Online Supermarket Delivery Services Lead to Declining Wine Sales, Need Improvement, Says Rabobank

Amazon's announcement that its Whole Foods chain will now deliver wine with your groceries was big news this week. (Read the story here.) I wondered (along with a few colleagues) if this new way to order wine from the natural foods giant might be an opportunity for organically grown wines to expand?

Apparently not, according to this story in Progressive Grocers, on declining alcohol sales among online grocery shoppers. The whole wine category suffers, according to experts.

A new June 2018 Rabobank Research report found that about 5% of in store shoppers buy alcohol, but that number drops to 0.7% among online shoppers, leading the study's authors to predict a $3.9 billion decrease in supermarket revenue by 2022.

The report states:

"Between 2011 and 2016, beverage alcohol sales in supermarkets grew by 25.3%, more than any other department. Furthermore if a consumers buys wine, they spend nearly 60% more per trip, with half of that additional spending coming from non-alcohol items."

The bank research group goes on to say:

"Supermarkets account for 44% of wine sales and 25% of all beer and spirits sales in the U.S. and problems with the supermarket channel can have widespread implications throughout the industry. In fact, we believe poor online sales in grocery could explain some of the slowdown in 2017." (Italics added)

What should retailers do?

Beef up their online ordering web sites, say the report's authors.

"The department (alcohol) has become a cash cow for grocery retailers," and retailers should make sure to make their online sites let consumers search for wines and cross sell wine as a related product (just like those recommendations on Amazon provide suggestions on products you might also like).

Why have alcoholic beverage sales declined in online orders?

Shoppers don't stop buying alcohol, say the report's authors; they just buy it from a non supermarket retailer.

"According to Nielsen, only 69% of alcohol purchases are planned. Without a physical shelf to remind consumers that beer, wine and spirits are an option and retailers failing to effectively promote beverage alcohol online, people could just buy less alcohol."

In their podcast, the authors say 23% of people buy groceries online; the rate for Millenials is only slightly higher - 28%.

PODCAST

Listen to the episode about this story on Rabobank's Liquid Assets podcast here.

For more insights, also listen to a discussion and analysis of supermarket alcohol sales in an earlier Liquid Assets podcast episode - Who Can Win in Online Grocery - here.