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Online spirits sales slow in US

E-commerce alcohol sales in the US could grow by 7% in value between 2023 and 2027, but spirits will rise at a slower rate than initially expected.

The IWSR said there is still headroom for growth in the US online alcohol market

Data from IWSR Drinks Market Analysis found that the US online alcohol market only rose by 1% in value in 2022, following years of growth amid the pandemic.

The IWSR predicts a 2023-27 value compound annual growth rate (CAGR) of 7% for online alcohol sales in the States, compared to a total beverage alcohol (TBA) CAGR of 1% over the same period. This would result in e-commerce’s TBA share increasing from 3.2% in 2022 to 3.9% in 2027.

However, the 7% growth is a drop on the 11% CAGR prediction estimated for 2022 to 2026.

Online spirits sales in the US are also expected to increase by 7% (CAGR 2023-2027), and collectively beer, cider and ready-to-drink (RTD) products are predicted to grow by 19%. Wine, on the other hand, is estimated to dip by 1%.

The IWSR previously estimated that e-commerce spirits sales in the States would rise by a CAGR of 17% in value between 2021 and 2026.

Despite a slowdown in online alcohol purchases, 14% of consumers said they had shopped in the channel in the past six months of 2023, down from 18% in 2022. As such, the IWSR believes there is still plenty of growth potential in the market.

Guy Wolfe, head of e-commerce insights, IWSR, said: “Recruitment has unsurprisingly slowed down since the pandemic, especially among Boomers, indicating that the channel is becoming more mature.

“However, there is still room for growth, as one in four online buyers has been recruited in the past two years. In addition, frequency of online shopping has continued to rise among those who use the channel.”

Spirits and beer to take share from wine

Within the online channel, wine is the most mature category due to the widespread use of direct-to-consumer (DTC) shipping. While wine has a 22% value share of TBA in the US, its slice of TBA e-commerce is 45%. Spirits has a 37% e-commerce share (33% of TBA), with beer/cider/RTDs at 18% of e-commerce (44% of TBA).

The IWSR said spirits, beer, cider and RTDs will gradually erode wine’s share in the coming years.

Whisky dominates e-commerce spirits sales with almost 50% value share in 2022, while agave-based spirits are poised to overtake vodka during 2024, taking more than 20% share of online spirits sales by 2027.

Online’s value share of US spirits sales is projected to reach 4% by 2027, up from 3.5% in 2022.

“Stricter state regulations on the online sale of spirits, compared to other beverage alcohol categories, have resulted in a relatively low but increasing e-commerce value share,” Rogers added. “In an intricate market landscape, spirits continue to find ways around restrictive state laws to meet consumer expectations and demand.”

Only 11 states, including the District of Columbia, currently allow DTC spirits shipping. Trade groups, including the Distilled Spirits Council of the US, have collaborated on a ‘Ship My Spirits’ campaign, which aims to allow DTC shipping of spirits.

The IWSR also highlighted growth for no-alcohol, which is ‘significantly outpacing traditional products’, and benefits from no restrictions on shipping.

We recently examined the state of DTC shipping in the US.

US alcohol delivery service Drizly will shut down this month just three years after Uber acquired it for US$1.1 billion.

Alcohol e-commerce sales in 16 markets are estimated to grow at a slower pace than initially expected, with the category’s value reaching nearly US$40 billion by 2027 not 2026.

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