Spirits and beer to outpace wine in UK e-commerce

Almost half of UK consumers buy alcohol online at least once a week with sales of spirits and beer predicted to outpace wine over the next five years, according to a new study.

In the UK, 25% of shoppers are willing to spend more than 15% higher online than in store

The A Blueprint for Success in the Ecommerce Space for Alcoholic Beverages report by IWSR Drinks Market Analysis looked at the e-commerce channel in 10 core markets – Australia, Brazil, China, France, Germany, Italy, Japan, Spain, UK and the US.

According to the IWSR, the UK has a “very high internet penetration” (95%) with online purchases driven mainly by special occasions and gifting. It also noted that convenience is an important factor in most countries for making online purchases.

In addition, shoppers spend more online than offline. In the UK, 25% of shoppers are willing to spend more than 15% higher online than in store.

Almost half of UK consumers buy alcohol online at least once a week and they “tend to have more loyalty to their online retailer rather than brand”. The UK’s e-commerce sector is dominated by supermarkets with Tesco, Sainsbury’s and Asda taking more than 50% of the market.

Looking at spirits, the UK is “a nation of whisky drinkers with online sales of US whiskey growing even faster than malt Scotch, which itself outperformed the wider spirits market in almost every country researched”.

In the UK, beer and spirits are predicted to outpace wine over the next five years. Flavoured gin and craft beer could benefit from the online marketplace as “the ideal place to sell the variety of flavours on offer which may otherwise not have shelf space to feature in a bricks and mortar store or supermarket”.

“Our research also shows that at the simplest level, sales of alcohol online in the UK are divided between sales as part of a regular grocery shop, and dedicated purchases specifically of alcohol, often as a treat for oneself,” said Emily Neill, COO research and operations at IWSR.

Neill also said UK consumers are “increasingly using tools to help consumers navigate to the products they will like” and “becoming more educated, and more curious, about what they drink”.

She added: “The overall impact of market trends and growth insights lead us to believe that the volume of alcoholic beverage sales across UK e-commerce platforms will increase by over seven million cases in the next five years, which will be notably greater growth than the offline market. That’s why it’s so important for brands and retailers alike to pay attention to this research if they want to realise that potential.”

Global outlook

Together, the 10 markets were estimated to be worth more than £16 billion (US$21bn) – twice the size of the global travel retail sector. The IWSR forecasts that the figure will hit £34.6bn (US$45.6bn) by 2024.

The IWSR found that across the 10 markets, online sales are continuing to grow at a rate of 15% per year, compared to total trade growth of 1% per year.

The analyst also said the e-commerce sector is “continuously going through innovation and development”, citing retail giant Amazon’s recent move into own-label spirits as an example. With this in mind, the IWSR said retailers “should have a clear e-commerce strategy in place if they want to see continual growth”.

Neill said: “As our five-year predictions demonstrate, it will be profitable to focus on your e-commerce strategy, which Amazon has clearly recognised. And in the UK the volume and value of alcoholic drinks sold online in the UK is also set to grow over the next half-decade.”

China has the biggest market for alcohol, driven by baijiu, followed by France and the US, where wine has the largest share.