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Alcohol e-commerce develops in global markets

The e-commerce channel for alcohol has been underdeveloped in countries such as Italy and India, but has benefitted from growth and investment in the midst of the coronavirus pandemic.

Drinkers may look to other channels for their alcohol purchases once lockdown measures are eased

A new report by IWSR Drinks Market Analysis looked at how Covid-19 has pushed the development of the e-commerce channel in a number of markets across the world. The IWSR noted the “increasing importance” of e-commerce in the future.

Mark Meek, IWSR CEO, said: “Many people will be exploring home delivery services and e-commerce services for the first time during lockdown and social distancing. Consumption habits formed now may stick around in the future.”

In France, IWSR noted that there has been continued “strong growth” in e-commerce. Click and collect services have performed “very strongly” while alcohol categories that previously under-performed, such as beer and spirits, are “now over-indexing” compared to last year.

However, IWSR said: “This should be placed in the context of the channel’s limited importance compared to both on-trade and bricks-and-mortar retail. The former is currently nonexistent, and the latter continues to decline.”

IWSR said Italy’s e-commerce environment was not prepared for the changes stemming from the pandemic. The direct-to-consumer service has witnessed particularly strong growth in the past weeks, led by on-trade wholesalers moving into the channel.

E-commerce has increased from around 2% to 4% of total grocery sales (and lower for alcohol) but is now thought to have peaked, IWSR said, as a result of limitations of infrastructure and capacity despite growth in direct-to-consumer.

Meanwhile, India is in “advanced talks” to move into alcohol e-commerce for the first time. The channel would run alongside licensed bricks-and-mortar stores and the country’s “thriving” e-tailer platforms, which currently cannot offer alcohol. IWSR said the move “may help provide tax income for Indian states, while also avoiding overcrowding in and around the sparse number of currently licensed outlets which has been in evidence when some shops reopened in the first week of May”.

E-commerce offerings are also being “rapidly developed” in Argentina, which has implemented strict lockdown measures.

IWSR said that many brand owners have teamed up with existing delivery services, such as Uber, or have created their own e-commerce apps. Some companies have also made use of social media to promote sales of their alcohol brands directly to the consumer.

Bars and restaurants have also worked in partnership with brand owners to offer delivery services to provide additional funds. IWSR said that drinkers “may start to gradually leverage additional channels for their alcohol purchases” once lockdown measures are eased.

IWSR cites China as an example, where e-commerce “greatly benefitted from strict movement restrictions”. However, the analyst notes that some consumers will return to physical stores “at the expense of e-commerce” as restrictions are relaxed.

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