25-month period from Jan. 1, 2016 to Jan. 31, 2018, according to Slice. That’s followed by spirits, at 21.2%, and beer, 13.8%.
“While e-commerce in the alcoholic beverage space is still immature, we are starting to see the shape of a robust category,” says Ken Cassar, principal analyst for Slice. “It makes sense that wine would lead all subcategories within alcoholic beverages, due to the relatively high value of scarce wine. Ultimately, though, beer will likely win as grocers figure out how to manage through complicated laws that vary by local jurisdiction.”
Slice also found that women account for 55.7% of alcoholic beverages delivered online. Among women, wine represents 56.7% of the alcohol they buy online. Wine also is the most popular alcohol purchased online by men, making up 47% of their online alcohol purchases, Slice says.
Among online wine buyers, the top brand is Veuve Clicquot, followed by Barefoot Cellars and Bota Box. Tito’s is both the most popular spirit and the most popular alcohol brand online, accounting for 3% of online alcohol delivery revenue, Slice says. Others among the top-10 online alcohol brands are Bud Light, Bulleit, Corona, Oyster Bay, Stella Artois and Miller Lite.
Slice says 60.8% of the growth in online beer, liquor and wine sales came from the expansion of app-based alcohol delivery service Drizly Inc. Drizly’s revenue grew 61.8% in 2017, nearly twice as fast as online alcohol sales overall, according to Slice. In comparison, Slice says, Minibar Delivery, a direct competitor of Drizly, had revenue growth of 6.5% in 2017.
According to Internet Retailer, Drizly had estimated online sales of $11.9 million in 2017, up from $7.4 million in 2016. Compared to e-commerce giants, that level of sales makes Drizly a pretty small player. But in the still-nascent business of online alcohol, the Boston-based company is a giant, garnering almost 19.2% of the market, putting it only slightly behind the market leader, Wine.com, which has 19.3%.
Drizly currently serves 70 markets across the U.S. and Canada. Like its liquor-delivery competitors, the company forms partnerships with local retailers, who pay monthly fees to sell on the Drizly platform to local customers. This arrangement means Drizly can operate without a liquor license and the need to stock its own inventory.
Like other online food and beverage merchants, online sales continue to represent a tiny fraction of the market. The U.S. Department of Commerce, for example, says U.S. consumers spent $54.1 billion on alcoholic beverages in 2017. The vast majority of that was in stores.
The fast growth of online alcohol sales coincides with that of online food and beverage sales in general. Food is, in fact, fast becoming one of the hottest areas of online retailing.
In 2017, a study from the Food Marketing Institute (FMI) and The Nielsen Co. predicted that, by 2025, as many as 70% of U.S. consumers will be buying groceries online, and those purchases will total more than $100 billion. An update of the FMI/Nielsen report published last month, however, moved up that timeframe by three years to 2022.
FMI and Nielson cited big acquisitions as key drivers accelerating the pace of change in the online food market.
The report calls out the $13.7 billion purchase of Whole Foods by Amazon.com Inc. (ranked No. 1 in the Internet Retailer 2017 Top 500) in 2017, the 2016 acquisition of Jet.com by Walmart Inc. (No. 3) for $3.3 billion, the purchase of meal-kit delivery company Plated by Albertsons Cos. (No. 157) last fall (terms were not disclosed) and the acquisition of Shipt Inc. by Target (No. 20) late in 2017 for $550 million.
Currently, the FMI/Nielsen report says 49% of U.S. consumers shop for consumer packaged goods (CPG)—the kinds of products typically found in grocery stores—online. And it’s not just millennials who are shopping for food online. The report says 61% of millennials, 55% of generation X, 41% of Baby Boomers and 39% of those born before the Baby Boom reported having recently purchased a CPG product online.
According to the Internet Retailer’s 2017 Online Food Report, online food sales in the U.S. grew 31.5% to $22.1 billion, Internet Retailer estimates—double last year’s growth in e-commerce as a whole.
As with online sales of alcohol, the online food market is far from reaching the level of e-commerce penetration seen in other sectors, such as apparel and computers and electronics. But the stakes are much higher in food because the market for groceries is so huge—more than $708 billion, according to the U.S. Commerce Department. Even a small slice of that pie means big money.