Spirits to lead online alcohol sales in US

E-commerce spirits sales in the US are expected to rise by a compound annual growth rate (CAGR) of 17% in value between 2021 and 2026, driven by the expansion of the omnichannel.

According to IWSR Drinks Market Analysis, online alcohol sales in the US are estimated to increase by a value CAGR of 11% over the five-year period.

Wine is predicted to increase by 2% in value by 2026, and beer, cider and ready-to-drink products collectively by 15%.

IWSR expects online alcohol sales in the US to moderate, following value growth of nearly 80% in 2020 and 15% in 2021.

“Online alcohol sales have grown rapidly in the US in recent years,” said Guy Wolfe, head of e-commerce insights, IWSR Drinks Market Analysis.

“Covid-19 boosted consumer awareness of the channel, and retailers and brand owners have invested heavily in the space. Certain states also eased previous restrictions on online sales, while in others, technological solutions offered a way to legally circumvent such barriers.”

The analyst said spirits’ share of e-commerce remained modest, partly due to restrictions on online sales – but the category is now benefitting from greater consumer awareness and the expansion of the omnichannel.

Whisky – which accounts for around half of online spirits sales in the US – and premium agave spirits will spearhead future growth. IWSR expects a value CAGR increase of 16% for whisky and 30% for agave spirits by 2026.

IWSR said the on-trade was predicted to fully recover in the coming years, alongside a return to in-store purchasing patterns.

Wolfe noted “considerable room for expansion”, as online sales account for around 3.5% of total alcohol sales in the US, where the off-trade dominates. The e-commerce share of total off-trade alcohol sales is forecast to reach 6%-plus by 2026.

“With consumers now accustomed to the convenience of e-commerce, and the infrastructure more established, the channel is expected to return to growth in the medium term,” Wolfe said.

Premium-plus caution

While premium-plus products had a 28% value share of total alcohol sales in the US in 2021, the figure for online purchases was 49%. This percentage is expected to rise to 54% in 2026.

However, Wolfe noted that the current economic climate could affect higher-value products.

“While significant growth in online alcohol is forecast, expectations have been tempered by an increasingly uncertain economic environment,” he said.

“E-commerce sales are largely weighted to the premium end, and therefore expansion may be limited by high inflation, recessionary fears and rising living costs.

“Although IWSR consumer research indicates that premium consumers are generally more insulated from economic weakness than less affluent groups, some reduce purchase frequency or quantity in order to avoid down-trading. Retailers and brand owners have also become more cautious about investment.”

The IWSR noted that sales of beer and spirits will also benefit from a shift to omnichannel and on-demand operators over the next few years. This move will be driven by investment from major supermarket chains, IWSR said.

“Omnichannel caters to stocking up, with larger total basket sizes and click-and-collect options reducing delivery fees,” Wolfe explained.

E-commerce alcohol sales in 16 markets, including the US, are predicted to grow by more than a third to reach nearly US$40 billion by 2026, IWSR revealed in November 2022.