How the alcohol industry can serve consumers who prefer to drink at home
by Christopher Doering
Dive Brief:
Alcohol e-commerce delivery service Drizly reported sales were up 391% over baseline — what the company expected normal sales to be — during the week of May 17.
Sales have been at least 350% above baseline since early April. This is a sign consumers continue to buy more of their alcohol online instead of going out, even as more restaurants and other establishments are gradually starting to reopen. Consumers are not only ordering more frequently, but also larger quantities per order, Drizly said.
“Sales have continued to distribute across the week as more consumers are home during the work week,” Drizly said on its website. "Additionally, we are seeing returning user order count continue to increase week over week."
Dive Insight:
With many consumers reluctant to venture out to purchase alcohol, and many favorite bars or restaurants closed during much of the pandemic, shoppers have seemingly fallen in love with the convenience and simplicity of purchasing their favorite drinks online.
While purchases of alcohol through e-commerce channels have long trailed more well-established categories like grocery, there is evidence that alcohol has meaningfully closed the gap. Other booze delivery companies or platforms that offer the service — including Minibar, Instacart and Postmates — also have seen robust sales increases in recent weeks. Drizly CEO Cory Rellas told The Wall Street Journal earlier this year he expects the pandemic to accelerate online sales to as much as 8% of all alcohol bought from retailers, up from around 2% previously.
While it's too early to know the long-term impact of this trend, the past few months could have sweeping implications for companies that produce alcohol. It's unlikely that all the consumers who turned to Drizly and other online services to buy their drinks will continue in volume and frequency as society continues to return to normal. But enough will continue with the platform that the alcohol industry will need to respond. Data insights firm Kantar estimated 30% of new customers who purchased booze through e-commerce for the first time during the pandemic will remain long-term users.
"When shelter-in-place began, we were uncertain of whether or not this would be a short-lived trend, or long-term change," Lindsey Andrews, CEO of Minibar, told Food Dive in an email, last month. "What the growth numbers in April have shown us is that online alcohol delivery is here to stay. COVID-19 has shifted consumer behavior permanently."
Beer companies may need to do more to connect with consumers in other ways. Since people may decide to spend more time at home for the foreseeable future, they may be less likely to try a brew at restaurants, sporting events or other social events. To foster the same kind of feeling, companies could tap into sponsoring virtual happy hours or other online events organized to get people together and socializing.
Craft brewers, which have turned to e-commerce or other ways of getting beer to consumers since many revenue-generating taprooms and brewpubs have closed, could decide to maintain the service going forward — though laws generally limit them from shipping beyond their home state.
And alcohol companies could increasingly find easy ways to allow consumers to "brew" their own beer or make their own cocktails at home. Drinkworks, a partnership established in 2017 between AB InBev and Keurig Dr Pepper, allows consumers to make cocktails and a handful of beers on their Keurig-like device. A drawback of the service is consumers must buy the $299 Drinkworks system, as well as the individual pods.
The coronavirus has undoubtedly changed where and when people purchase beer, wine, spirits and other types of alcohol, though it has yet to be determined how much. Now alcohol juggernauts that are used to selling their products in bars, supermarkets, liquor stores and restaurants will have to pay more attention to e-commerce than they did just a few months ago as new shopping habits become permanently ingrained in more Americans.