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Alcohol e-commerce sales to rise by 34%

E-commerce alcohol sales in 16 markets are predicted to grow by more than a third to reach nearly US$40 billion by 2026, according to IWSR Drinks Market Analysis.

Alcohol e-commerce
Spirits will contribute the most value to the e-commerce channel

New data from IWSR revealed that alcohol e-commerce sales are predicted to grow by 34% between 2021-2026. This followed value growth of 12% in 2019 and almost 43% growth in 2020.

A weaker macroeconomic outlook and a return to pre-pandemic purchasing habits have hit the channel’s previously expected trajectory, the analyst said.

The IWSR previously predicted that the value of alcohol e-commerce would rise by 66% across global markets between 2020-2025.

The IWSR looked at e-commerce sales in 16 markets: Australia, Brazil, Canada, China, Colombia, France, Germany, Italy, Japan, Mexico, the Netherlands, Nigeria, South Africa, Spain, the UK and the US.

“Having surged through the pandemic, alcohol e-commerce sales are set to moderate over the next few years,” said Guy Wolfe, strategic insights manager, IWSR.

“However, the channel is still a key growth contributor for the total beverage alcohol market. Almost all volume gains in the total off-trade between 2021 and 2026 will come from e-commerce, despite slowing growth rates.”

The IWSR noted that rising costs have seen consumers start to turn to trusted brands and ‘strong value propositions’ in some markets and categories. However, the online channel remains a place to look for rare and unusual items, the IWSR said.

While the US will generate the most additional value in coming years, China will maintain its position at the top, the IWSR found. The two markets will drive growth for the channel until 2026.

As the e-commerce share of the off-trade is relatively low in the US, the channel has opportunity to grow, the IWSR said.

China is expected to continue to grow more steadily as it was less dependent on the impact of the pandemic, which saw online sales soar in markets across the world.

Less developed online markets Mexico and Nigeria will grow more rapidly, the IWSR estimated, while Brazil will be key to growing the channel’s value.

Positive outlook for spirits

Spirits will contribute the most value to the e-commerce channel over the five-year period, the IWSR said.

Excluding baijiu in China, whisky and agave spirits in the US will lead e-commerce sales, with an expected value CAGR increase of 16% and 30%, respectively, by 2026.

The spirits sector is expected to account for nearly half of all online sales by 2026.

Non-alcoholic ‘spirits’, Indian whisky and Irish whiskey will show the fastest online growth across the focus markets, but they will remain relatively small in size.

Beer, cider and ready-to-drink products are projected to register the quickest growth over the next five years, and by 2026. Together, they are expected to account for nearly a quarter of online sales.

Wine, the most established category online, will see its share of e-commerce sales fall by under a third by 2026, the IWSR predicted.

The ‘value-driven’ omnichannel, which includes bricks-and-mortar retailers, is expected to account for US$3 of every US$10 spent on alcohol online by 2026.

The US and China are more likely to pay more for one-hour delivery times, followed by Brazil.

The IWSR noted that convenience will be an ongoing driver for e-commerce sales, with consumers in 2022 choosing to order online to ‘stock up’.

“Consumer drivers for purchasing alcohol online are shifting as costs of living increase,” remarks Wolfe.

“Achieving previous pandemic growth rates will be unrealistic but adapting to the current economic situation should ensure that brand owners operating in the e-commerce channel can still deliver healthy growth. Considerable opportunities continue to present themselves in the alcohol e-commerce space.”

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