New research from alcohol market analysts IWSR, forecasts that while the alcohol ecommerce market’s growth will slow over the next five years, it will continue to outpace the growth of total beverage alcohol (TBA).
IWSR says that the alcohol ecommerce channel is entering a period of normalisation following the Covid boom, but is expected to globally be worth US$40bn by 2027. That represents a 2022-27 value CAGR of 4.5 per cent, compared to TBA (on-trade plus bricks-and-mortar off-trade plus ecommerce), which is expected to see 2022-27 CAGR of two per cent.
The findings in the IWSR Ecommerce Strategic Study 2023 forecast that overall ecommerce value share of TBA will stabilise at around four to 4.5 per cent. Previously, the share figure had risen from 2.1 per cent in 2018 to 3.7 per cent in 2021.
“After the pandemic boom, ecommerce value saw a slight correction in 2022 (minus two per cent) as restrictions in most markets were removed and shoppers returned to the on-trade and to bricks-and-mortar stores,” says Guy Wolfe, Head of Ecommerce Insights, IWSR. “In the near term, online growth will pick up but remain depressed by a weak macro-economic outlook, before a return to steadier growth from 2024.”
IWSR monitors 16 markets, including Australia, for its research and the analysts said that while the percentage of alcohol buyers using ecommerce had declined, the frequency of those who do shop online has increased.
“In the post-Covid environment, the behaviour of alcohol buyers is evolving in different directions,” says Wolfe. The overall proportion of consumers shopping online is down, but those who continue to do so are increasing their frequency.
“This indicates that the channel is shedding ‘transient’ users who only adopted it out of necessity during the pandemic, but also maintaining or even gaining appeal among ecommerce loyalists.”
IWSR also said that while the pace of alcohol ecommerce growth is expected to slow, it should still remain an important channel for brand owners.
“Online sales value is still forecast to outperform TBA to 2027. Furthermore, consumer research conducted by IWSR in Q3 2023 confirms that the digital space is a crucial source of information, influence and engagement for buyers across all channels,” says Wolfe.
“Ecommerce therefore remains a key element within the big picture of total value.”
CONSUMER BEHAVIOURS
IWSR’s COO Consumer Insights, Richard Halstead, also said there are two key behaviours of online alcohol shoppers that brand owners should be aware of.
Firstly that as economic uncertainty and cost pressures continue, value-seeking behaviours will continue to persist.
“With continued pressure on disposable incomes and ecommerce shoppers in most markets demonstrating greater price sensitivity, it is more important than ever for brand owners to offer strong value propositions in the online space,” Halstead said.
“This does not necessarily mean discounting, however, and can instead entail offering consumers a solution, such as free delivery, or a reason to treat themselves, such as limited-edition products.”
In addition to seeking value, online shoppers are also seeking information, with Halstead saying the online alcohol shoppers spend significantly longer carrying out pre-purchase research than those buying in bricks-and-mortar retail.
Halstead said: “The extent of pre-purchase research, the sources used and the information sought varies greatly by market and demographic. It is therefore crucial that brand owners tailor their content and forms of digital engagement accordingly to ensure they have maximum impact.”
The IWSR Ecommerce Strategic Study 2023 surveyed 10 core markets and six secondary markets, which together account for 90 per cent of global ecommerce alcohol sales. Consumer research was carried out in the 10 core markets of Australia, Brazil, China, France, Germany, Italy, Japan, Spain, UK, US, while the secondary markets were Canada, Colombia, Mexico, Netherlands, Nigeria, South Africa.